(Yicai) April 20 -- Chinese home appliance makers have increased the prices of their products on display at the China Import and Export Fair, better known as Canton Fair, by about 10 percent because of rising raw material prices caused by the war in the Middle East.

Skyworth Group is under severe cost pressure because prices of plastics and other raw materials have climbed 50 percent to 80 percent since the end of last year, as most of them are imported from the Middle East, and due to the appreciation of the Chinese yuan against the US dollar by 3 percent to 4 percent, a staffer told Yicai. Therefore, the company has hiked the prices of its refrigerators and washing machines by about 10 percent at the Canton Fair.

“Orders are abundant this year, but the cost pressure is high, with overall costs rising by about 10 percent,” Zhang Zhuofan, executive director and general manager of Cuori Electrical Appliance Group, told Yicai. Due to the sharp increase in plastic prices, the firm has started to raise its product export quotations since last month, he added.

However, as European and American consumers are highly sensitive to price changes, it is difficult for retailers to raise prices, Zhang noted. Therefore, sellers need to share the cost pressure with buyers, so that they can each bear a rise of 5 percent.

Around the Canton Fair, the entire home appliance industry began to raise prices, up about 5 percent to 10 percent, a business executive from a small household appliances exporter told Yicai. Products with a relatively higher proportion of plastic would see a larger increase, they added.

The Middle East conflict has also affected logistics and transportation.

“Some goods destined for the Middle East cannot be delivered, and some have to be redirected to other destinations,” Zhang Qingfu, vice president of ‌Haier Overseas Electric Appliances, told Yicai, adding that if the Strait of Hormuz remains blocked, the company plans to supply the Middle East with goods from other places from next month.

As Haier has inventory reserves in the Middle East, sales in the local market have not been greatly affected, Zhang Qingfu pointed out.

Several home appliance firms told Yicai at the Canton Fair that even though logistics disruptions and rising costs have driven export prices, the main appeal of Chinese home appliances to overseas buyers is innovation rather than price, so they remain confident about the long-term prospects of overseas markets.

China’s home appliance exports shrank more than 15 percent to USD7.6 billion last month from a year earlier, according to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. In the first quarter, they rose 1.5 percent to USD24.5 billion from the same period last year.

Editors: Tang Shihua, Futura Costaglione