Instead of reaping the benefits of their emerging domestic market the Chinese fishing tackle manufacturers are now facing a prolonged and deep worldwide recession that is shaking their base and damaging their outlook for the future.
I have always believed that one point of growth in European GDP created 10 points of growth for the fishing tackle market. With a negative 2% growth in Europe in 2009 it is not surprising to hear that sales of fishing tackle fell in the order of 30% or more in some European countries, a fact that has brought dismay to the manufacturing industry and is still not showing any real signs of long term recovery.
It has to be said that the European market has been fragile for many years; the problems are not only due to the current financial crisis. The current slowdown in consuming added to a dramatic tightening in credit and overdraft facilities by the banks would however seem to be the “coup de gràce” to a struggling industry for which the problems run much deeper.
Europe, like other older western economies has been sick for many years now. The never ending increase in government taxation, an aging population and excessive labor regulations have not mixed successfully with free circulation, globalization and the emergence of new and powerful production points such as China and India.
The European Fishing Tackle market is presently so complicated; cash flow is so hard to find that European buyers are running stocks at lowest possible levels and requesting fast development, quick delivery, small quantities and competitive prices.
If I am to judge by this show and my current experience, Chinese fishing tackle manufacturers can develop quite quickly but only if good volume is to follow. Their delivery performance is poor and prices are currently under strong inflationary pressure due to shortages of labor, commodity costs and domestic inflation.
There is therefore plenty more to be done by China’s manufacturers to reach the current demands of the importers.
If it is true that the cost of fishing tackle has decreased heavily over the last 15 years and that the consumer markets should allow for some inflation in the prices. Competitiveness between the brands may on the other hand not allow for this.
The ability of the Chinese factories to obtain sufficient and timely laborers and the stability of their skilled workforce will determine the role China can play as a future source for the trade.
Even if the manufacturing and sub-contractor channels are strong and efficient, steady delivery performance will be a key in the future choice of sources for our labor intensive industry.
Chinese manufacturers had better rapidly solve their labor shortage problems while maintaining productivity through technical improvement and capital investment.
If they don’t achieve this in a near future, they are at risk of seeing their main clients shift to new and cheaper sources in neighboring developing countries.
There are already indicators of this trend: A number of major international brands have already cut down on their production workforce in China, in order to, and I quote: “better adapt to the fluctuation of demand”. Some World-leading brands have built large and modern units in other countries in south-east Asia.
National manufacturers should therefore be careful not to become overly satisfied with current success, especially in the domestic market as tomorrow may bring major new challenges to China as a fishing tackle manufacturing source.