The Impact of the Recession on the Sales of Promotional Pens and Printed Pens

Not only has the current recession impacted heavily on the advanced economies of the world, we are now seeing that emerging economies such as China, Vietnam, Brazil and Argentina are also suffering, primarily because their exports in general are significantly down on previous decades. Here we look briefly at how the recession has affected the sales of promotional pens and printed pens in both the western world and China.

Promotional pen manufacturing in both the U.S. and Europe began to decline approximately in 1999 because of lower manufacturing costs in China. Changes were quite slow in the first five years as Chinese pens, in terms of style, finish and functionality were greatly inferior to western standards. In the following five years there was a significant increase in exports from China and the reasons for this is covered in a separate article 'Why Promotional Pens are not made in the West Any More'.

Since the beginning of the recession that began in early 2008 overall sales of promotional gifts was in steady decline as company's marketing and advertising budgets were slashed. Whereas overall sales were down in some western countries by as much as 60% some product lines were affected much more than others. Generally speaking, the more expensive promotional items saw a greater reduction in overall volume than budget promotional items. The reasons for this were twofold. Firstly, companies that traditionally used promotional pens or printed pens for marketing and advertising were able to continue with their spend because the outlay was relatively low. Secondly, many companies that traditionally bought expensive promotional products switched to cheaper ones such as pens to carry their advertising message and this strategy allowed them to keep their volume the same but as the unit cost was significantly lower, the overall spend was dramatically reduced.

The impact that the recession has had on China should not be underestimated. After ten years of perfecting the processes involved in the manufacture of promotional pens, the Chinese now dominate the world supply of promotional items in general and pens in particular. Promotional Pen factories, the size of small towns emerged in Shanghai and Ningbo throughout the early part of the twenty-first century, many with several thousand employees involved in manual assembly. The amount of labour required was so great that workers were shipped in from other regions to meet western demand. A labour crisis was emerging in these two regions by late 2007 and wages began to rise sharply. This was a golden period for that region of China and it seemed that it would never end. The banking and money supply problems that the west encountered from early 2008 onwards, however, resulted in a sharp decline in demand for promotional pens and promotional items in general and this had a catastrophic effect on employment in the industrialised regions of China. Workers that were originally shipped in from remote areas were sent home with no prospect of returning. This had a devastating effect on rural communities and continues to be a great worry for the Chinese authorities as they are ever conscious of civil unrest. Many large Chinese companies involved in the manufacture of promotional items have now closed down with no prospect of reopening.

We are increasingly living in an interdependent world and the current recession has certainly highlighted that fact. We have seen the economic effect the recession has had on global markets and many believe this is a temporary affair before we instinctively revert to unabated levels of consumerism once again. Only time will tell!