Several factors contributed to low profits in manufacturing ornaments
Even with Christmas ornaments orders increased by 30 % this year, majority of Shenzhen manufacturers were not happy due to fall in profits. Ornaments manufacturers said several factors contributed to low profits such as increases in material costs, labor and appreciation of the yuan.
Even with a 30 percent increase in sales, plus a 20 percent increase in prices. Profits were still low, even lower than the profits they had last year. manufacturers blamed the increase of prices in raw materials such as cotton and resin two of the widely used raw materials in making Christmas ornaments. Wage increase is also one of the reason profits were low since most factories were labor intensive, and recently factories were having a hard time hiring workers during production time that they had to increase wages by 20 percent just to keep workers from leaving.
Shenzhen is one of the biggest Christmas ornaments producers in the world, and exports of Christmas ornaments reached US$ 710 million in ten months a 28 percent increase from last year. even with this increase manufacturers still didn’t make any profits due to the appreciation o the yuan. Most factories made deals with ornament buyers early this year but with the yuan appreciation profits were very little.