China's Next Export: Inflation
Bloomberg Businessweek|May 17, 2021
With prices rising at the factory gate, consumers abroad may wind up paying more
Enda Curran
China's Next Export: Inflation

Bryant Chan’s factory in Heyuan, in China’s Guangdong province, turns out Nerf guns, LeapPad toy tablets, and other playthings for major U.S. brands, as well as electronics, such as a gadget that can capture data on golf swings. The president of Hong Kong-based Wynnewood Corp., Chan has seen prices for paint, screws, springs, solvent, metal, batteries, and packaging rise as much as 15% this year. Plastic resin has climbed up to 40%. “To put it very simply, everything has gone up in price,” he says. “This increase has been much steeper and across a broader range of categories than we have typically experienced.”

To illustrate, Chan breaks down the contents of the company’s trail camera, a device used by hunters and wildlife photographers. The electronics, which make up 40% of its production costs, are now about 10% more expensive. Packaging, which represents one-tenth of costs, has seen a 10% increase. And while plastic accounts for only 2% of the production costs, the surge in resin has had a noticeable impact. When the higher input prices are added up, the camera is now 6% more expensive to make.

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