Been a big day for worried people. Orders canceled by major retailers, open to buy dollars cut hard and stock not being let out of China.
Look we all know it is bad out there but these things become a self fulfilling prophecy after a few weeks.
With major orders being canceled and open to buy cut back there will be many importers and distributors doing it very tough in the next 2-3 months. I would expect many to go to the wall as their cash flow dries up and they cannot repay their trade lines. This will result in job losses and lower spending and the cycle continues.
The milk scandal in China has got their government very worried. With more stringent checks being done on food items leaving Chinese ports, expect many supermarket shelves to be empty in the lead up to Christmas as stock is unavailable.
Major FMCG manufacturers have already held crisis meetings and are advising Coles and Woolworths that these issues will hit hard as stock run out in 2-3 weeks. With their heavy reliance on China for their own brands, this should not come as a big surprise, but I doubt it will stop them from raising loss of profit claims.
Any thoughts?
Tim
Posted under News
This post was written by Tim on October 16, 2008
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