Wondering if your product might sell in China? There’s a chance it already is through agents purchasing goods overseas for Chinese buyers. Called daigou (代购), the industry is estimated to be worth at $8 billion in 2012.
Chinese shoppers buy overseas for reasons of price, availability or quality. High customs duties and pricing strategies mean the cost of some foreign imports, especially branded goods, can be 40% more expensive.
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Even as foreign companies rush to China, many Chinese firms claim tough market conditions are forcing them overseas. In a recent survey of 300 Chinese firms, some 77% of respondents cited rising prices as a reason to leave; another 73% cited fierce competition.
Of course, many firms are making good money in China. When speaking recently with a foreign manufacturer of medical equipment, he noted that his firm had recently switched from export to domestic sales. “I didn’t realize the margins in China were so high. I should have done this years ago”.
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China’s rising costs and the outsourcing of production to other low-cost Asian countries is a favorite subject of ours, and we spend a good deal of time speaking with global retailers and sourcing companies on the subject.
This chart on U.S. apparel imports offers a simple illustration of the change. It shows how China + Southeast Asia’s share of total U.S. apparel imports has risen from 19% in 2000 to 63% in 2011. (The region’s Top 5 includes China, Vietnam, Indonesia, Cambodia, and the Philippines.)
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The Wall Street Journal is worried about the challenges for multinationals in the region. We agree, and the article neatly sums up the key issues: growth opportunities are significant, but emerging local and regional competitors result in a more competitive market.
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Considering how important debt is to any economy, it is remarkable how much effort it takes to assemble accurate and timely data on the subject, not only in Asia, but also Europe. However, it is certainly worth the effort involved trying to piece together a more detailed picture, and we have done just that for larger regional economies.
The good news is that emerging Asia is still carrying a low level of debt—with the key exception of Korea where total debt is nudging U.S. levels (331% of GDP).
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‘Fishballs’ are a popular snack in Hong Kong, and sold in 7-11 stores across the city to school children. But are they Halal? Not quite. According to Dr Paul O’Connor, the author of a recent book on Hong Kong’s Muslim population, the snacks include a pork paste.
We estimate the world’s Halal-food market at between $410 and $820 billion. The range assumes that Halal-products account for between 25% and 75% of foods consumed by Muslim communities, and that food accounts for 30% of total consumption.
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Bank licenses are never easy to obtain in Saudi Arabia, especially for foreign banks. But the Industrial and Commercial Bank of China (ICBC) appear to have done just that, opening up a branch office in the country. Most likely ICBC will be offering simple cash management and treasury services to Chinese clients, much like the bank’s branch in Abu Dhabi.
But this article in Okaz (Arabic) suggests that the bank may also replace the middlemen that Saudi buyers use when importing from China. Not sure if I agree.
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In June, while in Riyadh, I heard stories that Indian goods were increasingly popular, at the expense of their Chinese competitors: apparently, the Indian goods were cheaper.
That makes sense given China’s rising labor costs and the fact that the Indian rupee has depreciated 29% against the Chinese renminbi over the past 2 years.
It also helps that Indian expatriates have opened their own retail chain stores across the Middle East: Home Plaza and E-Max Store are two commonly cited examples.
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