importance of secure data handling practices in the industry. • One distributor respondent said: “One of the most pressing concerns for our business is the evolving landscape of cybersecurity regulations. With the increasing number of data breaches and cyber threats, we are closely monitoring new laws that may require us to implement additional security measures to protect our customers’ data.” Operational Impact The impact of these regulations goes beyond theoretical concerns. Many of these laws have already begun to reshape business operations in meaningful ways (see Figure 3): • 13.3% of distributors and 23.3% of suppliers report that regulatory updates “significantly affect” their operations, while 42.6% of distributors and 43.3% of suppliers say they are “moderately affected.” For some, these impacts translate to increased compliance costs, operational inefficiencies or even shifts in business strategy and hiring to meet new standards. “We have taken and continue to take steps to monitor industry trends, building a regulatory compliance team, collaborating cross-functionally, leveraging expert networks provided by PPAI and investing in sustainable products and ethical practices,” says Kotia. At the product level, some suppliers have had to adjust their product formulations due to state-level bans on “forever chemicals” like PFAS, while companies reliant on imports from China expect tariffs that will directly affect their bottom lines. • One distributor respondent said: “International trade policies, including tariffs and trade agreements, are critical for our business, especially since we rely on a global supply chain. Any disruptions in trade could lead to increased costs or limited access to certain markets.” Ryan Paules, chief swag officer of Los Angeles-based Radar Promotions, says he understands the goal behind any administration’s use of tariffs, but history has shown that this always results in higher costs and prices. “As a distributor, we rely on our supplier partners to keep up on the tariffs, as they are almost always the importer of record on the raw/blank products they are sourcing. This largely insulates us from the administrative burden of this issue,” he says, “but make no mistake, tariffs are passed onto the price of the product just like any other variable cost of doing business, whether it’s raw materials, labor costs or governmental fees.” Industry Readiness The industry’s preparedness to meet these challenges is mixed: FIGURE 4: How prepared is your company to adapt to future regulatory changes in the promotional products industry by tracking and anticipating updates? Distributors Suppliers Very prepared 22.3% 43.3% Somewhat prepared 43.1% 36.7% Not very prepared 30.9% 20.0% Not prepared at all 3.7% 0% FIGURE 3: To what extent do regulatory updates affect your business operations in the average year? Distributors Suppliers Do not affect operations 2.7% 6.7% Slightly affect operations 41.5% 26.7% Moderately affect operations 42.6% 43.3% Significantly affect operations 13.3% 23.3% “We have taken and continue to take steps to monitor industry trends, building a regulatory compliance team, collaborating crossfunctionally, leveraging expert networks provided by PPAI and investing in sustainable products and ethical practices,” Heidi Koch, Senior product manager for Cap America Take Action Legislation and Compliance | Must Read PPAI • JANUARY 2025 • 33
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