As another year comes to an end we look forward to the Year of the Tiger 老虎. The last year has been eventful and a year full of change and volatility particularly in respect of shipping but also uncertainty of supplies and currency exchange rates – all of which makes trading difficult and challenging. But with change and volatility comes opportunities and for some the past your has opened doors and allowed unprecedented growth. Has your company been one of those for whom the last year has been kind or has it been challenging with squeezed profit margins?
The new year offers opportunities to change the fortunes of your company and take advantage of new trading positions as they arise. Who will be the winners and losers over the coming year. Over the last year clear winners were shipping, warehousing and haulage companies who saw profits sore on the back of increased demand and shortages of supply. The signs are that this trend will continue over the coming months with little sign of the situation improving from the point of view of importers and exporters over the coming months. High shipping costs have the least impact on high value small volume goods such as electrical products, where as bulky and low value goods will continue to be impacted by the high costs and we are already seeing the effects of this with reduced shipping of these expensive and bulky items. This will however lead to opportunities as shortages of supply will drive up prices putting those who have stock in a position to command the market.
Over the past year we have seen increasing interest in recycled products, eco friendly products and a move away from plastics. This is a trend we believe is likely to continue and accelerate. There is also increased demand for electric vehicles from scooters and bikes through to cars a further trend that is increasing. Other areas where we have seen high demand is in the area of electrical components including chipsets. However one needs extreme caution in this area as there seem to numerous bogus suppliers and even outright scams being operated in this area. As with all acquisitions good due diligence and back ground checks are recommended.
China has proved very resilient to out breaks of Covid-19 since its initial eradication from the country and the zero tolerance approach to outbreaks has proved very effective in controlling the disease in China which remarkably has the lowest rates of infection of any of the large industrialised nations of the world – an amazing feet considering the first out break was recorded in China. This achievement however has come at a cost. Firstly sudden lock downs of whole cities has become the norm leading to disruption in production and worse when (as is often the case) it involves a port closure of the port with the inevitable delays. The second more long term consequence of this problem is effective closure of China to foreigners with virtually no visas being issued. We are seeing increasing requests for factory inspections and order verifications to be done as customers are unable to visit in person. It is also making procurement that much more difficult for potential buyers and making China a more challenging place to do business. It is not clear how long China government intends to continue this policy but there appears no appetite for them to deviate from their zero covid approach to the pandemic which has proved so successful to date in keeping the virus out of China. In the meantime for customers requiring independent on the ground verification and inspections of factories we are in an excellent position to assist and help companies to continue to trade successfully with Chine using the facilities of our office and staff in Guangzhou.
A very happy New Year to you all and may your families have prosperous and peaceful year of the tiger.