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Caldeira UK – Introduction 1991 – 2003
• Founded 1991 by Tony Caldeira in Liverpool, UK
• Sells cushions & textiles to volume retailers
• Grew from a market stall to UK market leader
• 2003 Sales £5m+ 100+ Staff 2 UK factories
• Successful UK SME - Then came globalization...
Caldeira UK Sales 1996 - 2003 (£GBP)
6 000 000
5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
1996 1997 1998 1999 2000 2001 2002 2003

8 000 000
7 000 000
6 000 000
5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
Caldeira China – 2005 – 2009
• China admitted to the WTO so easier to trade
• China selling price cheaper than UK cost prices
• Retailers and supply chain forced to react
• Simple choice - “China or bust”“step by step”
• UK designs at Chinese prices - Rapid growth
Caldeira China 2005-2009 ($ USD)
2005 2006 2007 2008 2009

Caldeira UK & USA – Reaction to Globalization
• Moved upmarket with European fabrics - Fashion
• Higher quality, faster lead times, service, JIT
• Advantages - Same language, business culture
• Advantages - Time zone, currency, close to market
• Caldeira USA - Opened in New York, rapid growth
1 200 000
1 000 000
800 000
600 000
400 000
200 000
0
2007
Caldeira USA 2007- 2010 (£ GBP)
2008 2009 2010

The Tipping Point
• Tipping point happened around 2007-2008
• Next phase of globalization begins
• Tide turned - Chinese prices rise faster than West
• UK & Europe become more competitive each year
• Two critical factors labour costs & exchange rates

Key Factors – Relative Labour Costs
• Since 2007 Chinese labour costs have rocketed
• Caldeira China factory staff earnings up 400%
• 2003 RMB 1000 per month - 2015 RMB 4000 pm
• 2003 China factory staff earned 10% v UK
• 2015 Now China staff earn 35% v UK and rising

Key Factors – Relative Exchange Rates
• In 7 years the Euro has dropped by 34% v RMB
• This makes Chinese goods even less competitive
• Caldeira Reaction - Downsizing in China step by step
• Caldeira Reaction - Re-shoring jobs back to the UK
• Others moving all production home
EUR V RMB - JULY 2008 EUR 1 = RMB 10.87 SEPTEMBER 2015 EUR 1 = RMB 7.20

Issues for Companies Re-shoring
• Capacity - Production moved East, capacity lost
• Skills - Production moved East, skills also lost
• Supply Chain - China “cluster model” strong
• Supply Chain - Local supply chain lost in West
• Finance - Following crash, banks reluctant to lend

What Should Governments Do To Help Re-shoring?
• Aim High – Aim to make the UK & EU “the best place in the world to do business”
• Create Economic Stability – Sustainable public finances help investment decisions
• Create a Pro Business Environment – Tax and regulation should be low, simple, competitive & fair
• “Talk the Talk” – UK is the role model “Britain is open for business!” Sell your market.
• Prepare and Set Expectations – Educate and advise business and consumers of global changes.
• Understand – “Tipping point” & help step change
• Investment – Infrastructure, education &training
• Incentivise – Help companies to invest & re-shore
• Opportunity – More growth and jobs in countries which re-shore, both in companies & supply chains