Consumer Electronics

Submitted By: David Zarcone

When it comes to consumer electronics, prices only seem to go up when a new technology is revealed or next-generation products are introduced. However, consumer electronics (CE) will be going up across the board this year. What’s the reason for the price increase? CHINA! Click here to find the Yahoo! article.

Numerous factors are contributing to this incredible increase, according to well-placed sources, including the rise in manufacturing and material costs. At the moment, China is the production center for the majority of CE partly due to the cheap cost of labor. But this might be coming to an end; China is bettering its relationships with workers by introducing new labor and protection laws which in turn pushed labor costs up 15%. On another note, one thing to blame is the Olympics. Many factories are shutting down in June to help clear the air pollution. Additional reasons include higher oil prices affecting shipments to the US, factory relocation in China from south to north, and finally, the biggest reason of all: the falling US dollar.

The US dollar just isn’t what it used to be, and the exchange rate between the US dollar and the Chinese Yuan has gone down since the beginning of the year. It has fallen about 10% in the last year, so basically Chinese companies now earn 10% less than they did a year ago due to falling exchange rate.

When asked about this problem and ideas of possible alternatives, a US manufacturing executive said “Some have mentioned Vietnam, but we are talking about consumer electronics. China has the infrastructure. There really isn’t an alternative.” At the manufacturer’s level, prices in China are up 8-20%, and the US retail prices will follow shortly, so stock up on your new cell phones and laptops before it’s too late.

4 comments May 4th, 2008