Talk about going to the wire! After another series of all night talk it finally looks as though there is agreement across the eurozone on a way forward.
To quote Jean-Claude Juncker, the European Commission head “There will be no Grexit” – The financial markets have responded positively, but of course there is still the small matter of the Greece government having to pass the reforms that underpin the agreement by Wednesday. If this happens then whilst it won’t exactly be business as usual at least there will be a way forward and we can all collectively work on restoring something akin to normality.
For us at USB2U this is fabulous news because we have lots of clients in Greece and they have remained loyal to us over the past few years. Many of them are local photographers that take on wedding orientated assignments and come to us because of our range of popular wooden USB sticks and gift boxes but we have plenty of other more general businesses in Greece that we also supply.
Greece Bailout Deal Done – Hooray
Failure to reach agreement wouldn’t necessarily mean we couldn’t or wouldn’t continue to supply our Greek customers but we suspect it would make our prices and payment terms less attractive than they are today. (or have been over the past year or two).
Anyway now there seems consensus on a way forward we’re delighted because it means we can focus on what we do best and that’s working with our customers to deliver a range of amazing branded USB memory sticks – Hooray!
All we need now is for the uncertainty and mild chaos that’s rocking the Chinese Stock markets to abate and we’d be in the happy position of saying stability has been restored! Unfortunately whilst all eyes across europe have been on Greece the bigger potential crisis has been unfolding in China.
Given that all of our USB sticks are manufactured in China (we finish, e.g. print or engrave the majority in the UK but buy the core “blank” sticks from China) it’s critical to us (and our customers) that we can be assured of stability in supply and pricing.
Whilst our partner factory is not directly affected by the lurches in the stock market per se they (and we) do suffer when sentiment moves against China and the exchange rates take a hit. All USB sticks are purchased from the factories in China in US dollars so pricing is directly connected to the international financial markets.
So, whilst the deal for Greece is welcome news we’d be a lot happier if the Chinese markets could follow suit and find some stability.
It’s tough in Greece. The economy is on its knees and the Greek Government must pass new austerity measures to trigger the release of more bail-out cash from the EU and IMF. Without this additional injection of cash it’s going to be incredibly hard for the country to stay afloat.
The numbers are mind-boggling and without doubt there is going to be a lot of pain because the programme of proposed tax increases and spending cuts amount to 28bn euros (£25bn) over five years and that’s in addition to a raft of new tax rises.
If the Greek Government passes the austerity package then it’s likely there will be a short-term respite not only for the people of Greece but also the euro as a whole. It’s decision time this week but it’s by no means a done deal.
USB2U Team Heads to Greece
At USB2U we’re trying to do our bit to help by sending a couple of our team to the Greek islands. They won’t be arriving with huge bags of cash (or boxes of USB memory sticks) but they will be there to spend their hard earned money in the local restaurants, bars and hotels – depending on how things go this might actually translate into a sizeable cash injection.
We’ll miss them whilst they are gone but as a responsible employer we are keen that they get a proper break and come back with their batteries charged. If they can do something to assist the local Greek economy whilst they are away then so much the better!
If the Greek economy can be stabilised and the markets in Europe begin to show signs of settling down it should help strengthen the £ (GBP) and euro against the $ (USD) and ultimately this will drive down the cost of USB memory sticks. Because most USB sticks are manufactured in China the default trading currency is the $ (USD) so any financial weakness in Europe drives up prices.
The economic turmoil in Greece is unlikely to enter the mind of anyone looking to source branded flash drives in the UK but the reality is that the current issues in Greece have a direct bearing on the price of flash drives. Why? Well, USB memory sticks, like many other PC components and peripherals are purchased in USD ($) from the factories in China.
Today’s announcement by rating agency Standard & Poor’s to downgrade Greece’s debt to “junk” because of concerns that the country may default has hit the European stock markets hard and most European currencies have fallen dramatically against the dollar (USD).
The impact of this is that prices for memory sticks will increase by circa 2% with immediate effect and all new quotes will only have a very limited “valid for” period because of the increased volatility in the market.
Branded flash drives are more susceptible to short term currency movements because orders are placed on the factories and paid for as customers confirm their requirements. Whilst some forward buying of stock does take place the wide range of styles, colours and memory sizes coupled with the fact that many customers are now taking advantage of options to pantone match body shells etc. makes it impossible to forward buy too much.
With the improvements in global transportation and the ability to manufacture and ship within days rather than weeks most branded flash drives are now manufactured to hence why an unstable currency and financial market has such a dramatic bearing on price.
Hopefully the issues in Greece will be resolved soon or at least brought under some degree of control and confidence will return to the currency markets.
In the meantime if you are looking to buy branded flash drives be prepared for some short term volatility in pricing and don’t be surprised if you’ve purchased flash drives in the past to find that prices are now higher than when you last bought them.