As the US Dollar Increases, how does this affect buying stock from China?

[GhostOfAmazon]

I've only been selling online since 2009, so I've never bought overseas when the dollar was "strong".

Question for those who have been doing business since before the recession of 2008: Now that we're seeing a stronger US Dollar, how should this effect negotiations with Chinese suppliers, if at all?

Should we be able to get lower prices on our orders than in the past?

Please, no speculators. I'm looking for advice from someone with real knowledge of either global financial markets OR at least someone who's purchased goods from China pre-2008.

I'm sure I'm not the first to wonder this.

[yankee]

As the dollar tanked, Importing costs for shipping along with cost of goods doubled on small items. In fall of 2008, items I paid $4.25 then cost $7.75 Also, labor as a whole in China has 4x or more during these times.

Asking your vendors about the currency values would be a good start but I would not quite demand a new price yet. It is possibly they have already been adjusting prices as cost of manufacturing in china has been going up very quickly the past couple years while costs of goods have somewhat remained the same, or for me, gone down 20-30%

[phaz0rz]

All of my prices from my main (chinese) supplier decreased by about 20% a few weeks ago. They told me it was due to the dollar strengthening. I'm relatively new to international trade so I didn't see it coming at all, but it was quite a pleasant surprise. It's helped offset the huge hike in USPS postage.

[GhostOfAmazon]

Thank you both for your first hand experiences. I'm interested in hearing more from others. One of my main suppliers recently increased my product cost, citing higher material cost. I kind of got the feeling it was BS, and I'm looking to educate myself on exactly how the global market works in relation to our strengthening dollar.

Anyone else who has insight, please do feel free to post.

[GreenBean]

Do you mind if I ask you long you have had a working relationship with that supplier?

[rsot]

Originally Posted by GhostOfAmazon

I'm looking for advice from someone with real knowledge of either global financial markets.

If you look at the asian stock market it's been tumbling....HARD. Your supplier may have lost money in the market and been passing the cost onto you - just a possibility as well as the material costs...

[GhostOfAmazon]

Originally Posted by GreenBean

Do you mind if I ask you long you have had a working relationship with that supplier?

It's been about 2 1/2 years since I placed my first order with them. I wouldn't call it a "long" business relationship, since to the Chinese, I'm sure they have customers of decades who have spent hundreds of thousands. But I have spent several thousand dollars with them over the past couple of years. I order in bulk, pay via Escrow, etc. Not a cheapskate who buys 2 dozen items and then thinks they have a "solid business relationship"

[phaz0rz]

For what it's worth, I've spent a little under 100k with the supplier I referenced and I always pay w/u or m/g (I trust them, a lot). I place an order every week. They will usually decrease the unit price on an item once I buy a certain amount (e.g. 1000+), but this was the first time the price of EVERYTHING decreased.

No idea why your supplier would raise your prices, but I'm sure they had a valid reason. Even if you aren't their largest customer I'm sure they still value your business if you've spend several grand.

[yankee]

It is quite possible some material has gone up significantly in China. Example is high grade aluminum, clean stainless steel are very hard to get at an affordable rate today. I am buying years worth of material to get a fair price. High quality non whitening rubber hose in non existent along with quality fiber optic. I am buying both of those in the USA and sending to my factory from the USA.

Now if we are talking about basic aluminum extrusions along with plastic molds, those costs of materials are down with most commodities. If you are talking about a technical item that needs CNC machines, especially precision machines, they have never been more expensive.

Even precision metal injection molds. I had a mold break that I paid $3800 for in 2011 and it cost me $25,000.00 to replace July 2015.

The Government no longer supplies tools/machines for free and assistance and transactional lending goes away when USA economy looks bad(and it looks extremely dim to the rest of the world at the moment)

[yankee]

Another possibility especially if you are buying from stock supply and not having your own item made is that the original buyer may no longer be buying. Most small goods are going to be made 10,000 or more pieces at a time, so unless you are buying that much, it is quite possible you are just buying over made goods from someone elses order. If that other person stops buying or goes out of business, cost of goods will skyrocket for making a small MOQ.

[phaz0rz]

That's quite insightful yankee. You're by far the most experienced forum member when it comes to international trade. I swear I actually learn something every time you make a post!

[newjerseymax]

I have seen prices increase 20-30% over the last year... I have several suppliers of the same products with little or no relation to each-other and all have gone up.

