(Filed Under wholesale Lingerie News). BODY publisher Nick Monjo interviewed Dreamgirl owner Barry Revzen on the subject of rising lingerie producer prices.
MONJO: Prices are going up for a range of lingerie goods in China. Can you provide a overview of the situation and the categories involved?
REVZEN: Right now, I believe all products, no matter what it is that is being made in China, are on the increase. In lingerie, all are on the rise. Raw materials are going crazy and the demand world wide is through the roof due to the amount of product that has moved out of China because of the tariffs.
MONJO: What is the reason for the increases?
REVZEN: Prices are going up in China for a variety of reasons. The Renminbi (RMB) is increasing in value very quickly. This, along with the increase in oil prices, is driving the prices sky high. All synthetic fabrics are oil based, so just as we are seeing prices rise at the pumps so are our fabrics increasing in price. The other big problem was COVID which has also driven all prices of everything higher. Until COVID is eradicated it will continue to wreak havoc on the cost of materials and on our worldwide economy. In order for factories, mills and all suppliers to survive they have raised the prices. This is another contributing factor to the price increases. Finally, and one of the biggest issues, is that of supply and demand. At the moment, due to the tariff situation, so much of the China production has moved to other countries. But these countries must buy their raw materials from China. It is a Catch 22 situation whereby the tariffs created a condition that caused people to move production to other countries, but those countries do not have the fabrics, accessories and findings needed to make those goods. So they go to China for the raw materials. This has caused huge demand on the Chinese suppliers, which causes inflation. Now the prices for raw materials for the Chinese factories are going crazy.
MONJO: What are the time frames involved? When did producer prices start to rise? How long will the price rises continue?
REVZEN: Prices began to increase right after the Chinese New Year vacation. But the RMB had started strengthening much before that. Factories did not immediately raise prices over the RMB because when it began to strengthen after all orders had been placed. But after the Chinese New Year vacation the RMB, along with the other issues listed above, caused all prices to go up. Once we reach a plateau, whereby they cannot go higher, then things will taper off. But factories will most probably not decrease prices after that. It is impossible to know for sure how long this will last or if the Chinese government will step in to try and stabilize prices of raw materials, but that would be the hope. I now have a factory that said that prices are rising so quickly they will no longer quote prices on new goods until things do stabilize. For us it is impossible to work like this.
MONJO: What about price increases in other parts of Asia?
REVZEN: I have not heard of prices going up in other parts of Asia with the exception of countries like Vietnam and Cambodia, which are nearly 100% reliant on Chinese raw materials. Any other countries that are also reliant on China for their raw materials will be experiencing the exact same issues.
MONJO: How is Dreamgirl responding to these price rises?
REVZEN: Dreamgirl, and probably all other suppliers, are going to have to raise prices in order to survive. We will need increase prices accordingly in order not lose money and hope that things do stabilize and we get back to selling goods and not worrying about currency and labor prices. China labor prices have been steadily going up over the years and getting even higher as the struggle with the labor situation. The China labor market is tight and has been for years. The one baby law has created a situation of a disproportionate number of elderly people. And now the younger generation is becoming more and more educated and does not want to work in factories. This has created much higher wages as everyone fights for the same workers. People can now go from job to job and in each time get a higher salary. And this is causing higher prices on consumer goods both in China and abroad. It is also causing serious inflation as wages steadily up.
MONJO: What do you think the response will be at other manufacturers?
REVZEN: I have no doubt that everyone is going to be forced to raise prices. There is no way of absorbing such huge increases and maintaining prices. Even if they all reduce margin’s they can only reduce so much in order to still make a profit. This is going to be a universal problem.
MONJO: What are your predictions for price increase going forward in 2021 and 2022?
REVZEN: I believe that prices will stabilize in the very near future and will carry over into 2022. The biggest question now will be with the RMB and if or when it starts to strengthen again. This will certainly impact prices once that does happen. I feel that it may remain stable for this year but will strengthen further sometime in 2022. This is only my prediction and not something I know for sure but this is what I think may happen.
MONJO: What is happening to lingerie retail prices in stores?
REVZEN: Lingerie retail prices have been stable for many years now. But since most of our lingerie comes from China you will now see prices start to increase dramatically. We have lowered our margins to allow for prices that are nearly the same as before, but even that will not prevent us from having to increase prices on carry over styles. It is a bad situation for everyone. Retailers will have to do the same as their suppliers are forced to raise prices in order to make a profit. It is going to be a tough year with higher consumer prices across the board. We have already seen nearly everything get more expensive due to the tariffs but this will further increase prices of all commodities coming from China and most other countries around the world as we are all reliant on China for raw materials.
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