As Beijing celebrated the start of its 'Olympic Year' with a large outdoor music performance on Monday night, we might well look at some of the trends that could impact China sourcing in 2008.

Homeworldbusiness speaks of "shifts in the China sourcing paradigm" as a 'macro' issue of 2007, and one which is expected to escalate in 2008. As a gloomy forecast of the outlook for the U.S. housewares industry in 2008, changes in the Chinese economy in the coming year like 

Inflated prices on Chinese-made housewares induced by rising raw material and fuel costs are a reality that the biggest retailers can no longer deny. Get ready for mounting increases in 2008 stoked by a weaker dollar to the Yuan RMB, reduced export tax rebates to Chinese factories, stiff pollution penalties and tightened product safety standards as the Chinese government adopts and enforces regulatory controls.

The benefits of stricter product safety standards, however, should be more evident in 2008, even though housewares retailers and suppliers will have to "rigorously self-police" to ensure the quality and safety of all their products. And as an additional challenge to Chinese sourcing in 2008, the Olympics may lead to labour shortages as workers are temporarily relocated to Beijing, resulting in restricted production during the usually critical June/July manufacturing period.

For Supply&Demand-Chain Executive the advent of the Olympics could in 2008 coincide with media attention focusing on China as the world's next potential 'bubble,' leading many manufacturers to shift sourcing strategies away from Asia. The falling dollar, limited free trade agreements, high energy costs and rising production costs will all contribute to companies reevaluating extended supply chains in Asia, and in addition

shareholders and board members could question their company's reliance on China and the Asia region should any further negative headlines arise regarding quality issues or if China receives bad press on the handling of protestors and dissidents prior the the Olympics. 

Prospects for 2008 have a few few commentators fearing signs of 'bubble(s).' The Washington Post on Sunday outlined China's current dot-com boom where start-ups have proliferated in the past decade in 'new Silicon Valley' districts thanks to an aggressive government campaign to attract private investment. Since the beginning of a frenzy of investment in 2005, many domestic Chinese companies that have gone public have traded at exceedingly high valuations, and some fund managers are worried that China is creating a tech bubble similar to the one that burst in the United States at the start of the decade.

Yet the party seems far from over in China, and Moneymorning.com views China as being on the edge of an economic transformation known as 'global decoupling' in which the growing prosperity and influence of China is contributing to the U.S. slowly being excised from its role as global economic trendsetter, all indications that 2008 will see a continuation of trends prevalent in 2007.