The end of cheap gear?

The stability of prices of many items of backpacking gear over the past ten years has been remarkable. Think tents or waterproofs. While there have been some relative movements, prices have tended to be quite stable. The main reason for this has been the rise of China as the workshop of the world. As production has expanded, unit costs have fallen and productivity has risen, meaning that prices have tended to be stable (allowing for quality improvements and currency movements).

However, this could be on the verge of changing. A considerable proportion of backpacking gear sourced from China will be made by  small and medium-sized companies (SMEs in the jargon). Because backpacking is still a specialist market, it is unlikely that much production will be produced by the very large domestic Chinese companies. In a blog that I read regularly on Chinese economics, Michael Pettis is suggesting that many Chinese SMEs are finding access to credit difficult and that many are facing bankruptcy.

If this is true and there is a wave of bankruptcies in SMEs, then supplies of cheap backpacking gear may be disrupted or even disappear altogether. Admittedly there are other countries used for production like Vietnam (Osprey) and Columbia (Paramo), but look at the labels in any outdoor shop. A lot of product still comes from China. We might be witnessing the start of a radical shift in the outdoors industry. If companies cannot rely on cheap Chinese production, they will have to rethink their strategies and business models dramatically.

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9 thoughts on “The end of cheap gear?”

  1. I think my recent post about settling on kit you love instead of persistently buying new stuff is starting to sound fortuitously timely. Alternatively, grab what you can now! Fortunately, there is not much I need – I just need to get out and use what I have…

    Thanks for the interesting post, Robin. Hope you enjoyed the Carneddau but from your posts it seems you had a good trip.

    1. >I think my recent post about settling on kit you love instead of
      > persistently buying new stuff is starting to sound fortuitously timely.

      I go along with this sentiment and not just in terms of the cost. As part of my love for the wilder corners of our wonderful world. I believe in trying to protect it and in ‘treading lightly’ in general terms. I don’t need multiple tents, sleeping bags, jackets, mats, stoves, boots, when one or maybe two of each will be enough. Apart from the actual manufacture of the goods themselves, they take up a lot of storage space. I’d like to take my ‘treading lightly’ to include living space and we are currently looking to ‘downsize’ and move to smaller property.

  2. I’m not sure but I ought to think that the rising prices (relative to income) are more likely temporary phenomena, if that even ever happens. There will be new countries to outsource to, maybe something in Africa or in the South-East Asia. And some companies are starting to invest in some states in the US instead of China because of the rising production costs. The bigger problem might be us westerns loosing our works and income to China and thus experiencing the outdoor kit to be expensive. But if we get our kit together now, then we have a lot of time to go hiking when unemployed. 😉

    And on the other hand, a lot of garage business made gear is made in the western countries and is quite affordable. And honestly, I don’t need the cheapest made-in-China-random-brand outdoorsy stuff anyway.

    And a random note on prices regarding “the good kit”… In the end of 1990s a top quality Goretex jacket was around 1000 Finnish mark (168 euros on the official ER fixed in 2002). Nowadays a top of the line shell jackets from same brands often cost around 600 euros. Has our income risen nearly 300% in ten years of has the stuff gotten more expensive?

  3. I tend to agree with Max. In the last 2 years I impulse bought a Laser Competition at half price (as if I really needed a second one person tent) and purchased a new pair of boots. Oh, and a pot stabiliser and a pair of silk gloves from B&R. I suspect that most of my current gear – bar boots and, possibly, trousers is going to outlast me.

    So this could come as a shock to those who can’t resist shiney new gear, but may be barely noticed by a lot of us.

    (Good to see a practical cross over from the economics blog.)

  4. I too, have noticed that the good quality hiking/backpacking stuff has not increased in the past 10 years.

    You young ‘uns would not believe how cheap it is compared to 30 years ago. My first Goretex jacket in ~1980 cost about £50 in a sale – for a plain, un-fussy hard shell Berghaus. I can’t remember how much my tent cost – a Phoenix with an aluminium A-Frame pole arrangement at the front – but I remember it at the time it was one months wages.

  5. I would assume that gear manufacturer’s will move to cheaper countries such as Vietnam. I also believe in supporting British manufacturers as much as possible (although there are not that many) PHD being one. However, I would not use that as a reason not to buy excellent gear not manufactured in UK. There are quite a few UK design companies – Terra Nova, Rab, Alpkit etc who are using the Far East to keep costs down and at the same time when these companies export, they will keep the vast majority of the profit in the UK. China only keeps a relatively small element of the total product cost.

    1. Relocating manufacturing may not be that easy as other countries do not have the spare capacity to cope with a significant shift in production. I’ve focussed on the outdoors market, but it is small compared to many other sectors. Imagine this happening across the board. Today’s manufacturing PMI in China is the lowest reading for two years. Something is going on! My view FWIW is that 2013 is when the real problem manifest.

  6. Got to agree with Swanscot, gear has never been cheaper. My 1st Gore-Tex jacket, a Phoenix Opal, cost £145 and that for a top of the range comparable to a Berghaus Trango Extreme, I paid £245 for a Wild Country (pre re-naming as Terra Nova) Quasar and £190 or so for a Phoenix Phreeranger EB. That was 20-25 years ago although all the above items were made in the UK.

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