to our prices to maintain our quality. But we’ve been able to absorb much of the cost increase internally, which gives us an advantage over other casual clothing brands.
Yu Kai, marketing director for Bai- hui, a subsidiary of PC Stars focused on cloud computing development with about 50 employees
As a software company, our raw materials are mostly intangible. Our direct costs are mostly for buying servers and providing the necessary bandwidth for our service, and these costs haven’t grown much. We haven’t needed to increase prices yet, and we’ve actually seen a dramatic increase in sales during the past few months. Costs are growing for almost every industry, and companies are balancing their spend- ing with less expensive information sys- tems. Tis makes the advantages of cloud computing more obvious – companies can use it when they need it, pay flexibly and save on procurement, software setup and IT. So we see continuing increases in input prices as more of a market opportu- nity than a threat.
“We see continuing increases in input prices as more of a market opportunity than a threat”
YU KAI, MARKETING DIRECTOR, BAIHUI
A sales manager at Nanjiren Tex- tile Development, a Shanghai- based company with more than 100 employees
Te cost of our main materials, like span- dex, polyester and acrylic, has gone up about 50-60%, while the price of cot- ton yarn has jumped 80%. We have to pass some of that on to consumers. We’ve increased our prices around 25% from last year and all of our competitors have raised prices by a similar amount. Of course this has had some impact on
our business, but nothing too serious. We’ve limited the impact both through our sales policies, like offering promo- tions and activities, and management, by controlling costs and increasing quality. Te rising price of goods has reduced company earnings, but at the same time employees are demanding higher sala- ries. Tis is a contradiction that can’t be reconciled.
Alice, an assistant at a leading buf- fet restaurant chain with roughly 4,500 employees
Our materials range from dairy, poultry and fish to fruit, and the prices for some of these products have increased lately. However, we have long-term fixed price contracts with our suppliers, so their sales price has not increased. Prices are actu- ally a bit lower now and business is slower compared with the peak Spring Festival season, but that’s quite normal for our industry. We have no immediate plan to raise prices. As far as I know, none of our competitors have increased prices yet either. But if PPI continues to rise, our operations will definitely be impacted.
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China Economic Review • May 2011
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