Artificial Christmas tree maker Lou Liping said her revenue is down roughly 12% due to delayed orders from U.S. And European customers worried about shipping disruptions in the Strait of Hormuz.
Her company, Kitty Christmas Factory, based in Yiwu, China, has seen costs per tree rise by 10% as the Iran conflict drives up oil prices, increasing the price of PET plastic used in artificial tree needles by 5% and packaging plastic by 15%, she told CNBC last Friday at Yiwu’s international expo center.
Yiwu, known as China’s Christmas capital, produces an estimated 87% of the artificial Christmas decor sold in the United States, according to the American Christmas Tree Association, with hundreds of manufacturers concentrated in the city’s export hub.
Tinsel maker Yun Zhuomei said plastic prices for her products have increased as much as 40%, adding pressure during the critical spring production period when factories gear up for summer shipments to meet winter holiday demand.
Christmas lights manufacturer Chen Lian said suppliers are moving up delivery schedules to avoid transport delays, concentrating demand between May and August and likely driving further material price increases.
To cope, Lou has accelerated shipments where possible and passed on some costs to customers when contracts allow, but she said U.S. Shoppers will likely face at least 15% higher prices for artificial trees this season.
For next year, Lou said she plans to design a wider variety of lower-end trees to make products more affordable amid ongoing cost pressures.
Why are shipping costs rising for Christmas decorations made in China?
Shipping costs are rising due to disruptions in the Strait of Hormuz linked to the Iran conflict, which have increased oil prices and raised the cost of oil-derived plastics used in artificial trees, tinsel, and packaging.
How much of the U.S. Christmas decor market relies on Chinese manufacturing?
An estimated 87% of Christmas decor sold in the U.S. Is sourced from China, with much of it produced in Yiwu, according to the American Christmas Tree Association cited in the CNBC report.
