Despite Potential Problems in Chinese Sourcing, Asia Outlook Improves

Even with the U.S. economy in its first weary steps towards an economic recovery after the turmoil of the last few years and concerns over inflationary trends in China, generally retailers are not making moves to cut down on risk from China-based sourcing.

When asked, as a part of BDO’s 2010 Retail Compass Survey of CFOs, whether they have taken steps to reduce exposure to Chinese sourcing the great majority of retail CFOs, a full 76%, responded that they have not taken any such measures. This result was somewhat surprising, given that both the slowly recovering U.S. economy and foreign inflation could have a negative effect on retailers’ ability to keep costs in-check and maintain margins.

Further, when asked what region of the world is improving most in terms of sourcing opportunities, Asia was the clear leader with 63% pointing East.  North America and Europe were next in line with an 11% and 7% showing respectively.  Central America (6%), South America (5%) and Africa (2%) trailed in the survey.

What regions are you finding hold the most potential and the most risk?  How heavily does the strength of the sourcing country’s currency weigh in your analysis?