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| REPLACING BROKEN CHINA? |
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| Imports from China have been increasing at double digit rates for the past ten years. In 2006, 40% of all consumer products imported into the United States came from China, with a value of nearly $250 billion. About 80% of all toys sold in the U.S. come from China. And, as of July, China is now the number one supplier of foreign goods to the U.S., edging out Canada in the latest reports from the Commerce Department. |
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| Among the top 20 product categories imported are: Telecom and sound equipment, miscellaneous manufactured articles, apparel and accessories, furniture and bedding, footwear, travel goods and handbags, professional and scientific instruments, and photographic optical equipment, watches and clocks. Many of these product categories may be very familiar to you. And many of you may have a strong relationship with manufacturers and providers of these products. There are three questions we raise for any distributor of goods produced in China to recognize and for which it may be important (no pun intended) to develop contingency plans. |
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| There are three questions we raise for any distributor of goods produced in China to recognize and for which it may be important (no pun intended) to develop contingency plans. |
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| 1. | How reliable is your supply chain for the holiday season? In September 2008, China will be hosting the summer Olympics in Beijing. That city has a health threatening level of pollution caused by unregulated increases in automobiles (the number grows by 1,000 every day) and construction in the city plus the outpourings from factories in surrounding provinces. The country's officials have promised the Olympic Committee that they will provide a green environment and have implemented many environmentally friendly activities to clean up the air. However, it is estimated that as much as 70% of the pollution comes from outside the city. |
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| | One solution to help alleviate the pollution problem that has been discussed is closing down factories within a given radius two months prior to the Olympics. If this happens, that means that during the peak buying season for Holiday, June and July, there will be no products manufactured at those factories. At this time, there is controversy about whether or not the closings will take place. It is definitely an issue to follow since it is possible decisions will not be made very far in advance of actual closings. |
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| 2. | How safe are the products you are selling? In addition to representing such a high percentage of imports, 60% of all recalled consumer products in the U.S. last year were from China. It seems weekly we hear news stories about too much lead in toy trains or necklaces or faulty space heaters, unbalanced lounge chairs, not to mention tainted food. China has already closed down almost 200 food processing, toothpaste, and pet food manufacturers. It seems that both product safety and actual supply chain from China could be at risk. |
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| 3. | Are products from China in jeopardy of trade restrictions? As we write this article, House Committee on Energy and Commerce is holding a hearing regarding the safety of consumer products imported from China. Nineteen companies were asked to describe the precautions they are taking to avoid selling unsafe products. The National Retail Federation is concerned that the outcome of these hearings will be constraints on products from China. It is strongly urging its members to encourage the committee not to recommend any trade restrictions. |
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| We strongly urge those of you who may be affected by any of these concerns to follow events closely, determining how best to ensure you have a safe and reliable source of product to meet your needs moving forward. |
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