How much have margins come down in the past ten years?
The answer depends on who you ask- manufacturers, brand holders, trading companies or sourcing agents. It also depends on the industry, but here is the big picture.
At the macro level, the trading companies and sourcing agents are getting cut out of the supply chain unless they provide real value. If they provided real value, then they have been able to hold their margins for past few years by working with the brand holders to put the squeeze on the manufacturers. The manufacturers in China have had their margins cut more than the others in the supply chains, but because 5 to 10 years ago was the “golden era” of China sourcing, there were a lot of manufacturers running sloppy shops (throw bodies at production rather than aim for efficiency) making fat margins. Those days are almost over, and the manufacturers that remain need to learn modern production techniques and grasp the basics of custom service if they want to keep the orders from going to their Chinese competitors who do understand what international buyers expect. So for the manufacturers, the sloppy shops need to get professional or go out of business.
About the blogger
Mike Bellamy – author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)
