Gift and home companies that currently source most of their products from China, India and elsewhere in Asia report they are open for moving some of those efforts closer to home in Latin America.
A cross-section of importers contacted by the Dallas Market Center in advance of its first Nearshoring America EXPO in December were optimistic about expanding their sourcing in Mexico and Central and South America with connections made at the show. While they were enthusiastic about this effort they cautioned that securing reliable, cost-effective suppliers who met quality and responsible standards was key.
“We already source some products from LATAM (Latin America) and are excited about the DMC’s efforts to expand the opportunities for Creative Co-Op and the entire industry,” said Adam Schrier, president of Creative Co-op.
“We have always looked for new and innovative skus for our retailers at the best values possible all across the globe,” he said. “Recent tariff and supply chain challenges inspire us to look for nearshoring opportunities provided that compliance and testing as well as quality standards can be maintained.”
“Our interest level is very high, at a 10,” agreed Kristina Steven, vice president of supply chain and distribution for Demdaco. “Several factors make Latin America an attractive option. First, reduced duties and tariff offsets offer significant cost advantages. Secondly, geographically closer sourcing translates to shorter lead times and improved logistics. However, ensuring consistent quality at competitive prices remains a key consideration based on past experiences.”
For several of the importers, it was a matter of starting the process slowly and seeing how it goes. “Latin America would be a new sourcing country of origin for Tag and we are very interested in exploring new opportunities from this region,” said Chuck Fraelich, president of the company. “Our objective would be to identify select product categories and ‘start’ the process.”
Evergreen Enterprises, like several other U.S. companies interviewed, is already doing business with Latin America. “We entered into an agreement last summer to be the exclusive distributor in the U.S. for a Mexican factory,” said CEO John Toler, “and this has worked out well. Additionally, we have made several sourcing trips to Mexico in order to build out the assortment around this factory’s offering. We’re looking to develop three to five categories out of Mexico to complement our current assortment.”
Toler, like others, is concerned about political and logistical issues impacting current sourcing models that are dependent on China. “Two things worry us,” he said. “The first being supply chain disruptions during COVID exposed things like ocean freight expense, port delays, etc. The second being geopolitical risks associated with China.”
“Of course, the elephant in the room is the potential war that could happen with China taking back Taiwan,” cautioned industry consultant Randy Eller of Eller Enterprises. “If this should happen, the fallout will not just include the U.S., China and Taiwan, but many other countries in Asia and would affect shipping as well.”
It's why, he says, “All my clients are very interested in diversifying their sourcing options. Our industry is very far behind on addressing a risk that has been discussed for years but never addressed. This effort needs to be accelerated.”
The Nearshoring America EXPO seems to be the first big step in that direction.