China Bike Production Costs Rapidly Rising
BEIJING, China (derailedonline.com) - Far east cost of manufacturing is set to rise due to recent changes in China's economic situation, as reported by Bike Europe.
Labor costs, taxes, and other contributing factors are causing a 30% rise in manufacturing cost from items made in China. 6 to 7% increase on cost of components and bikes has already been announced. Oil prices are causing a rise in transportation cost and manufacturing cost. Steel prices and plastics are also on the rise in China.
China's dependance on the US dollar has also had a staggering affect. It is said that China has already passed a new tax law that will impact money transfered in and out of China. This tax law will consist of a 10% fee on monies transfered to an from China - this will impact businesses around the world that have items manufactured in China. Not only will the cost of making the item go up but the cost of paying the manufactures will rise due to this new tax.
US is not alone in this situation. Europe also faces problems with increased cost. Some companies are starting to look toward other countries as a place to manufacture bikes and components.
It is uncertain as of now how much of a cost increase the consumers will see. Rest assured there will be some changes especially for smaller companies that cannot absorb the increase in cost. Expect to see the apparel market to be the biggest hit by this recent change in China. Many small apparel companies gets the majority, if not all, of their products made in China at the moment.
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Posted on Jan 4, 2008 12:43:53 -0400 by Brady.