Prices of made-in-China Christmas decorations could spike due to tariffs

[File Photo: VCG]

Halloween is less than two weeks away and with November on the horizon, people will be in the holiday season mood in preparation for Christmas. In the build up to December, merchandise at shopping malls will be showered under the Christmas lights, and festive songs will be heard in every corner. 

But for manufacturers in Yiwu, the city in east China's Zhejiang Province that produces two thirds of the world's Christmas decorations, the Christmas season begins in February when buyers around the world placed endless orders. 

Production will commence immediately after that, and the delivery of products are usually completed in October.

Christmas decorations in display at the Yiwu International Trade Center, September 26, 2018. [Photo: CGTN]

Shen Mengxia, 27 years old, is one of the wholesalers at the Yiwu International Trade Center, whose family has been making Christmas decorations for two decades. 

“About 90 percent of our products go to overseas markets. And the rest 10 [percent] are for domestic sale,” Shen said. And all her products can be customized, making her business stand out.

“China is irreplaceable in the market. All of these petals and patterns are hand-painted. Comparing with competitors in other countries, manufacturers in China are faster in publishing new designs,” she added.

A buyer is purchasing Christmas products at the Yiwu International Trade Center, September 26, 2018. [Photo: CGTN]

The dealer price of a plastic tree ranges from 10 US dollars to over a hundred, yet that price will be at least three times higher when sold to customers.

The business is attractive for many, including the US which buys 90 percent of its Christmas items from China.

But things are changing. In September, the US imposed another 10 percent tariffs on 200 billion US dollars' worth of Chinese goods. 

That could drive up prices. According to a study by Kirill Borusyak at Princeton University and Xavier Jaravel at London School of Economics, the tariffs will cost each American family additional 127 US dollars per year. 

The pain incurred from tariffs is also being felt by some merchandisers in Yiwu.

Workers produce Christmas trees in a factory in Yiwu, September 26, 2018. [Photo: CGTN]

Huang Huimin has been making plastic Christmas trees for 15 years. Her products are for export only and have always been popular, but this year was not easy for her. Her long-time American partner “BCP”, the number one seller on Amazon, didn't confirm their orders until June.

“This morning, my customer suddenly said they wanted to change the destination port to Indiana, and the products must be delivered in three days. They say they want to get them ahead of another round of tariffs. For us, time is really tight," Huang said.

Huang is also concerned about what's to come. She remembered that in 2016, when the UK voted to leave the EU, she thought there would be no immediate impact when it happened. However, the next year, some orders from the UK fell by half, some were cut by even more than half.

“Trees with lights are now on the tariff list. And the current tariff is 10 percent, we can reduce our profit or the cost of raw materials to offset it," Huang added. "If the tariff climbs to 15 percent, we can divide it with our customers.”

“But if it rises to 25 percent, we might have to drop America and look to other markets,” Huang said.

Huang is not the only one who holds that view in Yiwu.

“Yiwu is a one-stop trade center. Its strength lies on the variety of products it can provide. It's true that the US is a big buyer. But we have other markets. It's impossible for us to stop our business just because of American policies. We will carry on no matter what happens," Huang's peers responded. 

Improving products, reducing profits and exploring more markets are some of the answers for manufacturers in Yiwu. The upcoming Christmas might not be the jolliest for them, but they are determined to get it through.