Oil price threatens toymakers
Soaring prices for raw materials, coupled with worsening electricity and labour shortages, are threatening to strangle Hong Kong-owned toy-manufacturing operations across the border.
Hong Kong Toys Council chairman Samson Chan said the problem had become so severe that some firms were finding themselves unable to compete in the marketplace.
'While toy manufacturers are working hard to overcome these problems, all other concerned parties, such as trade associations and buying offices, should offer help,' Mr Chan said. 'Viable solutions could be mapped out before the situation deteriorated further if buyers and retailers appreciate the problems and offer assistance where they can to toy manufacturers.'
Prices of raw plastic used for making toys have seen a particularly dramatic rise in recent months, as the price of oil - the basic raw material used to make plastics - has soared.
'Commonly used plastic raw materials used in toy manufacturing have experienced more than a 30 per cent increase over the past month or so,' Mr Chan said.
He said the price of ABS plastic, which was selling for US$1,240 per tonne in July, had risen to $1,680.
'[This] raw material has registered a 50 per cent price increase since January ... and over 70 per cent since August [last year],' he said. 'There is no sign of the price increases slowing any time soon; certainly there seems no opportunity to reverse this trend.'
Toy manufacturers are facing potentially devastating losses because orders placed early in the year did not take the prevailing manufacturing costs into account.
Many factories are also facing shipment delays due to power and labour shortages in Guangdong.
Joseph Li, secretary-general of the Federation of Hong Kong Industries, said cheap labour was becoming more difficult to find in Guangdong.
'Despite better global economic conditions, 2004 is proving a difficult year for all toy manufacturers,' he said.
