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China’s recent economic downturn has created changes around the globe. One such change is the apparent forcing of the company’s hands. Many companies have been forced to look for new countries to import some goods. For the first time in recent memory, many companies are starting to go back to older good sources. Often, these sources haven’t been used in decades.
Canadian companies who have used Chinese imports are feeling the heat. Customers in Canada are paying close attention to China’s economic downturn, currency devaluation, and the continual volatility of the stock market in the country.
Will China Remain Number One?
China is at an economic crossroads right now. The county saw foreign direct investment fall dramatically when the Renminbi fell. This slowed cost creep of Chinese-made goods, but created other problems.
However, the Chinese government has shown in the past that it can quickly adjust to the challenges. This makes the current China situation difficult to predict. While China is still the number one manufacturing plant for goods, many Canadian companies have begun to search elsewhere for alternatives. Other countries in Asia, India, and a few South American countries have been considered. Importers are striving to keep their pipelines full by sourcing other goods, as one stalled shipment from China could be disastrous.
Canada & Asia
Over 20 percent of imports come into Canada from the Asia-Pacific region annually. Half of that number, or around $58 billion comes directly from China. Imports from China have been growing rapidly in Canada, but so have imports from other low-cost Asian countries. Many of these countries have seen their imports in Canada grow much faster than China’s.
What will Canada Do?
Many importers in Canada feel uneasy about China’s unpredictable nature. Yet, most importers believe these minor issues do not outweigh the benefits of working with China. Canadian business people should be looking into other countries, but should never ignore the value China can offer – as China is a giant market.
While Chinese costs begin to rise, it’s natural for importers to look for other countries and sources. However, a company only concerned with cheap labor is shortsighted. Many other factors should be considered. China is still the best source of imports to Canada of cheap products. Importers in Canada should not make any drastic changes if they are importing from China, as of yet. If things change in the future, importers will want to have a backup plan and other sources.