sixtwentysix

House Votes to Ban Xinjiang Cotton

If the bill becomes law, it could affect supply chains, drive up cotton prices and influence apparel trends. Those developments would impact the promotional products industry, experts say.

Concerned over reports of forced labor, the U.S. House of Representatives has passed a bill that would ban the import of all cotton from the northwestern China province of Xinjiang – a move that could have a dramatic effect on apparel supply chains, potentially including those in the promotional products industry.

The House, which approved the bill in a 406 to 3 vote on Tuesday, Sept. 22, is now sending the legislation to the Senate for consideration. The Senate would have to approve before it could become law.

Xinjiang makes about 85% of China’s cotton. China produces about 20% of the entire world’s cotton supply.  “About one in five garments flowing into the U.S. contains Xinjiang cotton. It would be a challenge to identify any major apparel brand or retailer whose supply chain doesn’t run through Xinjiang,” Scott Nova of the Worker Rights Consortium, a nonprofit labor rights organization that monitors global supply chains for abuse, told NBC News.

Rep. Jim McGovern, a Democrat from Massachusetts, introduced the Xinjiang cotton ban bill. He was motivated by various investigations that indicate more than 1 million ethnic Uighur people from Xinjiang are being held in internment camps where they’re forced to work in factories and on cotton farms against their will. At the camps, authorities make the primarily Muslim Uighurs study Marxism and renounce their religion, NBC reported.

Governmental authorities in China call the alleged internment centers “re-education camps” and assert that they provide vocational training, lead to employment and help fight extremism. There is no forced labor, Beijing officials say.   McGovern – and others in the House that voted for his bill – don’t buy that line. “It is time for Congress to act,” McGovern said during a debate on the bill. “We found that the evidence of systematic and widespread forced labor in Xinjiang is astounding and irrefutable — and includes evidence from camp detainees, satellite imagery of factories being built at internment camps, and public and leaked Chinese government documents.”

Stephen Lamar, president of the American Apparel and Footwear Association, last week told U.S. lawmakers that a blanket ban on cotton or other products from Xinjiang would “wreak havoc” on supply chains. He said an all-out ban on Xinjiang cotton and/or other products from the province would be impossible to enforce.

Lamar’s comments to the House’s Ways and Means trade subcommittee came on Sept. 17, a few days after the U.S. Department of Homeland Security’s (DHS) Customs and Border Protection (CBP) issued Withhold Release Orders (WRO) on apparel, cotton, hair products, computer parts and other items produced by particular companies in Xinjiang.

“Such a WRO or legislation would no doubt make headlines, but they would wreak havoc on human rights, economic development and legitimate supply chains, themselves already battered by COVID-19 all over the world,” Lamar said. “As a country, we simply do not have the capability or capacity to implement or comply with or enforce a blanket WRO or the proposed legislation right now.”

Eric Simsolo, director of business development at Gardena, CA-based Top 40 supplier Next Level Apparel, said that if the Xinjiang cotton ban becomes law it could trigger cotton price increases and propel a shift toward more synthetic fibers in apparel. Both of those developments would impact the promo products industry.  “Between India and China, you have 47% of the world’s cotton supply,” Simsolo told Counselor. “If one were to be limited, or turned off, you would have a large supply issue for the world’s cotton commodity exchange. Long story short, prices will go up. The vendors that are smart about how they source and have the least impact on their COGS will be able to survive the price wars. This increase in cotton will directly affect cotton and cotton-blends. If prices go high enough, we could see the demand for and usage of synthetic fibers like polyester, nylon and modal go up.”

Simsolo also thinks a cotton ban – or even just the discussion around it – could compel more promo industry apparel companies to intensify their corporate social responsibility efforts (CSR). He noted that Next Level has a robust CSR program and that its supply chain is not exposed to human rights issues. “The Fair Labor Association has had their eye on the Xinjiang region for some time now,” Simsolo told Counselor. “In some ways, this proposed ban is catching up to the rhetoric that companies with serious CSR’s have been watching.”

Avenel, NJ-based Vantage Apparel s one of those companies with a serious CSR focus. The Top 40 supplier already maintains a strict corporate code of conduct that includes annual factory audits. As news about forced labor in Xinjiang has spread, Vantage “immediately reviewed our supply chain mapping chart to reconfirm that no raw material supplies were coming in from that region,” Gina Barreca, Vantage’s director of marketing, told Counselor. “We also reached out to our manufacturing partners and all of our factories have submitted an undertaking confirming there is no forced labor of any kind, especially from the Xinjiang region.”

Top 40 supplier alphabroder has been diligent about avoiding Xinjiang. The Trevose, PA-based supplier conducts traceability and transparency assessments of its manufacturers’ supply chains to evaluate fabric and component origin in its private brands — North End, Devon & Jones, Ultra Club, Harriton, CORE365 and TEAM 365.

“Based on the assessment, we determined that no items used in the manufacturing of alphabroder private brand apparel styles is from the Xinjiang region,” Andrea Lara Routzahn, alphabroder’s senior vice president of portfolio and supplier management, told Counselor. “We will remain vigilant to ensure that we do not knowingly purchase any components for our goods that originate from the Xinjiang region of China.”

Chinese authorities have said that U.S. legislative action aimed at Xinjiang has nothing to do with human rights.  “Lately, China has shown with facts and numbers that issues relating to Xinjiang are by no means about human rights, ethnicity or religion, but about counterterrorism and anti-separatism,” said Zhao Lijian, a foreign ministry spokesperson. “What the U.S. truly cares about is never human rights. It is just using human rights as a cover to suppress Chinese companies, undermine stability in Xinjiang and vilify China’s Xinjiang policy.”


Reprinted from Promogram, By Christopher Ruvo

sixtwentysixHouse Votes to Ban Xinjiang Cotton
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Luxury PPE: Hazmat Tuxedos and Louis Vuitton Face Shields

Fashion brands are releasing high-end masks and other personal protective wear.

It seems PPE has gone Hollywood.

At the Emmy Awards, aired Sunday, Sept. 20, trophy presenters were decked out in “tuxedo hazmat suits” to give out some of the awards live during the virtual ceremony. The protective formalwear was designed by Katja Cahill, a top awards show costumer, and Guy Carrington, executive producer of the awards show, according to Los Angeles Magazine. The pair worked with an actual hazmat suit manufacturer to ensure the safety of the winners and presenters, but the team went the extra mile to make the suits “safe and classy” – and inject some fun into an otherwise serious precautionary measure.

The Emmys aren’t the only place that masks and other personal protective equipment have gotten a designer upgrade. Just as the promotional industry pivoted to making cloth masks and transforming them into a sophisticated accessory, so too have high-end fashion designers put their spin on PPE. Louis Vuitton recently announced the creation of the LV Shield, an adjustable photochromatic visor that darkens when exposed to sunlight, trimmed with the brand’s signature monogrammed print. The visor is set for release in late October.

