Buyers gain upper hand with Chinese exporters

The prices of China-made goods are falling again as bargaining power shifts back to overseas buyers, according to executives at Li & Fung, the world's largest trade sourcing company.

A deflationary price trend has re-established itself after 3½ years of steady increases in the so-called “China price” – a once unbeatable benchmark for global manufacturers – and coincides with double-digit falls in the country's exports during recent months.

The value of China's exports fell 25.7 per cent year on year in February, beating a 17.5 per cent decline in January.

Hong Kong-based Li & Fung, whose revenue reached HK$110.7bn ($14.2bn) last year, said export prices for Chinese manufactured goods began to fall in the second half but stayed flat for all of 2008.

“This year prices are falling considerably and I expect that to continue for the full year,” said Bruce Rockowitz, president of Li & Fung's trading arm. He added that prices were down “at least 5 to 10 per cent” compared with 2008.