Are prices for promotional products going to increase in 2008?
It’s pretty difficult to answer this question, given the sweeping of the products that can be used as promotional ones!!
However, if we consider promotional products imported from China, that is to say a great majority of our industry sales, my opinion is that 3 factors could influence prices in 2008:
EURO / DOLLAR exchange rate. 2007 was a really profitable year for European importers of promotional products. It’s hard to anticipate the exchange rate change for 2008. But even if the dollar rate increases, most importers already have their European stocks ready for 2008, so the impact on prices shouldn’t be so important. Moreover, they generally open bank accounts in dollars to compensate for rate risks. To be honest, my company in Spain, which imports a lot from China, made a lot of profit in 2007 thanks to favorable exchange rates!
OIL prices also influence the price of imported products. Firstly because this mineral can be used to make plastic products. But mainly because oil prices will have repercussions on transport prices! (Its a fact, planes do not fly yet with rapeseed oil!!). Given the changes of oil prices, we can forecast a high increase of transport prices in 2008 and therefore an increase of our final prices…
Last, but not least: starting in January 2008, the Chinese government will stop supporting financially the exports of many of its industries (in order to satisfy the USA, mad at China when it competes with home productions!!!) These financial supports used to reach an average of 8 to 14%! No more support means higher prices to compensate the loss!!… (Unsporting in North America? could be!)
IIn my opinion, it’s inevitable that China’s imported product prices will increase in 2008… BUT the question is : are importer going to echo this increase on their 2008 prices? Maybe…but they have taken enough profit from the dollar exchange rate in 2007 to soften this increase…