Louis Vuitton plans to offer a high-end face shield.  “When a brand like Louis Vuitton unveils an item like its new face shield, the rest of the industry pays attention,” Elizabeth Paton, a reporter for The New York Times style section told The Guardian. “It’s easy to see why a sleek, design-led face shield is likely to be embraced by high-fashion brands. It is more dramatic in structure and statement than a mask – which will appeal to creative directors who can sense an opportunity.”

Covidisor

The Covidisor is described on its website as an “N95 respirator that protects your entire head without covering it.”

During New York Fashion Week, a style blogger, Michelle Madonna, was spotted wearing a bubble-like face covering called the Covidisor, invented by Nicholas Kosta. The futuristic helmet is powered by an air-purifying respirator and costs $245. Kosta explained to Vanity Fair the fashion-related benefits of his creation: “With masks, people get makeup on them and lipstick on them, and after they take them off, they have to do their makeup again.”

Burberry

Burberry is selling masks, featuring its signature vintage check pattern.

But masks still have their place in the luxury world. Burberry, last month, unveiled a designer face mask featuring its iconic check design, becoming the first major design house to launch a high-end collection of masks commercially. The masks are made from leftover fabric and come in either pale blue or beige. The British brand says profits from the sale of the masks will go to the Burberry Foundation COVID-19 Community Fund.

Celebrities have been flexing their style muscles when it comes to PPE as well. Scout Willis was spotted in a fringed face mask recently, Anne Hathaway donned one sporting a pair of bright-red lips, and Jennifer Lopez showed off a pink, sequined number during a bike ride in Manhattan back in August.

The fact that designers and fashionistas alike are embracing the stylish side of PPE should be welcome news to promo pros offering custom masks and other protective gear. Clearly, there’s a desire in the marketplace for items that make a statement, in addition to helping to curb the spread of the coronavirus.

Reprinted from ASI Central News – Web Exclusive

sixtwentysixLuxury PPE: Hazmat Tuxedos and Louis Vuitton Face Shields
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A Gift Still Worth Giving

The end of this year may be unlike anything we’ve seen before, but don’t give in! It’s more important than ever to show employees and customers that they’re appreciated.

Year-end celebrations are meant to commemorate all the good times and successes of the past year. But clearly no one’s in a mood to celebrate all that’s happened in 2020. “We’re traumatized,” says a chief strategy officer for marketing, sourcing and compliance at a Top 40 distributor in Los Angeles. “We’ve been through a lot. We haven’t been connected, we haven’t been together.”

The fourth-quarter gifting season has always been promo’s time to shine. Distributors and suppliers could count on the rush of end-of-year orders to lock in a successful, profitable year. This year? There’s only uncertainty. Of course, there’s the looming specter of prolonged shutdowns that have crippled business for months.

But what will those year-end celebrations look like – if there are any at all? Without in-person events, how will companies recognize and show their appreciation to hardworking employees and customers who weathered There are ways to do it, say distributors and suppliers, and it’s important that gifting and recognition still take place, especially this year. Yes, customers’ budgets have been slashed, so distributors will need to tap into their creativity, sourcing connections and long-term relationships with suppliers to help end-buyers find solutions challenging situations this year and stuck by them? Promo can help companies connect their employees and prepare for 2021

Two Little Words: ‘Thank You’

With health and business challenges and slim budgets, who feels like celebrating? While it’s sure to be scaled back and more conservative than previous years, gift-giving this year will play a critical role in acknowledging, recognizing and thanking people. If 2020 taught us one thing, it’s that we’re more than employees or clients; we’re people, with real human concerns. A little gift to say thank you goes a long way.

A director of national accounts at a Top 40 distributor in Sterling, IL is starting to help clients with appreciation gifts for their employees. “They worked through the pandemic, took pay cuts and went on furlough, while staying loyal and often doing things outside their job description to help keep the business going,” he says. “Recognition and retention will be big topics this year.”

In years past, high-end awards for star employees and donors dominated the Q4 gift scene. This year, without in-person events, recognition and thank-you gifts will be smaller and more utilitarian, much of it drop-shipped to private homes as custom kits or “parties in a box.”

“Trophies are really for recognition in front of peers,” says Rena Ashfeld, vice president of sales at Webb Company, Eagan, MN. “We’re not going to see ceremonies, cocktail parties or dinners, but people will appreciate high-value, useful items at many different price points.”

It’s definitely going to be a different feel from past fourth quarters. But it’s also an opportunity for end-buyers to comfort their recipients and let them know they’re there for them and appreciate their hard work.

“We’re going to need the human dynamic,” says Greg Armstrong, vice president of sales at Evans Manufacturing in Garden Grove, CA. “Gifts need to be impactful, thoughtful and utilitarian, with high perceived value. Don’t give out something like clocks that will just sit on a mantle, and recognize that companies might not be able to afford name-brand wireless speakers for everyone.”

Marketing budgets may be slashed significantly, but it’s up to distributors to make sure clients know how important it is to reach out to their employees and customers with gifts that can serve them at this difficult time. “We’re not going to have parties, but it’s still very important that companies send out something to their people,” says Abergel. “Promo connects people.”

No Place Like Home

As reopening plans were made, implemented and then rolled back in some states this summer, people slowly realized that a return to normalcy was going to take a long time. For many, homes were their safe havens in the midst of the storm.

While $100 trophies and name-brand wireless speakers may be off the table this year, companies can still show appreciation with gifts for home use, usually at affordable price points. “We’re now working, playing and overall living at home more,” says a distributor in Maple, ON. “It’s up to distributors to present unique ideas that might not have been typical options in the past but are totally relevant now.”

Despite fears of slashed marketing budgets, food gift supplier Maple Ridge Farms in Mosinee, WI, is up 50% year-over-year, because of remote work, a lack of dining out and a few smaller reopening celebrations. President Tom Riordan says they’re fulfilling more orders for cheese and sausage packages than he can ever remember. He expects dining in and family sharing of food gifts to remain popular through the fourth quarter, and smaller items will be used as teasers for virtual parties and year-end meetings.

“Almost all of our customers think their Q4 business from 2019 will repeat,” says Riordan, anticipating repeat business this holiday season but with smaller orders. “Over the past 10 years, there’s been a shift from sending items to residences to sending them to offices for workers to share. That will flip big time this year.”

Now, people want a change of scenery after months of stay-at-home orders, but aren’t yet ready to board flights. That means more road trip and camping items will soon be in demand. “People want to be safe, but they want to get out of the house,” says Abergel. “Items won’t be at the same price points as previous years, but we’ll take the same care with it.”

Another option: “Experience” gift bundles that give recipients a taste of a destination without having to leave the couch. Was a client’s incentive trip to Puerto Rico canceled this year? Put together a kitted box with personal care items, fun sunglasses, barware, towel and tote. It’s not the same as actually going, but it’ll get attendees pumped for the 2021 event.

