Christmas decorations will become more expensive this year

This year's Christmas decorations are likely to be more expensive than in previous years. The Chinese city of Yiwu, where most of the decorative reindeer, Christmas lights and other accessories come from, has been hit by an energy crisis that is limiting production. The factories in the Chinese city of Yiwu, which produce Christmas decorations that are sent all over the world, suffer from a great shortage of material, which of course increases production costs. The higher price for Christmas decorations is also affected by delayed shipments and a lack of energy in China, which has forced many factories to suspend production. The city of Yiwu, located about 280 kilometers southwest of Shanghai and has a population of over one million, annually produces about 80% of all Christmas decorations sold worldwide, of which 45% goes to the United States. The decorations made in Yiwu are worth about $ 6.1 billion. Although much of the Christmas decoration orders have already been shipped, according to Yiwu Cai Qinliang, general secretary of the Christmas Products Industry Association, factory owners confirm that prices for the goods will be higher this year. "Metals and plastics are becoming more expensive and shipping is delayed. Since June, we have had to increase prices by about 10 percent, because we have higher material costs. In addition, we now had to limit production to three days a week in October, because it is high season, but we have nothing to shine on, ”says the owner of one of Yiwus's factories, Chen Jiang, for Bloomberg. The last two seasons are challenging for Christmas decoration manufacturers. Last year, the pandemic disrupted the global shipping industry and many customers canceled their orders because it was clear that they would not arrive on time anyway. This year, however, it seemed that the situation around Christmas would be stable, so customers began ordering in bulk in advance to ensure timely and successful delivery by Christmas. However, due to very early and large orders, even more pressure was placed on suppliers and manufacturing companies. Commodity prices are rising sharply, and China is currently experiencing the largest increase in factory costs in 26 years. "In the end, consumers will pay for the higher costs. Exporters and global brands can only absorb costs temporarily, but companies will not do business if they are at a loss. If more companies leave the market, supply will fall and prices will continue to rise, as the remaining producers will have more price power, ”concludes Ding Shuang, chief economist at Standard Chartered.