China Economy expecting serious slow down... The US Dollar is much stronger now then before, however it cost China more to make things, so naturally they pass that on to you.

They will drop price when they want to unload something for whatever reason.

Or as been posted depends on quantity. Obviously if you buy more then you get better discounts.

[Jiexie]

Actually,to US buyers,dollar increasing is indeed a good news because they can buy online at lower price.
But for us Chinese sellers,it is the same,we still remain the same profit.
Why ? our competitors adjust price to a lower price,then we also have to.

[phaz0rz]

Originally Posted by Jiexie

Actually,to US buyers,dollar increasing is indeed a good news because they can buy online at lower price.
But for us Chinese sellers,it is the same,we still remain the same profit.
Why ? our competitors adjust price to a lower price,then we also have to.

I bet you Chinese sellers are really benefiting from USPS's new rates though. Our dollar may have strengthened a bit, but we still pay 5x more for shipping

[Jiexie]

Originally Posted by phaz0rz

I bet you Chinese sellers are really benefiting from USPS's new rates though. Our dollar may have strengthened a bit, but we still pay 5x more for shipping

That is truth!We shipping rates to the US still does not go up,which is awesome,but not sure if it will change in the future.

[unkown5454]

Originally Posted by Jiexie

That is truth!We shipping rates to the US still does not go up,which is awesome,but not sure if it will change in the future.

Nope. We are indebted to your country forever. So, enjoy...

[vogeltron]

Yes, I bought from sources that had items manufactured in China pre 2008. During the financial crisis and ensuing years the Yuan rose against the dollar and things because more expensive. All items I bought from my supplies came via container ship. Dry bulk shipping index is at records lows at least with regards to USD pricing and volume. With the Devaluation of the Yuan in August/Oct of last year that should have brought costs down with regards to US Dollars.

I spoke to a former supplier in the US that I hadn't sine about 2012. We came to an agreement for a new manufacturing facility and splitting up inventory on a new container. I was quoted a price similar to that of 2008. About 20% less than I had paid previously. It may also have to do with a fall in demand. For those who import stuff EMS or DHL or whatever you do now days. The air postage as mentioned before I have no idea what it costs to send it like that.

As others have mentioned even with the rising Dollar items I use to send to Canada or Europe, Japan, Australia the postage has risen like 100% from 5 years ago. It is not even worth it anymore.

YouTube

YouTube

[dallis]

The Great Recession started in 2007/2008, that period until now can't really be considered typical.

It isn't just the strong dollar that is the important dynamic, its the relationship between currencies, ie strong dollar weak yuan, strong yuan weak dollar etc.

China spent the past decade misrepresenting it's GDP, and the Chinese government has a history of strongly manipulating the value of it's currency, and prices were definitely increasing.

Since the recent market corrections I'm seeing product prices trend downward for the moment.

However, shipping certainly isn't going down.

I'm tiny potatoes compared to some of the players on here, though, so their advice and insight is far more detailed than mine.

[yankee]

Originally Posted by dallis

China spent the past decade misrepresenting it's GDP, and the Chinese government has a history of strongly manipulating the value of it's currency, and prices were definitely increasing.

I would also argue that Quantitative Easing alone is equal to or exceeds the price manipulation of China's RMB and that is just one out of thousands of ways our shady government manipulates USD.
But yea, china deflates its currency RMB and USD inflates USD.

QE4 starts soon and that in theory will kill the USD but you can be assured, as our stock market tanks, savings get wiped out, housing market crashes that USD will remain artificially strong.

IMO anyone who has cash or has access to cash soon will have opportunities as great as 2010

[GhostOfAmazon]

Originally Posted by yankee

I would also argue that Quantitative Easing alone is equal to or exceeds the price manipulation of China's RMB and that is just one out of thousands of ways our shady government manipulates USD.
But yea, china deflates its currency RMB and USD inflates USD.

QE4 starts soon and that in theory will kill the USD but you can be assured, as our stock market tanks, savings get wiped out, housing market crashes that USD will remain artificially strong.

IMO anyone who has cash or has access to cash soon will have opportunities as great as 2010

Would love to hear more about your economic ideas.

Everything Else - eBay Suspension & Paypal Limited Forums

I'm fascinated by the topic, but I can't wrap my head around all the complicated investor jargon used by the stock traders etc. Let me know if you decide to post about it in detail.