Think home exercise apparel and equipment and cooking accessories, for starters. Starline in Grand Island, NY has a wide array of kitchen tools, such as bowls, tongs, spatulas, serving spoons and bamboo cutting boards. “This is the year of cooking and dining in,” says Brian Porter, Starline’s senior vice president of sales and marketing. “We’ve seen steady order increases week-over-week.” He says other “universal use” items, like tech accessories, are great for sharing with significant others and kids.

Workers Near & Far

When employees were first told to go home and set up shop in their dining rooms, no one knew exactly how long it would be before seeing their co-workers in person again. Now, it seems it might not be before the end of the year, and maybe not until Q1 2021. That means employees will continue to need work-from-home items, even if they’re on newly implemented flexible home/office schedules.

Sheng Kuo, principal at KLM Promo Products in West Covina, CA, says good quality branded headsets would be appreciated for virtual meetings, especially if the ones recipients have been using look worse for wear after more than six months of near-daily use. He says companies are also looking for desk items like wireless device chargers with UV sterilizing cases.

For those venturing out of the house more often as restrictions lift, consider stylus pens for transaction screens and ATMs, no-touch tools and bag holders to avoid contact with floors.

Ahead of virtual year-end events, companies can distribute gifts to employees in the office and drop-ship them to those still working remotely. “It adds a personal touch and promotes team spirit,” says Kuo.

For companies with a little more to spend, custom sales specialist Eleanor Turner of Cufflinks Inc. (asi/47838) says cufflinks, ties and scarves are ideal for virtual holiday parties and then as permanent wardrobe pieces for virtual sales calls. “All of our items are used from the waist up,” she says. “There’s a novelty to them and they’re personal items the team can use. They bring comfort and remind everyone that we’re all in this together.”

Meanwhile, welcoming back employees to shared workspaces is slowly starting and is expected to continue ramping up for the rest of 2020 and into 2021. Q4 gifts can help prepare everyone for the transition.

Webb Company has been doing more kitting than ever before. “Kitting is our go-to moving forward,” says Ashfeld. “It’s interactive and tangible.” The supplier is putting together bundles of PPE and promo customized to each client’s needs. “We’re including no-touch keys and drinkware,” she says. “We’re also combining tech accessories with personal care products like lip balm and sanitizer. We’ve made things easier by offering a black gift box with an in-house printed label. It’s got a subscription box feel and it makes people happy. And then we can drop-ship to homes.”

Clients can also help returning employees maintain a healthy distance by giving them personalized items, which not only adds an appreciated touch to the piece, but also mitigates accidental sharing.

Personalization is normally used with about 10% of orders at Starline, says Porter. It’s now about 50%. “They’re looking for personalized coolers in particular,” says Porter. “Employees won’t be able to commune in breakrooms, so this helps avoid gathering and use of the fridge. Then they can still bring their lunch and eat healthy because they’re not going to the fast food place down the street. Plus, with temperature checks at the door, leaving for lunch and coming back will be a pain.”

An appreciation gift will have even more impact this year if there’s a built-in health and safety aspect. “We can help people feel safe coming back to work,” says Silseth. “Whether it’s PPE or showing them how valuable their role is, there are opportunities we can propose to clients to help them with comforting their people.”

Q4 Challenges Compounded

With a flurry of orders and clients coming to distributors late in the game, the fourth quarter is traditionally a trying one, particularly when it comes to inventory levels. This year, the quarter will have its own unique challenges.

To start, many end-buyers will have a hybrid of in-office and remote gift recipients. To meet demand, promo companies will have to be nimble to offer clients the smoothest gift experience possible. Drop-shipping, for example, is a must-have this year. “Say a company has 600 remote workers,” says Armstrong. “How do you get gifts to them? They can’t all stop by on December 23 to pick them up. That would be chaotic, so you deliver them to people’s doorsteps.”

Many factories are now offering extended services in drop-shipping, kitting, warehousing and curbside pick-up. “We’ve always offered these things, but it was mostly for our larger national clients,” says President & CEO Sam Singh. “Now, everyone needs them. In Q4, we’ll be ramping them up to offer a frictionless experience.”

Keep lead-times in mind as well. This year, the persistent problem of COVID-related supply chain disruption complicates an already busy gift season known for fluctuating inventory levels. Riordan at Maple Ridge Farms said they had to expedite a few meat orders because of facility closing concerns, and lead-times on gift towers lengthened considerably recently after the cardboard supplier was shut down for several weeks. “Disruption could also spike prices, sometimes between 25% and 30%,” he says. “Clients should be ordering twice as early.”

But arguably, the most daunting challenge will be reduction in client budgets. End-buyers say they just don’t have the money to give out gifts this year. Distributors should be sensitive to financial challenges while also offering to help clients get creative with fewer dollars at their disposal.

Singh says two kinds of spend will dominate Q4 sales: Higher-end products for a smaller group of recipients (what he calls a “narrow and deep strategy”), and higher volumes of lower-priced items to get them into more people’s hands and keep their brands top-of-mind. Think pens, ceramic mugs and water bottles, he says. Clients might still be thinking in terms of $100 gifts. Tell them $10 to $15 will still get them something worth giving, says Abergel, even if it’s just drinkware, a blanket or comfy socks with a card or note.

Don’t forget to use available budget from canceled end-of-year parties. “Our national sales meeting isn’t happening,” Porter adds. “The $50-$60 in overhead for each attendee is going to Q4 promo for our people.”

Ashfeld says she’s quoted a variety of gift bundles from $15 net (a vacuum tumbler with candy inside) to $50 net. “I’d say the sweet spot for gifts this year is in the $10 to $30 range, including the products, imprint and packaging,” says Armstrong. “Companies aren’t going to do $50 to $100 a person.”

It’s been an unforgettable year, but for all the wrong reasons. Now, it’s up to distributors and their supplier partners to help clients end the year on a positive note with an affordable token of gratitude. “Showing appreciation is at an all-time premium right now,” says Armstrong. “Companies need to say to their employees and clients: ‘Thank you for enduring and sticking by us.’”

The right gift at the right price not only recognizes employees and clients after a long, difficult year, but also boosts morale for the next. “Gifts will keep everyone connected and ready for 2021,” says Abergel. “We’re all going to have to start building business up again and getting back on track.”


