COVID SURGE IN CHINA, INFLATION STILL INCREASING & THE WAR GOES ON…
China’s Covid surge is starting to seriously worry toy & games companies. While Yantian port is officially open, there is reportedly a backlog and a shortage of other critical elements of the logistics process, like truck drivers for instance. As the toy business is heading into peak season production, delays in production and shipments are not going to do anybody’s frayed nerves good (perhaps aside from shipping company people!). Many toy companies we spoke to were already planning to commit to manufacturing earlier than usual, this latest Covid surge in China will most likely cause others to do the same. It does not seem that the shipping issues of 2021 will be going away in 2022 alas!
Many major economies are still seeing inflation increase, with the UK this week updating on inflation figures to the highest levels seen in 30 years – truly crazy! The oil price has been fluctuating like usual, but on the day of writing this article (23rd March 2022) the price is in the vicinity of $120 per barrel, which is VERY high, and effectively means that the vast majority of toys produced in 2022 will be produced with the highest plastic resin prices we have had in recent years.
In Ukraine sadly the horrific conflict is continuing, with more and more homes being destroyed, people being displaced and both innocent civilians and fighting forces on both sides losing their lives. For the toy & game business this human tragedy will also not help business in most cases, as Russia was a good-sized market which will now be very hard to supply.
The reality right now is that there are some very grim things going on which are making life and doing business much more difficult than ever, but we can remain thankful that demand for our products is robust and that we as an industry have a good future ahead, even if the clouds are currently gathering!
We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services
We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com