Higher raw material prices and labor shortages are forcing more factories in China to slow production, stoking fears of inflation
, the pain is so severe at some manufacturers that they are finding it hard to raise prices enough to make up the difference. Others don’t want to risk losing business to competitors. Many are now looking for other solutions to avoid losing money.
Zhongshan Xiliwang Electrical Appliances Co., a kitchen ventilator producer based in southern China, told clients in mid-May that it would stop accepting new orders temporarily and urged customers to wait for two weeks before negotiating prices, given their volatility. The company has been operating at a loss since April, in part because of a substantial increase in prices for metals, glasses and switches, it said in its notice to buyers.
Xing Jialiang, the owner of a glass factory in Zhongshan, says his company is also running out of good options. It has raised prices by about 5% so far this year, but that hasn’t been enough to keep up with a 10% increase in costs, he said. Costs were pushed higher in part because Chinese authorities shut down or limited production at some high-polluting plants, Mr. Xing said, including those in glass manufacturing, which is energy-intensive and emits large amounts of carbon dioxide.
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