YEAR OF THE DOG TO BITE NAJIB & ROSMAH HARD: EXPECT 10%-20% PRICE HIKE FOR CNY GOODIES, TRADERS WARN AS CONSUMERS FUME OVER GOVT’S INABILITY TO CONTROL SKY-ROCKETING COSTS

TRADERS of Chinese New Year items are bracing themselves for slow sales even though the festival is just a month-and-a-half away.

They said prices of decorations and food items, especially dried seafood, usually increase by between 10% and 20% every year, and a currently weaker ringgit might dampen sales even more.

Staff at wholesaler NuLycie, which sells a vast array of Chinese New Year decorations, told The Malaysian Insight that some items have been selling better than others, such as lanterns, plum blossoms, wall decorations and couplets.

If people can only afford to spend on fewer items, they seem to be choosing the ones that they believe will bring luck, said the staff, who gave her name as Lai.

“Maybe it’s the high cost of living, but people prefer charms or items like the good fortune cat. Or since 2018 is the Year of the Dog, items or images of the dog sell really well,” she said.

Decorations usually increase in price by 10% each year due to the cost of materials, Lai said.

The weak ringgit has driven up the prices of some smaller ornaments, which can cost at least RM7, “more expensive than a bowl of noodles in some kopitiams”.

Promotions to stay competitive

Merchants will still try to keep prices affordable to remain competitive, she added, and her shop does this by organising promotional activities for customers with discounts given as rewards.

“With the Goods and Service Tax (GST), you need to do more promotions or business will be bad,” she said.

The ringgit, at RM4.06 to the US dollar, is currently stronger than it had been in the past year, bouncing back as the region’s second best performing currency after the South Korean won, but is still far from its RM3.40 level before it slid in 2015.

Currency exchange aside, the source country for certain items, such as dried seafood, is an important factor that influences prices.

Demand for dried seafood from China has dropped due to scares about fake goods and food that had been shared on social media, said a retail worker at popular Chinese food importer Kwang Yeow Heng.

The company has reduced certain imports from China and is selling scallops from Japan, dried mussels from Korea, South African and Australian sea cucumbers and New Zealand dried fish innards. Other types of dried seafood are also sourced from India, Indonesia and Thailand.

These changes, along with demand, are seeing dried seafood prices go up by as much as 20%. Unless seafood is in very low supply, prices will not increase much more, the worker said.

Demand for dried seafood is still there, but customers are cutting back on portions, he added.

“Whatever the state of the economy, most Chinese will insist on these must-have items. Maybe, they used to buy two portions (in the past), but now they buy one instead.

“Or they their RM100 may buy less now, but they will still spend that RM100 they’ve budgeted for Chinese New Year.

At the moment, business is slow and the only ones doing Chinese New year shopping are wealthier customers who like to shop early.

Most shoppers, the worker said, would likely make their purchases once they receive their annual bonuses.

Weak RM makes imports costlier

At Chinese produce wholesaler Chai Huat Hin Trading, business has been slow because imported foods are more expensive this year.

“The biggest reason is because of the weakening ringgit. Merchandise will naturally increase in price, add in GST and you can expect a 20% surge in prices,” said a representative of the company that has been in business for 45 years.

The worker said Chai Huat Hin imported most of its goods from the same long-time supplier in China.

Chinese New Year best-sellers are the more affordable items, like dried shitake mushrooms. Over the years, once popular items like dried sea cucumbers have not sold as well because “only the old folks buy them, young people don’t because they don’t know how to cook them”.

A biscuit maker said the higher cost of ingredients has driven up the price of a jar of Chinese New Year cookies by RM2 compared with last year.

“(The price of) a jar of biscuits ranges from RM18 to RM28 now. This is about RM2 more than last year because of the higher price of ingredients,” said Huang Wei Wei who sells her family’s homemade cookies at their noodle and yong tau foo stall on Petaling Street in Kuala Lumpur’s Chinatown.

Their best-seller is a fried dumpling with a sweet peanut filling.

To keep sales going, even if at a lower volume than before, they started selling as early as October.

“We sold early, although Chinese New Year was still far away. We know that when people see fresh biscuits, they will buy them; customers don’t necessarily have to wait for the New Year to have some biscuits first,” Huang said.

The strategy seems to pay off as their stall, which doesn’t even have a name, enjoys steady business from regular customers, who have been their patrons for more than 10 years.

Reducing portions to keep prices

By now, other stalls and shops are competing to sell popular treats, such as love letters and pineapple tarts.

One stall owner, who started selling her baked goods this month, is pricing her cheaper cookies at between RM13 and RM18 per jar, while more expensive ones are between RM20 and RM23.

These prices are the same as last year, she said, and when asked how she maintained her prices, answered: “I might put a few biscuits less in each container!”

She said prices have to be maintained because competition is stiff and new rules for traders prevent them from displaying their wares too far out onto the pedestrian path, making it difficult for her goods to catch the eyes of shoppers as well as before.

– https://www.themalaysianinsight.com