China could lose out to cheaper market sources

AS THE South Africa economy, in line with the United States and other countries, moves into slow-down economic mode, with local economists predicting growth of 2% or even less, a move to cheaper imported products is a strong possibility. Kevin Thompson, Cape Town branch manager of German-founded Birkart Globistics Air and Ocean, detects a swing under way as importers look to less-costly options than China such as Vietnam, Sri Lanka or Cambodia. Although Birkart clients appear satisfied with the improved quality of Chinese garments and other manufactured products, they appear less so on pricing. Thompson attributes this, in part, to higher wages in China, up 20% in 2007, on the back of appreciation of the Chinese Yuan by more than 9 % against the US dollar over the same period. Thompson, an industry veteran who has spent the past four years with Birkart, told FTW: ”Some of our clients are starting to look at markets in different countries because Chinese companies are forced to increase their prices to remain profitable.” Last year, Birkart Cape Town recorded a revenue increase of more than 40% over the previous year and plans to grow business by at least a further 40% this year.