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Hong Kong: Day 2
January 5, 2008
Pricing does appear to be emerging as a key issue for this year. People I am talking with here in Hong Kong are telling me that they are seeing price increases, so far (emphasis on so far), in the high single digit percentages. They are also telling me that buyers expect them, and though not prepared to roll over, do recognize that they are inevitable.
There is, however, an interesting challenge for buyer and manufacturer in that no one knows for sure how high prices are going to go up this year. There is just too much uncertainty around inflation, Yuan / Dollar valuations, and other variables.
So, factories are saying that they must have orders by a certain date or they will not be able to honor the price they are quoting now. Retailers are responding that they want one price for the whole year. That gap has not, to my knowledge, yet been worked out.
Retailers may want to consider the fact that if they insist on one price for the whole year, that price is going to have to be higher than what they can get right now. Why is that? It’s because any factory quoting them will have to hedge against an eventual upward pressure on pricing. It’s the only way for them to manage the risk.
We’ll all need to stay tuned to see how this one turns out.
Posted by Richard Gottlieb on January 5, 2008 | Comments (0)