TARGET DEMOGRAPHIC: HOMEBODIES – Stay-at-Home Order
With restaurants and bars either closed, takeout-only or at reduced capacity, 2020 has become the year of cooking at home. Think kitchen items with high perceived value, such as cutting boards, utensils, spatulas, spice racks, and even bowls and strainers. Send an eco-friendly message with items made of sustainable bamboo. And look to food gift suppliers for meat and cheese packages that would pair perfectly with cheese boards, or for sweet items that make for an excellent after-dinner treat for the family.
TARGET DEMOGRAPHIC: HOMEBODIES – A Little R&R
Weekends used to be filled with personal care appointments and trips to the movie theater, but now people are staying close to home and watching streaming services. Movie-themed food gifts will be appreciated among end-users, along with spa items like bath salts, slippers and soft robes. Whether it’s a DIY face mask or movie night with the whole family, soft blankets are an ideal addition for the colder winter months. They can also double as a little extra warmth for the home office. For those planning to have small, distanced get-togethers at home to celebrate the end of 2020, think wine marker sets to help guests avoid accidental sharing.
TARGET DEMOGRAPHIC: VIRTUAL WORKERS – Going and Staying Virtual
We’re not out of the woods yet. Many companies plan to keep employees safe by prohibiting company air travel and asking everyone to continue in their remote setups for the foreseeable future, perhaps even into 2021. That means they’ll need accessories, particularly “waist-up” ones, for virtual meetings and client calls. Consider a custom tie, pocket square and cufflinks as a sophisticated set. They’ll make a nice impression on video calls and will continue to be used when in-person meetings start back up. Custom cufflinks – like these depicting the famous Japanese woodblock print “The Great Wave Off Kanagawa” – would be ideal gifts for patrons who continued supporting museums and endowments this year.
TARGET DEMOGRAPHIC: HYBRID WORKFORCES – Out & About Again
Items that encourage good health practices – whether while running errands or spending time in the workplace again – will be appreciated by recipients in Q4. Consider branded masks and sanitizer bundled with hard goods, and don’t forget no-touch keys for opening doors. Styluses are ideal for transaction terminals, ATMs and gas tanks, and a UV sterilizer case keeps devices clean during the day. Health and safety items say the giver cares about the recipient’s wellbeing, appreciates them and wants them to stay healthy for the long-haul.
TARGET DEMOGRAPHIC: HYBRID WORKFORCES – Sharing (at Home) Is Caring
Even with some workers heading back to the office, the days of sharing food gifts in the conference room are still a long way off. Consider smaller individual edible gifts (like candy bundled with a hard good or PPE) for desks and shipped to remote workers, as well as larger gift towers ideal for drop-shipping, to be taken home and shared with family members. Even if most or all employees are back in the office, close gatherings with shared refreshments still aren’t in the cards yet. Consider including a note with the gift encouraging everyone to take their food home to share in one household.
TARGET DEMOGRAPHIC: VIRTUAL WORKERS – Home Technology
Those continuing virtual work have been putting their devices and tech accessories through their paces since March. Some are most likely starting to wear out with heavy use (especially when shared with the kids). Consider fresh tech accessories that will keep workers connected from their home offices into the new year, like power banks, charging cases, web cam covers, speakers, headsets for video calls and earbuds. This wireless pair comes with a convenient charging case and cable, so users can easily make and take calls, and listen to music or podcasts without bothering roommates and family members.

Reprinted From ASI Central News, By Sara Lavenduski

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Setting the Record Straight on Gaiters

Chris Bernat is willing to stick his neck out for gaiters.

The chief revenue officer of Vapor Apparel (asi/93396) was unhappy with the way the national media was portraying a Duke University study that measured mask efficiency. Researchers used a laser, box and smart phone to measure how many respiratory droplets were able to pass through more than a dozen different types of face coverings. Included in the mix was a neck gaiter that scientists had lying around. The gaiter proved the least effective of the bunch.

Duke researchers were up front in noting that their study was never meant to be a comprehensive test of all face coverings, but rather a demonstration of how easy and inexpensive it would be for manufacturers to set up their own test for respiratory droplets. Still, the tidbit about neck gaiters was what made headlines, spreading quickly across the country. That had an immediate effect on suppliers in the promotional products industry.

Bernat contacted the authors of the study, a reporter at The Washington Post and others who wrote about the viral mask study to explain that not all gaiters are the same. Just as with a mask, Bernat emphasized, much of the effectiveness of a gaiter depends on its construction: How heavy is it? How tight is the weave of the fabric? Is it long enough to be doubled up? Is a person wearing the correct size?

Republished from PROMO INSIDERS 8/20/2020, Interview by  Theresa Hegel, executive editor of digital content at ASI.  Please on the link to listen to the 30 minute podcast.

 

sixtwentysixSetting the Record Straight on Gaiters
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FDA Issues New Warning About Hand Sanitizers

The agency expanded its list of dangerous or ineffective sanitizers to avoid and raised a new alarm about a toxic chemical to look out for in certain sanitizers.  

As reported poisonings from deficient hand sanitizer rise, the U.S. Food and Drug Administration has expanded its list of alleged toxic sanitizers to avoid, raised a new alarm about a chemical to look out for, and warned that some products on the market lack the required germ/virus-killing potency to be effective.

The news is relevant for the promotional products industry. Amid the ongoing coronavirus pandemic, “hand sanitizer” has been the single most searched term through the first seven months of 2020 in ESP, the Advertising Specialty Institute’s database of products from around the promo industry.

The FDA’s list of sanitizers (go here to see the full list) to avoid has now grown to 163 entries. The list includes recent additions like Leafree Instant Sanitizer, which was labeled “edible alcohol.” Distributed by Corgiomed Inc., the sanitizer was made in China by Yangzhou Olande Cosmetic Co. Ltd. Ingesting sanitizer can lead to everything from blindness to death.

Many of the problematic sanitizers on the list were produced at facilities in Mexico. But recently, the FDA also called out sanitizers manufactured in the U.S., including products produced in North Carolina, Ohio, Texas and Utah. On Saturday, SG24 of Bolingbroke, GA, recalled SkinGuard24 – All Day Hand Sanitizer products because they are labeled as containing methanol.

U.S.-made sanitizer that the FDA identified as problematic included: UltraCruz Hand Sanitizing Gel Antimicrobial from Santa Cruz Biotechnology of Texas; Volu-Sol Handrub Sanitizing Solution from Volu-Sol, Inc. in Utah; Always Be Clean Hand Sanitizer and Just Hand Sanitizer Single Use Packs by Open Book Extracts in North Carolina; and Lite ’n Foamy Lemon Blossom Hand Sanitizer and foamyiQ Lemon Blossom Hand Sanitizer from Spartan Chemical Co. Inc. in Ohio.

The FDA is also now cautioning consumers to avoid sanitizers that are labeled to contain ethanol or isopropyl alcohol/isopropanol (which are safe at the correct levels), but have tested positive for 1-propanol, which can be toxic and life-threatening. For example, sanitizer from Harmonic Nature S de RL de MI in Mexico contains 1-propanol, the FDA says.

“Young children who accidentally ingest these products and adolescents and adults who drink these products as an alcohol (ethanol) substitute are most at risk,” according to the FDA. “Ingesting 1-propanol can cause central nervous system depression, which can result in death. Symptoms of 1-propanol exposure can include confusion, decreased consciousness, and slowed pulse and breathing. Animal studies indicate that the central nervous system depressant effects of 1-propanol are 2 to 4 times as potent as alcohol (ethanol).”

Through the third week of July, a CBS report detailed, there had been a 59% spike in calls — more than 18,000 cases — to one of the 55 poison control centers around the U.S. due to various incidents involving hand sanitizer, compared to the same period last year. Almost 12,000 of those cases involved children ages 5 and younger.

