Once again the magical lure of Asia has resulted in us travelling all over China and Vietnam in search of new and innovative products.  Whilst in England you are experiencing one of the driest and warmest spring periods on record the same cannot be said of this part of the world.  We have never seen rain like it in Shanghai or Hong Kong. Whilst sheltering from the rain in a food market outside Beijing we had another of those special travellers’ moments. As we stood by a food stand the water melons started to explode covering everybody.  We later found out that in the water melon business companies have been using a growth agent that would appear to have taken things too far!!!

As this is one of the quietest times in the year for many of the factories, both in indoor and outdoor products, it offered us an opportunity to have in depth discussions with the factory owners, on life in general and not just our normal negotiations over prices. In our discussions, football and FIFA seemed to come top of the list, closely followed by the best place to invest money in the Western World.

For those not familiar with the new Chinese culture, women factory owners and women in general continue to occupy more and more important positions in the companies with whom we deal. They are much more goal driven and instead of confining there investments to the local markets they are looking abroad for property and education for their families.  In the major European cities, which offer safety and political stability, the largest investment groups in property are now the Chinese and Singaporeans. Certainly, the growth that is still being experienced in the Central London area in property prices is being fuelled by these groups.  They have been targeted by the European estate agents as their number one target and in the recent Irish property auctions were one of the largest buying groups.  In the area of education, we were shown the promotional material from leading independent private schools which made them look like 5 star resorts.  The prices quoted were unbelievable to us but more and more children are being sent over for their education. Finally, following on from the unbelievably positive reception of the recent royal wedding over here (everyone we talked to were in awe of Kate Middleton, but there were many positive comments directed towards her sister) the interest in the UK pomp and tradition has reached fever pitch.  Everybody is expressing a desire to visit the UK and now that next year’s queen’s golden jubilee celebrations are being announced they are beginning to book their trips

Following on from the financial crisis and boom and bust scenarios trade seems to be settling down at last to some degree of normality. As one after another European countries, (Spain being the latest to suffer street protests over a youth unemployment level of 40%) admit that their economies now face the prospect of slower growth as a result of the excesses enjoyed over the past 15 years, trade with Asia has started to slow down. This fact can be substantiated by the fall in the amount of cargo volumes being carried by the shipping lines.  Even the factories in China have begun to forecast a slowdown, as demand from Europe and the USA is falling at the same time coupled with the political uncertainty that is affecting the Middle Eastern economies.  

Inflation in China is now 5.3%. This is still too high and the government have imposed strict restrictions in lending on the banks.  Interest rates have been increased 4 times by the central bank in the last 6 months and the bank liquidity ratio has been increased 8 times.  This means that for small and medium size firms – the type that we deal with – the pressure of a rising cost of capital coupled with restrictions on the availability of funds is causing huge problems. Many firms are declaring bankruptcy.  One of the biggest reasons for the lack of product arriving in the UK for the current gardening season was that the factories in China could not afford to make it.  For the next 12 months this problem will only get worse and for those who companies are importing directly from organisations they do not know well are asking for deposits - pay attention you can’t say that you haven’t been warned.

For the first time for a long time we were not made as welcome as we expected by new factories with whom we were attempting to establish business relations.  After having a few meetings like this, we happened to have a dinner with a number of the factory owners who confided in us that they were having a number of problems with UK importers and distributors with regards to payments.  In addition to the Focus administration, there would appear to be a number of other UK companies who are unable to pay for the goods that they have ordered and the factories cannot decide whether to take a risk or stop the shipments.  

However, food and vegetable prices are falling and non food inflation may just be starting to ease. The biggest fear here is that the runaway property market may start to decline which would have a severe effect on individual wealth.  The Chinese investment in property is a vehicle for saving and not for borrowing. If the price of property were to fall it would dampen their ability and desire to spend but would not plunge them into debt.

Unfortunately, in any economy the rich just seem to get richer and this is a definite view that can be applied to the world of commodity trading, which is still causing the prices of raw materials to rise. Of course there are real shortages of certain materials resulting from their usage in new technologies, however this does not tell the full story.  Anyone who follows the financial press should have been scared silly when they studied the recent prospectus of the Glencore flotation.  It finally said what many experts had tried to prove that the prices of many commodities are being manipulated by a very few individuals, in this case operating out of Switzerland and making huge profits. The market in the price of silver is just one example where the recent price volatility can only be attributable to manipulation.  The saddest part of this process is that the retail investor is the last to become aware of this manipulation and he is the one who would have been advised to invest in the safe fund made up of a basket of commodities that on the face of it could only rise in value.  Even though every financial investment now has the appropriate health warning, we all have a desire to increase our wealth using this type of investment and it always ended up in being our downfall.  Just take a look at the way in which the price of Silver has fallen over the last few weeks and it does not take a genius to work out who the winners and who the losers are.

Returning to the products, new ranges and improved ranges have been finalised and the new products are arriving at the showroom on a daily basis. Over the past six months our sourcing operation has been somewhat overstretched but has produced superb results. We have developed to client specifications, ranges of indoor furniture, specialised contract furniture for general and catering usage, conference  and banqueting furniture, garden tools such as wheelbarrows and rollers, chicken houses and last but not least a complete new range of hair care products.  It is in the area of sourcing that our business is expanding and interestingly for us it is a move back to basics from the time we set up the company 23 years ago.  It is greatly rewarding to find products of the right quality at the right price, which meet with our customers specification. With 23 years of experience in trading we have an unrivalled network of contacts who we can call upon to source virtually any product that is requested. If you have any current requirements, however large or small , please do not hesitate to contact us – call don’t just email us - its good to talk and we are always ready to listen

In this rapidly changing world we have always maintained our basic philosophy. With the advent of the Internet and e-commerce a number of companies who operate in a similar market to us have set up their own internet retailing businesses, which compete directly with those of their customers. Innovators do not operate in this manner. We value the loyalty of our customers and recognise the investment that our customers make in their businesses. Our role is very clear to us and we will continue to operate in the same manner as we have done over the past 23 years and serve our customers to the best of our ability.

Our sales executives are currently making their showroom appointments for customers to view the new products at our 10,000 ft.² showroom located close to junction four of the M1. If you have not been approached yet and wish to confirm a suitable date for your meeting please do not hesitate to contact us. We assure you that you will find your visit to be of great benefit.