To sustain their price advantage, the majority of China makers will keep adjustments within 5 percent.

Nonetheless, our survey results show that fewer companies now have better control of price increases. In the first six months of 2007, 56 percent of suppliers predicted rises of up to 5 percent. In the second half, however, the number of makers with the same response fell slightly by 3 percentage points.

To keep substantial markups at bay, some companies are adopting qualified, alternative components as means to cut corners. The use of lauan plywood in place of solid wood, for instance, is receiving greater attention among living room furniture suppliers.

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