Meanwhile, the FDA warned consumers about sanitizers that don’t have a sufficient amount of at least one of two kinds alcohol required to make the product effective. Sanitizer must contain at minimum 60% ethanol or 70% isopropanol (different than 1-propanol) to work and be safe for human use, according to the Centers for Disease Control and Prevention. The FDA identified the below sanitizers as “sub-potent”:

• Alcohol Antiseptic 62% Hand Sanitizer (Quimica Magna de Mexico)
• Bernal (Quimica Magna)
• Datsen (Quimica Magna)
• Derma70 Hand Sanitizer (Asiaticon)
• Clean Humans (DEPQ Internacional)
• CleanCare NoGerm (Precision Analitica Integral)
• Dgreen (DEPQ Internaciona)
• Hand Sanitizer (DEPQ Internacional)
• HF&N (Healthy Food and Nutrition Lab)
• Medically Minded (Asiaticon)
• NeoNatural (Limpo Quimicos)
• OZO (Estrategia Hospitalaria)
• Protz Real Protection Antibacterial (Asiaticon)
• UltraCruz (Santa Cruz Biotechnology, Texas)
• V-KLEAN (Asiaticon)
• Yakana (Grupo Yakana)

Earlier this summer, the FDA told consumers to avoid sanitizer that contains methanol, which can be toxic when absorbed through the skin or ingested. Products may not be labeled as containing methanol, but might still have it. Check the FDA list of suspect sanitizers before making a purchase.

“Consumers who have been exposed to hand sanitizer containing methanol should seek immediate treatment, which is critical for potential reversal of toxic effects of methanol poisoning,” the FDA said in a statement. “Substantial methanol exposure can result in nausea, vomiting, headache, blurred vision, permanent blindness, seizures, coma, permanent damage to the nervous system or death. Although all persons using these products on their hands are at risk, young children who accidently ingest these products and adolescents and adults who drink these products as an alcohol (ethanol) substitute, are most at risk for methanol poisoning.”

Republished from PROMOGRAM 

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Companies Focus on Mask Innovation

Happening at retail and in promo, some manufacturers are aiming to produce masks with enhanced performance features, breathability and comfort, especially as summer takes hold. Still, innovation comes with risks.
Come July, Japanese sports equipment manufacturer Yonex plans to start selling face masks that contain xylitol.

Yonex typically uses the material, which absorbs heat and wicks sweat, in the apparel it produces for the Japanese national badminton team and professional tennis players.

Since Yonex pivoted to selling face masks during the coronavirus pandemic, the company with a 74-year history felt the material could be used to create quick-drying, antimicrobial masks that enable wearers to stay cooler and more comfortable on hot days.

“As people spend more time wearing masks against the coronavirus, we hope our technology will enable users to keep cool during hot weather, even if only a little bit,” a Yonex spokeswoman said, according to The Japan Times.

While the Yonex masks are particularly available in Japan, they highlight what some feel will be a growing trend at retail and in the promotional products marketplace as mask-wearing remains increasingly common amid the continuing COVID-19 threat – namely, that manufacturers are going to innovate, trying to build more performance-enhancing features into face coverings.

“We believe that more innovation is coming in face masks for people to wear while performing work, playing sports and engaging in other activities in warm environments,” said Jeremy Lott, president of Top 40 promotional products supplier SanMar (asi/84863).

Issaquah, WA-based SanMar is already making progress in that regard, Lott said. He noted that the company’s Port Authority Stretch Performance Gaiter (G100) comes in a performance fabric. Most of the masks SanMar makes are cotton, but they’re outfitted with Sciessent’s Agion, an antimicrobial treatment that only activates when it needs to defend against microbes, Lott said.

Meanwhile, Allmade (asi/34341) has already developed a mask innovation. The apparel supplier has created the Allmask Tri-Blend Face Mask. Lightweight and breathable for the summer months and beyond, the mask is a unique blend of 50% Repreve polyester made from recycled plastic; 25% organic cotton, which is U.S.-grown without chemicals; and 25% TENCEL Modal. Each mask consists of an average of one recycled water bottle.

“This tri-blend is a great performance fabric,” Moor said. “The differentiating ingredient we use – Modal – really helps with moisture-wicking and odor.”

In part to demonstrate the mask’s comfort and performance capabilities, Moor recently wore one as part of a Memorial Day-related fitness challenge, which he documented on Instagram.

When it comes to mask innovation, manufacturers need to proceed smartly and ensure they’re complying with standards established by the Food and Drug Administration (FDA), some promo suppliers say. “It’s a risky area,” Chris Blakeslee, president of California-based Bella+Canvas (asi/39590), said of experimenting with fabrics and treatments on masks.

Bella+Canvas is producing about 100 million masks per week now. Most are a cotton/polyester blend that Blakeslee says naturally keeps them cooler and more breathable. The company doesn’t plan to expand beyond that to different treatments and the like, Blakeslee said.

“Many of these treatments, like moisture-wicking chemicals, agents, water repellants and various bio antimicrobials have never been tested for inhalation safety,” said Blakeslee, adding that brands are doing a poor job of adhering to FDA standards regarding masks, such as that all body-contacting materials must be disclosed on the label. “Eventually,” said Blakeslee, “one of them is going to get nailed.”

Back at retail, some companies are definitely pressing forward with mask material and treatment innovations. Mizuno Corp., for instance, is making masks that feature a soft-stretch tricot material that normally would be used in the sportswear/athletic equipment maker’s swimsuits and track and field apparel. Another Japanese firm, knitwear maker Knit Waizu, is producing masks with icepacks, The Japan Times reported.

Such examples indicate that more new developments on mask fabrics and performance could be in the cards. Companies in promo, sporting goods, fashion and other industries have turned to selling personal protective equipment amid the coronavirus pandemic in order to meet rampant demand and help fulfill a public safety need.

 

Original Source: https://www.asicentral.com/news/newsletters/promogram/june-2020/companies-focus-on-mask-innovation/

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COVID-19 Crisis Disrupts Bag Market

Reusable bags are under fire due to concerns over spreading the coronavirus.

After years of increasing legislation banning single-use plastic bags, the “green wave” has crashed due to the COVID-19 crisis, creating a ripple effect throughout the promotional products industry.

States, cities and stores have changed their tune over the past few months, encouraging plastic bags rather than reusable bags because of fears over spreading the coronavirus. Even California, the pacesetter of the anti-plastic movement, has suspended its 4-year-old ban after certain studies have suggested that reusable bags, when not cleaned properly, can become veritable petri dishes for bacteria and the like. In order to better protect their workers and customers, retail, grocery and plastic industry advocates have rallied for plastics to be reinstated at least for the time being.

It’s been a reversal of fortune for promo firms who’ve benefitted from selling branded totes and other reusable bags in recent years. “Our sales have dropped since the pandemic due to the shutdown, and we’ve been hit extra hard because of stores removing reusable bags,” says Andy Keller, founder and CEO of California-based ChicoBag Company (asi/44811). “Raley’s Supermarkets, for example, will not sell new reusable bags as part of this, which has no basis in science or logic.”

