Challenges
While demand may be rising, the industry continues to face a myriad of issues that contribute to some uncertainties. The labor shortage continues to cripple factories, slowing production time by about one-third. Already, several businesses are rejecting orders due to limited capacity and cost problems. The 25 percent jump in workers’ wages complicates the situation further as it pads manufacturing expenses. Another dilemma is the rise in raw material spending. Rates have increased between 10 and 30 percent in the past six months, a trend projected to continue for the rest of the year. As such, many makers are enlarging the scale of operations to lower outlay. Zhejiang Jinbang, for instance, is expanding its factory, improving storage to lessen spoilage and installing automatic plastic-injection machines. The supplier expects these measures to raise monthly yield by 100 percent. Shanghai Double Happiness, meanwhile, has developed new equipment intended to improve packaging speed. At Wuxi Xinfda International Corp., the manufacturing processes are closely set up to shorten transport time and hasten the flow of materials and parts. With regard to rising costs, most enterprises intend to shoulder half of the increase. This is because final prices have already jumped by 5 to 15 percent in the past six months. Raw materials are chiefly sourced from nearby domestic providers. Wuxi Xinfda purchases rubber in Hainan and Yunan provinces. Zhejiang Jinbang procures wood from Guangxi province. PU wheels are from Shandong province, where products are noted for their airless and rigid constructions. Some, including Shanghai Double Happiness, buy imported wood and rubber such as those from Sri Lanka. To increase sales and remain competitive, many companies are developing OBM business by participating in trade shows in China and abroad. To boost brand awareness, others are supporting and sponsoring various sporting events. The EU and the US are the top shipping destinations. The latter, together with South America and Australia, absorb the bulk of shipments of water sports equipment. Products for racket sports go mainly to Southeast Asia and the domestic market.
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