When I was in Shenzhen last month I took a day trip out to an area outside of Shenzhen were most China factories buy their raw materials. When, for example, a factory in Shantou makes coffee mugs for a US importer this is where they come to get their raw materials. The place is huge and you can see anything and everything there – in its raw material state. There are separate areas, for textiles, glass, metals, plastics etc etc. I was here with a vendor looking for PP for a project I am working on now. It was very interesting to see that a lot raw plastics (polymers) are coming into China from places like, Thailand, Korea, Vietnam and even Taiwan. Chances are that if you have a resin product in your line it is made with a fluff (polymer) and additive from one of these places although the product label will say “Made in China.” When I asked the vendor about this he replied to me that there is a stronger environmental movement nowadays in China so vendors must source these materials abroad. I think this is part of the reason as Chinese local govts particularly in South China are becoming ever mindful of industrial waste. But I am sure there are other reasons as well, mainly having to do with cost. The vendor went on to say that China’s advantage is its abundant labor pool, factory capacity and state of the art machinery. But the actual raw materials are often cheaper in developed countries.
Anyway, the next time I hear from a supplier about the rising costs of raw materials in China, I will believe them. It was a fascinating visit to a fascinating place.