Keller points to environmentalists and other ban advocates who’ve called studies linking reusable bags to increased disease spread dubious. They note that reusable bags are not necessarily any more or less contaminated than other surfaces at stores. Keller also argues that the Centers for Disease Control and Prevention (CDC), Occupational Safety and Health Administration (OSHA) and the World Health Organization (WHO) have all given guidance supporting the notion that reusable bags don’t pose a health threat. Although those organizations don’t specify whether the coronavirus is spread through reusable bags, the CDC does state “it may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes.”

Despite trepidation from some clients, Top 40 supplier Bag Makers (asi/37940) is still seeing a demand for reusable nonwoven polypropylene bag styles. “While bag sales have slowed in general due to the economic impact of coronavirus, our customers continue to show interest in reusable bags for promotions and program business,” says Jennifer McFadden, communications director at Bag Makers.

The most popular bags during the pandemic, according to suppliers, have been paper, plastic and insulated bags that support restaurant takeout and delivery orders, as well as home grocery delivery.

“The nonwoven cooler sales spiked exponentially,” says Gary Semrow, owner and vice president of marketing at Illinois-based American Ad Bag (asi/35290). “We also had a large spike in demand for the wider gusseted paper shopping bags for the restaurants to do take-out, causing a tight supply chain. Now that most of the country is opening up, the stress on the supply of wide gusset paper shoppers has lessened.”

Deliveries of all kinds have experienced a surge during the pandemic, as consumers have turned to e-commerce for their goods. “Our poly mailer business is very strong now, as well as any other kind of packaging sold to online marketers,” says Ken Trottere, vice president of New York-based Poly-Pak Industries, Inc. (asi/81350).

Although the pandemic has prevented revenue from reusable bags, ChicoBag has seen a rise in other product categories. “We’ve seen a spike in sales for our bottle sling and travel pack because people are spending a lot more time walking, hiking and getting outdoors,” Keller says.

Original Source: https://www.asicentral.com/news/newsletters/promogram/june-2020/covid-19-crisis-disrupts-bag-market/

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What’s the Deal With Tariffs and Promo?

After months of threats, tweets and negotiations, the United States and China signed a trade deal that marks the first official steps to a resolution in their ongoing trade war. And while the “Phase One” deal (which was signed on Jan. 15) is viewed by promotional products executives as a positive development for the industry, there remain some fundamental challenges that are likely to linger throughout 2020. Here’s a breakdown of where things stand – and where they may be headed.

What are the biggest provisions of the Phase One deal?

— A reduction in tariffs from 15% to 7.5% on $120 billion worth of Chinese imports. “The fact is that tariffs are bad for our industry and a reduction in them is good for us,” said Craig Nadel, president of Top 40 distributor Jack Nadel International (asi/279600).

— Commitments from China to purchase $200 billion in U.S. imports over the next two years.

— Measures to prevent Chinese companies and the nation’s government from coercing American firms into divulging technology and trade secrets as a condition of doing business in China.

What tariffs are in effect?

— Besides the 7.5% on $120 billion worth of Chinese imports, 25% tariffs remain on more than $250 billion of Chinese imports. The 7.5% tariff applies to categories such as apparel (including T-shirts and jackets) as well as pens, while the 25% tariff hits bags, drinkware, chargers and more.

Will more tariffs be scaled down or removed?

— That’s the million-dollar question, and there isn’t a clear answer at this point. President Donald Trump’s administration has said there are no plans to remove or reduce more tariffs before a “Phase Two” deal is reached. Even if a comprehensive new trade agreement is eventually agreed to with China, it’s possible not all tariffs will be lifted, U.S. Treasury Secretary Steven Mnuchin has said.

When will a Phase Two deal be signed?

— According to analysts and experts, most likely not until after this year’s presidential election. Phase Two talks are likely to center on difficult, controversial issues that include Beijing’s government-backed subsidies to Chinese companies. Trump administration officials have indicated that there’s no timeline for the Phase Two deal to wrap up. “It’s unlikely there will be substantial progress or any type of rollback in tariffs before the elections,” said David Nicholson, president of Top 40 supplier Polyconcept North America (PCNA, asi/78897). “President Trump is balancing two competing interests – maintaining a tough stance with China and ensuring the economy keeps growing. I suspect he views the current position as a reasonable compromise of the two.”

Will prices on China-made promo products be reduced because of the tariff rate decrease?

— It’s possible that prices could eventually be scaled back on a limited number of product categories that saw a reduction in the levy rate from 15% to 7.5%. Still, it’s unclear if that will materialize. What’s more, tariffs remain on a broad swath of imported promo products, and suppliers are continuing to grapple with increased costs. As such, in the short term at least, distributors can probably expect some product price increases. Here’s what leading industry executives had to say on the issue:

— “I believe we’ll see price reductions likely some time in the second quarter, after suppliers have worked down their inventory and after Chinese New Year,” said Eddie Blau, CEO of Top 40 supplier Innovation Line (asi/62660).

— Terry McGuire, senior vice president of vendor relations at Top 40 distributor HALO Branded Solutions (asi/356000), said: “The impact of reduced tariffs … should be positive in the lowering of costs for several products. We have tracked pre- and post-tariff costing on most products from our key suppliers. We will be working with them on a timeline to return to pre-tariff costs.”

— “It’s important to remember that the tariffs on a huge range of categories and products are still in place at the original levels,” said Jonathan Isaacson, CEO of Top 40 supplier Gemline (asi/56070). “This will continue to impact a very large number of industries, including promotional products. Given this, there will likely be very few, if any, price rollbacks for our industry.”

— “The Phase One deal does very little to mitigate current tariffs,” said Nicholson. “I suspect there will be little impact as a result. The price increases imposed by suppliers will have to remain in place to cover the continuing tariffs. This will continue to impact budgets and the perceived value of our products, neither of which is positive for industry growth.”

— “We evaluate pricing annually and determine if we will make an increase on Jan. 1,” said Melissa Ralston, chief marketing officer at Top 40 supplier BIC Graphic North America (asi/40480). “This year, we postponed to Feb. 1 to increase prices reflective of the 7.5% tariff rate.”

— The tariff-driven pricing pressures have accelerated a push by both suppliers and even distributors that source directly abroad to move more production out of China. Expect supply chain diversification to continue regardless of what trade arrangements Beijing and Washington D.C. make. “Other promo companies will slowly continue to do what we’ve been doing,” said Joshua White, general counsel and senior vice president of strategic partnerships at Top 40 distributor BAMKO (asi/131431). “They’ll diversify their supply chains and expand their product sourcing footprint out of China to places like Vietnam, India and Bangladesh.”

Beyond a tariff rate reduction, what other positives emerged for promo from the Phase One Deal?

