China's changing economy

This is a really well thought out and set out email I received today from one of our manufacturers in China. Our contact Georges sums up what the pressures are in China at present and how it will affect us and our customers as we see the price rises come into effect.

"Dear Valuable Clients,

Thank you for your loyal support and being a valued client of Scorpion. I would like to take this opportunity to follow up and update everyone on the market conditions currently affecting the industry, and how these conditions will have an affect on all of us.

As I wrote before, this year was one of the worst years in recorded history for winter weather in China. In the first week of February, they had some of the worst snow storms in over 50 years. The snowstorms occurred during the Chinese New Year holidays, effectively stranding large parts of the workforce, and eventually grinding a halt to industries across the country for the entire month of February. It was not until the first week of March that everyone was able to get back to work. All of this had affected the delivery issues from Scorpion (as it did thousands of manufacturers throughout China). I am aware that some of our customers have had delayed orders, and I would like to express my appreciation for everyone’s patience and understanding on this most unusual situation. I’m pleased to report that things are back on track and we are able to fulfill all customer and dealer orders.

Now that the New Year is in full swing and things are back to normal, we look ahead at what the year holds in store. It is said that the Year of the Rat is a year of plenty that will bring new opportunities and good prospects. In this vein, we have much to look forward to in the coming year. But with new opportunities also come challenges.

The manufacturing landscape in China is undergoing some dramatic changes. Twenty years ago, factory owners couldn’t move into southern China fast enough. China’s southern coastal provinces used to be famous for their supply of inexpensive migrant labor, turning the region into one of the world’s manufacturing powerhouses. But just as the boom originally moved from Hong Kong to southern Guangdong, it is now moving further inland. It is reported that a third of DongGuan’s factories are either closing or migrating north for cheaper land and labor costs. In according to China’s new five-year plan, the Chinese government wants to focus on high-value manufacturing and environmental protection. This has led to new tightly-enforced government policies, and combined with unfavorable economic factors, it is said that at least twenty thousand factories will close in the south of China.

In addition, businesses in China whether they are foreign or domestic have been hard hit by 30% increase in labor wage / taxes / inflation / rising raw material costs / RMB appreciation, which all are impacting cost in productions.

China however is not the only place where we are witnessing major fluctuations and market changes. Costs on metals are reported to be all time high. Recently, in April steelmakers worldwide have agreed to a 65 percent increase in iron-ore prices. (This is setting a global benchmark for prices but is less than what analysts estimated. Some analysts had estimated prices could rise as much as 80 percent). Copper is reported to be over US$8,000 per ton and gold is over US$1,000 per ounce. As a result, the market is expecting a price increase of up to 50 percent in stainless steel and steel material costs. This will inevitably lead to an increase in production cost of 18 to 25 percent.

Up to date, we have delayed reflecting the increase in production cost in our prices, unlike our competitors. Current market conditions however leave us no alternative but to increase our prices. In order for our customers to keep their competitive edge, this increase will be reasonable taking the above factors into account. You will be pleasantly surprised to know that Scorpion is still able to beat its competitors in pricing, quality and service.

We will continuously keep you informed and alert you to the marketplace changes that affect the way we do business."

Concern about the environment

As a marketer the customer driven change to environmentally friendly products was initially difficult to deal with, as our suppliers both in New Zealand and in China were not prepared for the change.

In the space of 12 months we have seen a huge change in this, and we are now seeing products from inside and outside of New Zealand with eco-friendly production methods, and materials.

For some of these products please visit us here.

Some of the product changes we are seeing is the recycling of plastic into garments and even bags, but this has been happening for a while, for example Polar Fleece is made from recycled PET bottles, go here for more information.

Another area is that of bioplastics. One example of products that are being created with this is the corn starch pen.

This new area of products that are being launched into the promotional marketing arena are attracting allot of attention from "green" and "socially responsible" organizations, but as the products become more visible in the marketplace I believe there will be a huge uptake as organizations scramble to reduce their carbon footprint.

Another area that is developing in the eco-friendly arena is that of power, to charge your ipod, cell phone, and other small gadgets through solar power. These are starting to make an arrival in the New Zealand market, and we hope to see these become a hugely successful product.

R U Marketing?

Who are we? check out here!

But to expand on that we are a promotional marketing company based in Kingsland in Auckland, New Zealand. We have been around for a year now, and are working towards developing our business into a nationwide company.

I get allot of people day to day asking what exactly promotional marketing is, and it is something that is not written about readily online. I find that defining marketing itself can be as simple as "The techniques used to attract and persuade consumers".

Promotional marketing is a part of the marketing mix, it is a product focused approach to attracting customers, and persuading them to purchase your products. In a simple form it is reward for action, but it extends past this.

One simple way of looking at or describing/defining promotional marketing is to look at breakfast serial or children's takeaway meals it does not take long to realize that the little plastic toy is what is persuading the child to nag their parents to buy the product. We would provide the plastic toy..

But this is only a small part of promotional marketing, and children are much easier to market to than adults, in that the trends surrounding a child are not as complex as the trends that affect lets say a CFO or CEO in a large firm. How do you get their attention through promotion?

Back to the other area of promotional marketing; brand awareness, this is the recognition of your brand within your target market and the general public. Take Coca Cola for example the most recognized brand on the planet, not only is their logo recognized and used in advertising, but the specific font they use, the shape of the bottle, and color of the product are all instantly recognized.

The ways businesses gain brand awareness is through having their brand in front of their potential, and target markets faces. To accomplish this successfully can take trial and error, but a well placed promotional giveaway can do the trick. For example, providing pens with your business name on is something that every office uses, so your brand on the pen is more likely to stay in front of that target market. But how do you make a decision on what product to use, and how do you get it into your targets hands?

The most important part is to have a wide range of options to choose from, and make sure that the products that you choose are of good quality and that your brand is going to be well represented by the product. It is a good idea but not always crucial to keep the product functional, and useful to the targets, especially in their work environment...

So now we have some writing about the promotional marketing industry... hopefully we will have others contribute and debate what I have and am going to be posting on this blog!