Global Sources' China Sourcing Report: Bags & Footwear also shows prices rising due to higher costs

HONG KONG, May 22, 2012 – China suppliers of bags and footwear are relying on diverse business strategies to cope with threats to competitiveness in a slow market.

This is according to Global Sources' (NASDAQ: GSOL) China Sourcing Report: Bags & Footwear (http://www.chinasourcingreports.com/bagsfootwear). The Report covers the major products in China's bags industry, namely fashion, travel, business and special-purpose bags. The footwear industry is represented by slippers and flip-flops, and casual, sports, work, safety and occupational shoes and boots.

"These are difficult times for China's bags and footwear suppliers. Higher costs are a fierce challenge to margins and economic downturns in North America and Europe continue to depress demand. Survival plans addressing these issues are therefore multipronged," said Publisher of the Report, Livia Yip. "Besides enforcing cost-cutting measures, China suppliers of bags and footwear are enhancing products and cultivating new markets to attract more orders and maintain revenue."

The Reportindicates that many manufacturers are moving up the value chain to justify rising prices and secure better margins. This is especially true for footwear suppliers. They are elevating the output of genuine leather pairs, partly because staying with low-end models risks trade barriers from certain countries.

Meanwhile, China's bag suppliers are launching sophisticated models with emphasis on greater visual appeal and special textures to generate more orders.

With orders from Western markets still sagging, efforts to prop up both footwear and bag sales also involve targeting alternative destinations such as South America and Africa.

Suppliers secure revenue, higher prices inevitable

China Sourcing Report: Bags & Footwear shows heavy spending weighing down on prices. In the past 12 months, companies have seen pig- and sheepskin costs surge by 80 percent and 50 percent, respectively. Labor expenditure has shot up 20 percent, making production even more expensive. Smaller orders from buyers in critical markets are exacerbating difficulties as low output makes it tough for suppliers to achieve economies of scale.

Consequently, 80 percent of companies surveyed said they plan to raise prices in the coming six months to offset increased outlay and keep profit margins reasonable. Only 6 percent of manufacturers said they can reduce quotes to gain a competitive edge.

To help minimize price increases in the long term, suppliers aim to whittle down overall expenditure. Cost-saving efforts include paying for materials outright to get lower rates from providers, and boosting production efficiency through intensified employee training. Negotiating with customers to set specific delivery dates that allow exchange rate adjustments to be factored into prices is an option as well. Some exporters are relocating part of their production to provinces such as Anhui, Henan and Sichuan where operational costs are lower and labor is more easily accessible.

Other industry trends indicated by China Sourcing Report: Bags & Footwear include:

70% of suppliers expect higher export sales in 2012 despite hurdles

47% of manufacturers plan to raise capital expenditure to sharpen competitiveness

Many suppliers list stricter overseas standards and the yuan-USD exchange rate as challenges

Supplier profiles, price forecasts, and the latest bags and footwear for export

The 115-page China Sourcing Report: Bags & Footwear provides detailed profiles of 51 suppliers with verified manufacturing and export credentials, plus contact details of 25 more suppliers. It also includes a Product Gallery featuring 135 of the most popular export models, with key specifications and full-color pictures.

The Report's survey, price trends and supply forecasts aim to help buyers make better-informed purchasing decisions.

Specialized Global Sources websites, face-to-face events, trade magazines and research reports

China Sourcing Reports are part of Global Sources' sourcing and product information services. These include Global Sources Online (http://www.globalsources.com), China Sourcing Fairs (http://www.chinasourcingfair.com), Online Sourcing Fairs (http://www.onlinesourcingfair.com), Private Sourcing Events (http://www.PrivateSourcingEvents.com) and Global Sources monthly magazines (http://www.globalsources.com/SITE/MAGAZINES.HTM).

For more information about Global Sources' products and services that connect quality buyers with verified suppliers, please visithttp://www.corporate.globalsources.com.

China Sourcing Report: Bags & Footwear is available for purchase at http://www.chinasourcingreports.com/bagsfootwear.

Free information about China suppliers of bags and footwear can be found at http://www.chinasuppliers.globalsources.com/china-suppliers/Female-Fashion.htm.

About Global Sources

Global Sources is a leading business-to-business media company and a primary facilitator of trade with Greater China.

The core business facilitates trade between Asia and the world using English-language media such as online marketplaces (http://www.globalsources.com), print and digital magazines, sourcing research reports, private sourcing events, trade shows, and online sourcing fairs.

Over 1.18 million international buyers, including 90 of the world's top 100 retailers, use these services to obtain product and company information to help them source more profitably from overseas supply markets. These services also provide suppliers with integrated marketing solutions to build corporate image, generate sales leads and win orders from buyers in more than 240 countries and territories.

Global Sources' other businesses provides Chinese-language media to companies selling to and within Greater China. These services include online web sites, print and digital magazines, seminars and trade shows. In mainland China, Global Sources has a network of more than 30 office locations and a community of over 4 million registered online users and magazine readers of its Chinese-language media.

Now in its fifth decade, Global Sources has been publicly listed on the NASDAQ since 2000.