— The deal meant that additional 15% tariffs on approximately $160 billion of Chinese imports (that were supposed to be instituted on Dec. 15) were never actuated. There’s currently no plan to institute those levies. Had those duties gone into effect, the promo industry would likely be looking at even more price hikes.

— The deal signaled that tensions between the U.S. and China appear to be decreasing. That could create more market certainty. End-buyers could feel less impact from (and less worry over) the trade war, thereby making them more willing and able to invest in ad specialties. “Any injection of optimism into the marketplace has a positive economic impact, and that positivity should be quickly reflected in industry sales,” McGuire said. Nicholson added: “If the economy can stay on track, business investment, which suffered last year, is likely to pick up. That should indirectly benefit our industry.”

— Normalizing relations between the U.S. and China could ultimately help settle the pricing instability that has affected promo as a result of the trade war. “We have communicated that our expectation is for greater price stability this year given the recent progress in trade talks,” Nicholson said.

— There could be increased opportunities to sell promo to U.S.-based exporters that are benefitting from China’s commitment to purchase $200 billion in U.S. products and services.

Original article published in www.asiacentral.com by Chrisopher Ruvo

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Impact of Coronavirus on Promotional Products

Fears that the 2019 Novel Coronavirus would prevent factories in China from quickly resuming operations following the extended Chinese New Year are becoming an unfortunate reality, promotional products executives say.

Last week, Counselor reported that increased product prices, rising shipping costs, inventory shortages, prolonged supply chain disruption, health concerns and business travel/trade show upheaval are some of the issues the North American promotional products industry is facing or could soon face as a result of the viral outbreak.

A week later, the picture on what the supply chain disruption will look like has become clearer. The image that’s emerging is troubling: Industry executives say that many factories in China remain shuttered. The majority of promo products sold in North America are made in China. “Some factories have opened, but with few workers at this point,” Jeff Lederer, president of Prime Line (asi/79530), Top 40 supplier alphabroder’s (asi/34063) hard goods division, told Counselor.

Reasons for the slow re-opening are manifold. For starters, nearly half of China’s population – some 780 million people – are living under some form of travel restrictions, which the government has enacted to control the spread of Novel Coronavirus (also referred to as Wuhan Coronavirus and COVID-19). The clampdown on traveling is making it difficult for workers to return to factory floors following the Chinese New Year, which authorities had extended by a week to Feb. 10 in an effort to limit the virus’ reach. That holiday extension also ground factory production to a standstill.

Even if workers can get back on the job, some are opting to stay at home, rather than risk venturing out and potentially contracting the virus, which had killed 1,873 people as of late Monday. Five people outside of China had perished; the rest of the fatalities occurred in mainland China.

Chinese factories are also being delayed from getting back into production mode by governmental requirements related to containing the virus. “Each factory has to apply to their local government in order to reopen,” Lederer told Counselor. “In order to do this, they have to provide records and a prevention plan that outlines how they will keep the virus from spreading.”

The factory downtime could trigger disruption that lasts for months, some promo pros said. “We anticipate that many (factories) might resume their regular operations in early March. Others may not reopen until April,” Paul Lage, president of Top 40 supplier IMAGEN Brands, the parent company of Crown (asi/47700) and Vitronic (asi/93990), said in a letter to distributors. “In the meantime, orders for their products are still coming in and they are starting to accumulate some significant backlogs. Therefore, this potential disruption may last until early summer.”

If prolonged, factories’ inability to produce products could lead to inventory shortages for North American promo suppliers. Lage emphasized that IMAGEN beefed up its inventory prior to the Chinese New Year beginning in late January. As such, the supplier doesn’t anticipate inventory issues in the short term. Still, if disruption drags on, product categories IMAGEN carries that could be impacted include drinkware, umbrellas, tech products and some bags.

“We are also looking to sourcing alternatives of these products outside of China,” said Lage. “We do have alternatives for our cotton products and do not see them being impacted at this time. This is an industry issue and all suppliers that source product in China and surrounding countries will be experiencing the same issues.”

Meanwhile, Lederer told Counselor that Prime is in a strong position from an inventory and supply chain position, for the time being. “We have a significant amount of inventory in our four warehouses and decoration centers across the U.S., so there has been no interruption to our supply chain up to this point,” he said. “Also, Prime has moved a meaningful amount of production outside of mainland China. While it is not a majority yet, it does mitigate some potential interruption.”

Even so, issues could lie ahead for Prime and others if Chinese factories remain hobbled headed into the spring, Lederer said. “Should there be delays of more than 30 days, it will begin to have an impact on our product supply starting in the second half of the year,” he told Counselor. “We remain optimistic, but the situation is quite fluid right now.”

Even if production revs back into top gear soon, there could, at least initially, be shipping issues that cause delays in getting products stateside. That could exacerbate potential inventory shortages and compel more suppliers to utilize pricey air freight to get their products to North America. “The cost for suppliers might increase for certain items, should they decide to airship any delayed shipments,” said Lederer. “However, that is not sustainable, as it’s extremely costly. Therefore, we might see price increases in the latter half of the year.”

Jonathan Isaacson, CEO of Top 40 supplier Gemline (asi/56070), said in a letter to distributors that shipping companies in China appear to be gradually reopening, but the potential for backlogs is real. “Although we are expecting them to gear up in the coming days and weeks, this remains the biggest unknown in terms of planning,” Isaacson said. “The potentially large backlog in the global transportation system will likely mean some delays, but we will not have a more complete picture for some time.”

For more on potential shipping issues and possible price increases, check out this article and video from Counselor.

Beyond shipping and pricing issues, the promo industry is also contending with postponements of important trade shows. The Hong Kong Trade Development Council, for example, has postponed eight of its April trade shows until the end of July. Those include the Hong Kong Gift Show, which many North American promo products leaders attend.

Meanwhile, Canton Fair, China’s oldest and biggest trade fair, which is also attended by promo industry pros, has suspended exhibition activities due to the outbreak of the virus. Canton Fair was originally scheduled to hold its spring season exhibition at the Canton Fair Complex on April 15.

As of this writing, 2019 Novel Coronavirus had infected more than 71,000 people. Cases have appeared around the world, though the overwhelming majority of infections – 70,622, according to The Wall Street Journal – are in mainland China. Authorities have confirmed 15 cases in the U.S. and eight in Canada.

How Does The Virus Spread?
Naturally, there’s concern in the promo industry – and society at large – about how Novel Coronavirus spreads. Most often, the virus goes from one person to another through respiratory droplets, such as those emitted in a cough or a sneeze, according to the Centers for Disease Control and Prevention, the United States’ leading national public health institute.

The CDC notes that the virus has “poor survivability” on surfaces. Still, the organization also says that “it may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads.”

Given the newness of the virus, scientists can’t say definitively how long COVID-19 might last on surfaces that have not been disinfected. Still, studying other coronavirus strains might give some idea.

