With Xmas and the New Year festivities over it was back to work with another trip to Asia.  Our itinerary, which took in Vietnam, Indonesia, Malaysia and China was planned with particular emphasis on visits to those factories shipping outdoor products prior to the Lunar New Year.  The last few weeks leading up to this holiday have proved to be critical in the past few years and there is definitely merit in being at the factories at this time to push for shipments. As we are now coming to the end of the trip it seemed like a good opportunity to update everyone with our progress.

We have just arrived in Hangzhou from the south of the country after experiencing one of the most frustrating journeys that one could ever imagine. A few weeks ago a ‘bright spark’ at our company decided that it would be a great idea to experience the full flavour of the Chinese New Year in one of the oldest and most beautiful cities in China. Unfortunately, we had not taken into account the holiday traffic patterns of the millions of Chinese citizens who return home at this time.  The disruptions caused by the bad weather in the UK at Xmas pale into insignificance against the picture of utter chaos here in China.

We sat in a jam on the motorway for over 14 hours to complete a journey that normally only takes one and a half hours – no accident a la M25 but just the shear weight of traffic.  Arriving at the airport we were dropped off ½ a mile from and walked with thousands of others to the terminal.  On arrival, we had to queue to enter the terminal for 2 hours.  Once inside it was relatively calm but we had to queue again to have our bags weighted as any excess baggage or hand luggage was not being permitted, unless an extortionate amount of money changed hands.  We checked-in and discovered that our seats had been given away and the flight was full.  We were not the only ones and along with a number of other passengers, we were given a flight the following day. Unlike the policy in Europe, no alternative accommodation was offered and we spent an interesting day in the terminal.  The strangest part of this experience was that none of the Chinese people we talked with, appeared the least bit bothered. Apparently, these delays were totally normal and this was a good year as there were limited cancellations caused by the weather.

This experience has given us a true insight into the problems that the factory owners incur prior to the holidays. Many of the workers try to leave the factories up to a week before the holiday officially begins and the only way of ensuring this does not happen is to offer them bonuses that are paid on the last working day. Many factory owners now also offer a bonus payment for those workers returning to the factories on time at the end of the holiday.

Having said all of the above, it was quite an amazing experience, standing the middle of an industrial area normally buzzing with activity that is now totally silent and deserted. In Hangzhou, the city is crowded and full of very happy people. Around the famous lake people are just sitting, holding hands and staring into space. It will be very interesting to see what happens when the celebrations really get going over the next few days.

From our description of the start of the holiday, one can understand how the last two weeks at the factories have been nothing less than chaotic.  We split up and tried to cover as many factories as possible to ensure that the goods that we had ordered were being shipped in accordance with our shipping instructions. With the exception of two factories, we were successful in getting the goods away on time. In the current labour climate in China this was a very good performance. There are hundreds of factories who have not produced on time and are now running at least two months late with their production and there is nothing that can be done in order to bring this back into line. The Western ‘strike’ is now becoming common practice.  Only a few years ago ‘striking’ was unknown here and no group of workers would ever have dared to challenge the factory owners – how things have changed! Unfortunately one of our factories has been affected by strike action. We were present while the discussions took place with the workers and it was clear from the general body language that reaching an agreement was virtually impossible. Workers in the area have got together and are demanding a 60% wage increase. The factory owners cannot afford to pay this and will not produce at a loss and therefore a stalemate situation exists. Now this will only be sorted out after the holiday.

Factory capacity no longer exists to make up for these delays following the recession of two years ago. Factory owners are not willing to employ staff specifically for this purpose as temporary labour rates will totally wipe out any profit that they would make producing the goods. In addition, with current raw material shortages it is likely that even if they did have the labour, they would not have the materials.

The overall view on prices is they will continue to rise throughout the year as raw material prices and labour rates continue to rise together with the Chinese government increasing interest rates and gradually allowing the Yuan to strengthen against the US dollar. Clearly, for the exporters this presents a big problem but the factories realise that we currently have very little choice in finding alternative suppliers outside China, and that we will have no option but to accept these increases. The factories however are not stupid and realise that a point will come when these increases will result is a fall in demand. Many factories are already meeting price increase opposition, especially from their larger customers and the only way they can maintain prices is though the use of technological advances in product design or by lowering the quality of their products. Unfortunately, it is by lowering quality that current pricing demands are being achieved.  This is a very short sighted policy and one that we at Innovators are not accepting.

Regardless of price, the biggest factor affecting the factories at the current time is a lack of capacity. Over the past two years many factories producing outdoor furniture have gone out of business and those that remain are no longer willing to keep employees on their books based on the hope that further orders will be received later in the season. This change of attitude has clearly caught out those customers who like to order their products late in the season on the hope of getting special prices. Many factories are now quoting the beginning of May for repeat orders.

On the positive side the shipping lines are shipping on time without the rollover problems that were experienced through out last year. Over the next two or three weeks there is the possibility of rollovers but this is due to vessels been taken out of service during the Chinese New Year. Locally, we are informed that vessels at both Felixstowe and Southampton are currently being delayed by up to 4 days due to bad weather and port congestion.

Whilst clearly a great deal of energy and time has been expended to ensure that as many orders leave the factories on time, we have also been continuing to work on new products and improvements to existing items. Please find below a list of the current developments.

 OUTDOOR ITEMS
New ranges of painted Acacia Outdoor furniture
Plastic greenhouses
New party tent range
XLC – PVC/ Aluminium Wicker range – extended by 50% to include gazebos and parasols
New range of Zero gravity chairs
Polyresin garden ornaments

INDOOR ITEMS
New XNZ Oak furniture range
Storage cupboard/ Ironing boards
Classic Mahogany Dining and Occasional furniture
Cast iron stoves

CONTRACT ITEMS
New Office chair range
New improved Blow Mould Furniture range
Latest design bar stools and general contract furniture
Leather /PVC Chrome event chairs
Metal folding event chairs

Please do not hesitate to contact us if you would like to receive further details of any of the products listed above.

Please do remember that from the time we started the company over 23 years ago, one of our greatest strengths, which remains the same today, has been our ability to source products to client specification.  Today, just under 50% of our business is carried out in this area. These services are operated in total confidentiality and we have local offices staffed with employees with years of experience who are able to satisfy customer requirements worldwide.  We are always pleased to assist any organisation, if only just to reassure them that they are getting the most efficient service and more importantly competitive prices from their existing suppliers

We look forward to sending you our next monthly update, when hopefully we will have survived the Chinese New Year celebrations.

In the meantime please do remember that our 10,000 sq ft showroom, located by junction 4 of the M1 is open from 8:00am every weekday for you to view the samples of the extensive product range that we offer. Please just phone us to make an appointment.