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Supply Chain Woes Force Perfume Company to Shift Out of China

Supply Chain Woes Force Perfume Company to Shift Out of China
Perfume bottles are on display at the Fragonard perfume museum in Paris on September 10, 2015. (Francois Guillot/AFP via Getty Images)

By    |   Sunday, 10 July 2022 12:50 PM EDT

Supply chain issues from China, stemming from the COVID-19 pandemic, are forcing a designer perfume maker to shift production from Shanghai to New Jersey.

Inter Parfums is making the move as millions of dollars of product has been stuck in a Chinese warehouse amid COVID-19 lockdowns, The Wall Street Journal reported Sunday.

"We're doing this even though China is way cheaper," Inter Parfums founder Jean Madar told the Journal. "How good is it to have cheaper components when you cannot get them? For a consumer-products company like us, you need to have super stability in supply."

Almost 20% of supply chain executives are shifting production to a closer country in the past year, double the number from the previous year, according to a March-April survey by consulting firm McKinsey & Co., the Journal reported.

Semiconductors, steel producers, and automotive battery manufacturers are among those bringing things closer to the U.S., the survey found.

"The equation has changed," McKinsey's Daniel Swan told the Journal, citing rising shipping costs, factory shutdowns, delays, and shortages.

Inter Parfums does almost $1 billion in annual business, and will be keeping some contracts with Chinese-based suppliers and relocate to Europe instead of Asia, according to the report.

"It seemed like, when you had the bottle you were missing the cap and when you had the cap you were missing the pump," Madar told the paper. "The logistics became impossible."

The quickness of the moves are unprecedented, according to the company's business development chief Andrew Davis.

"The supply chain has fundamentally changed," Davis told the Journal. "In 20-plus years working in supply chain, I've never seen things pivot so quickly."

Despite this move, Inter Parfums partner Arcade Beauty questions how long the shift will last, citing the economics of cheaper production in China.

"If they’re truly going to stand by what they're saying, then it will be long term," Arcade Beauty VP Larry Berman told the Journal. "But if at some point costs [in China] come down, they'll have to make a choice on economics."

Fully cutting ties with Chinese production will prove difficult, according to APG Packaging founder Helga Arminak.

"No one can do what they do," she told the Journal. "All they do is work, and the government has been very supportive. Sadly, we are very dependent."

Eric Mack

Eric Mack has been a writer and editor at Newsmax since 2016. He is a 1998 Syracuse University journalism graduate and a New York Press Association award-winning writer.

© 2024 Newsmax. All rights reserved.


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Supply chain issues from China, stemming from the COVID-19 pandemic, are forcing a designer perfume maker to shift production from Shanghai to New Jersey.
supplychain, china, perfume, manufacturing, ny
382
2022-50-10
Sunday, 10 July 2022 12:50 PM
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