Due to shortage in Yiwu, the price of American Christmas products will increase!

This year, Yiwu, the world's largest manufacturing center for plastic reindeers, neon light strips and other Christmas items , is feeling more Grinch-like pressure than ever before.

Factories are affected by the shortage of raw materials, rising production costs, and the global supply chain crisis, which has also caused delays in logistics to a certain extent. Since mid-October, Yiwu has also been affected by the power rationing policy, and some manufacturers have had to provide their own generators, and some have even stopped production directly.

Equipment, materials and semi-finished products in a Christmas ornaments factory Source: Bloomberg

According to Lou Ting , the owner of a Christmas ornaments factory in Yiwu , she is so stressed that she can't sleep every day. "This year's orders are more than last year, which should be a good thing, but there are too many uncertainties that affect the delivery process."

Like many other Yiwu residents, Mr. Lou is trying to find a way to ship products like candy canes and pine cones to the United States and Europe while dealing with factory manufacturing delays and record freight prices.

It is reported that 80% of China's annual Christmas product exports of US$6.1 billion come from Yiwu. Yiwu, with a population of more than 1 million, has 45% of its products directly exported to the US market.

Cai Qinliang, secretary general of the Yiwu Christmas Products Industry Association, said that in fact, when the power rationing measures came into effect, exacerbating the difficulties that manufacturers had to face, most of the Christmas orders had already been shipped from Yiwu.

But delayed deliveries at sea and ports, as well as soaring metal and plastic prices, mean consumers will still have to pay higher prices for their baubles and metal ornaments this year, according to Chen Jiang, owner of a factory that makes Christmas lights and Christmas trees.

For Yiwu manufacturers, this was supposed to be a holiday season with a rebound in sales after business slumped by half last year as the pandemic threw the global shipping industry into disarray and customers canceled orders.

The situation improved in March this year , and retailers who had consumed all their inventory during Christmas 2020 placed orders in advance to ensure they were fully prepared for the upcoming Christmas season.

However , the difficulties faced by manufacturers this year have been further complicated, with soaring commodity prices causing the fastest inflation in factory gate prices in 26 years in September , and these costs are ultimately borne by consumers.

In this regard, Ding Shuang, chief economist of Standard Chartered Bank, said that exporters and global brands will only take risks temporarily , and if they lose money, companies will not continue to do business. If more companies withdraw from the market , the decline in supply will lead to further increases in commodity prices .

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