“Based on the current available data, I would primarily rely on the data from SARS coronavirus, which is the closest relative to the Novel Coronavirus — with 80% sequence similarity — among the coronaviruses tested. For SARS coronavirus, the range of persistence on surfaces was less than five minutes to nine days,” Dr. Charles Chiu, an infectious diseases professor at the University of California, San Francisco, told CNN.

“However,” Chiu continued, “it is very difficult to extrapolate these findings to the Novel Coronavirus due to the different strains, viral titers and environmental conditions that were tested in the various studies and the lack of data on the Novel Coronavirus itself. More research using cultures of the Novel Coronavirus are needed to establish the duration that it can survive on surfaces.”

The CDC has continued to maintain that there’s no evidence to suggest the virus can spread by imported products or shipments coming in from overseas.

“There is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures,” the CDC says. “Currently there is no evidence to support transmission of COVID-19 associated with imported goods and there have not been any cases of COVID-19 in the United States associated with imported goods.”

Isaacson, who has spoken with health experts about the virus, said the transmission risk on imports/shipments is described as “‘extremely low’ – especially given the shipping time for most products from China. Based on this, I would personally have no problem giving an imported product to my children to use.”

Original article published in www.asiacentral.com by Chrisopher Ruvo

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Trump To Put 10% Tariffs On $300 Billion More In Chinese Imports

The move has potential to trigger price increases on a broad spectrum of promotional products.

President Donald Trump said Thursday that he plans to place tariffs of 10% on an additional $300 billion in Chinese imports – a move that could potentially drive up pricing on a gamut of promotional products in the months ahead.

Trump said the new tariffs would take effect on September 1st. With tariffs of 25% already attached to $250 billion in imported Chinese goods, the new levies would mean that virtually everything American businesses buy from China will be subject to tariffs.

The Dow Jones Industrial Average was 300 points lower in the immediate aftermath of Trump’s announcement. The S&P 500 was down 1.1%, while the Nasdaq Composite was off 1.1%, nearly wiping out an earlier jump of more than 1.6%. Markets continued the retreat Monday after China escalated tensions by allowing its currency to slip to an 11-year low against the dollar, while also threatening to hit U.S. agricultural products it bought recently with tariffs.

In a series of tweets, Trump alluded to several reasons why he was moving forward with the new tariffs, despite what he characterized as “constructive talks” toward a new U.S.-China trade deal that occurred at the end of July in Shanghai between negotiators for the world’s two largest national economies.

The looming new tariffs come as a surprise. In June, Trump and President Xi Jinping held a sidebar discussion at the G20 Summit in Japan and, ostensibly, agreed to a kind of truce in the trade war that’s been dragging on for more than a year. The easing of tensions led to the resumed face-to-face negotiations that occurred this week. But just as it happened in May when Trump upped the tariff rate on some $200 billion in Chinese products from 10% to 25%, the president seemingly out-of-the-blue decided to proceed with new tariffs, rattling markets, business leaders and consumer advocates.

“Trump’s announcement about additional tariffs on Chinese goods will hit American consumers the hardest,” said David Clement, North American Affairs Manager of the Consumer Choice Center, which represents consumers in more than 100 countries. “Given how interconnected the two economies are, it is ultimately American consumers who are going to be footing the bill for these new tariffs. Legislators need to better understand that tariffs on foreign products end up being a new tax for domestic consumers. Simply put, tariffs are taxes.”

Some – along with Trump himself – have indicated they believe Beijing’s negotiating tactic is to draw out talks until after the 2020 U.S. presidential election in the hope of brokering a deal that’s more favorable to China with a new American president. Conscious of this, Trump’s play on additional tariffs might be intended to catalyze China back into negotiating in earnest now, some analysts opine.

Regardless of the reasons, the new tariffs have the potential to impact almost every supplier and distributor in the promo products industry that buys and sells products imported from China. That’s virtually every company in the space, as the vast majority of promo products sold stateside are produced in China and imported. “This is pretty distressing for all of us,” Eddie Blau, CEO of Top 40 supplier Innovation Line (asi/62660), told Counselor.

Should Trump proceed with new tariffs on $300 billion in Chinese imports, then most every promotional product brought in from China would be subjected to tariffs. Products the administration is considering tariffing include electronics, drinkware, writing instruments, blankets, calendars, golf balls, and all manner of apparel – from T-shirts and track suits to yoga pants, bathrobes and baby garments. The list could go on and on.

“Clearly, the industry will see additional costs running through the system,” Jonathan Isaacson, president of Top 40 supplier Gemline (asi/56070), told Counselor. “How that is managed will be different by supplier and by product, but it is unlikely that any single organization has the ability to absorb this kind of increase.”

Blau foresees a similar dawning reality. “Industry suppliers will have no choice but to continue raising prices to offset the latest tariffs,” said Blau, adding that newly tariffed items in Innovation Line’s value-oriented line could possibly see price increases of 4% to 7%. He worries the trade war will intensify. “It’s likely another round of tariffs will be coming if the trade talks don’t take a more positive direction,” Blau told Counselor. “Industry professionals should be prepared for the latest 10% tariffs to increase to 25% before the year’s end.”

Should tariffs trigger price increases, some ad specialty executives fear the heavier price tags could curtail end-client investment in promo products. “If we have to increase pricing to the end consumer, we will start to push them into other avenues of spending for their marketing dollar,” Bob Herzog, CEO of Top 40 distributor Corporate Imaging Concepts (asi/168962), told Counselor.

More broadly, promo pros fear the tariffs could have a dampening effect on the U.S. economy that causes clients to pull tight the purse strings on their marketing budgets, thereby leading to reduced investment in branded merchandise. “If the tariffs stick around, I could see everything really taking a hit in Q4 – retail, food, travel, promo,” Jason Lucash, SVP of marketing and product development at Top 40 supplier HUB Promotional Group (asi/61966), told Counselor. “A recession could be imminent.”

Amid the trade war, the Trump administration has placed tariffs on $250 billion in Chinese imports. China has hit back with tariffs on $110 billion in U.S. goods. For the promo industry, import tariffs have led to price increases on levy-affected items, contributed to destabilizing the industry norm of annual pricing, and caused uncertainty that hasn’t been good for business, promo executives have said. It’s disrupted supply chains too, providing fuel to what was already a growing movement to diversify production into countries beyond China.

“Supply chains are complicated and generally are not easily moved,” Isaacson told Counselor. “With that said, there are suppliers, like Gemline, with contingency plans in place. For those that lack such plans, this is going to be difficult. Furthermore, while some categories can be moved reasonably quickly, some will be difficult to relocate.”

Isaacson and others noted that some industry firms could be feeling the pressure to continue to meet product safety and social compliance standards amid the supply chain disruption. “In times like this, systems around product and social compliance have the potential to get tested,” he told Counselor. “Again, for companies such as Gemline, who have robust systems and processes, this can be managed. For those that do not have the people and processes to verify, this could increase the risk to the industry around compliance-related problems.”

Original article published in www.asicentral.com, written by Christopher Ruvo

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