Nearshoring doesn’t come without its challenges for promotional products suppliers, though. Jing Rong, VP of global supply chain and compliance at HPG Brands, says that the infrastructure in countries like Mexico and many in Africa isn’t quite there yet. But it’s coming, she hopes. “I think the promotional products industry will follow retail,” Rong says. “As retailers like Walmart and Target build the infrastructure in other countries, we can hopefully take advantage of that.” Working with other countries might be ideal for smaller orders or orders with long timelines. But Zhang says that most of the promotional products industry operates on such short timelines that buying from China is often the only option. “We’ve gone through many headaches and hassles trying to work with countries outside of China,” he says. “Our final conclusion is that if we have a tight schedule, China is still the best option. They deliver fast and they’re more established than other countries in the South Pacific. I’m not praising China, but it’s hard to beat China’s speed.” Confronting Ethical Conflicts Doing business inChinameans promotional products companiesmust alsomake careful ethical decisions. Theymay unintentionally participate in the Chinese government’s alleged crimes against humanity, specifically involving theUyghurMuslims. Since 2016, the Chinese government has detained an estimated 1.5millionmembers of theMuslimethnicminority in what have been described as prison camps, reportedly separating children fromparents, destroyingmosques and subjecting people to forced labor. To combat these atrocities, President Biden signed the Uyghur Forced Labor Prevention Act into law in December 2021. The new law seeks to ensure that American companies do not buy goods fromChina’s Xinjiang Uyghur Autonomous Region, and therefore do not fund forced labor in the region. HPG Brands’ Rong worries about how the law will be enforced. “For a product like a t-shirt, you have to look at so many layers, beginning with the cotton that is picked from field and then the cutter, the spinner and the sewer. It’s going to be hard to enforce,” Rong says. “Almost all cotton from Asia comes from China. If someone is buying a cotton-type material from Vietnam or Cambodia, it’s most likely coming from China. If companies are honest with themselves, they’ll say any cotton from China needs to be sourced from somewhere else.” Promotional products buyers—especially Fortune 100 and Fortune 500 companies—are looking for that accountability, according to Kevin Walsh, president of Showdown Displays and a PPAI board member. “They want to know where all the components of their products are coming from,” he says. “Being able to account for that in the entirety will become increasingly important. If you don’t have great partners in China, it’s difficult to know where all the items are coming from.” Walsh is hopeful that the act will motivate companies to look for manufacturers and supplier partners in countries such as Mexico, or across Europe and Africa. “The default to go to China as a solution is in question. Businesses are increasingly looking at alternative sources as a way to diversify and rely less on China,” he says. Promotional products companies don’t have to figure it out on their own. PPAI has followed this issue for years and offers guidance for tracking where goods, including components and raw materials, are manufactured. Visit PPAI.org/ Corporate-Responsibility for resources. Another ethical concern involves China’s alliance with Russia. In March, China pledged about $790,000 in humanitarian aid to Ukraine, Will An Aging Demographic Slow Down China’s Workforce? Can China continue to be seen as the speediest country for manufacturing? There’s no doubt that the country has infrastructure that most competitors cannot match, but the biggest factor in its speed is China’s massive workforce aiding in logistics. But that dynamic may be temporary. In 2021, people ages 60 and older made up nearly one-fifth of the Chinese population. That is a demographic that is either already out of or soon to be exiting the workforce. The reality is that this was likely a long time coming. Population boomed so rapidly in China during the 1960s and 1970s that there were national food and housing shortages. From 1980 through just last summer, the government imposed limits on how many children a family could have. Population growth slowed gradually, and recently, economic conditions have resulted in many couples voluntarily having no more than one child. China’s 2020 census revealed the slowest population growth since the 1950s. The Washington Post reported that by 2030 one-fourth of the Chinese population will be over 60. By 2040, the United Nations believes the country will have lost 10% of its current workers as they age out. simplyvectors / Shutterstock.com FEATURE | China 66 | MAY 2022 |
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