Survey finds rising China prices boost India sourcing

A majority of buyers report paying higher prices for products sourced in China, and China's exporters are becoming less competitive with other low-cost countries, particularly in the market of low-end products.

These results were highlighted in the latest survey of 385 buyers by Global Sources.

About 68% of survey respondents said the yuan's appreciation has affected their China sourcing strategy, with 54% indicating higher export prices as a result.

One-third of buyers are expecting the yuan to strengthen further to 6.5 against the U.S. dollar in the next six months, with 29% anticipating 6.43.

To deal with the rising China currency, 54% of respondents said they will boost their imports from other countries.

Of these, 57% said India as their main sourcing alternative.

Nonetheless, buyers will still rely on China for orders that have exacting specifications or tight delivery schedules.

"Given the changing price point of China products, China exporters must work harder to market themselves and justify their higher prices in terms of service, product quality or production volume," said Craig Pepples, president of Corporate Affairs.

In addition, buyers will take other measures to cope with the yuan's appreciation and rising China export prices:

- 24% of importers plan to raise retail prices;

- 22% plan to source fewer items closer to season;

- 20% plan to purchase only low-end items from China;

- 17% plan to source only mid-range and high-value items from China;

- 14% plan to peg export prices at a fixed exchange rate; and

- 9% plan to use the yuan in trade settlements.