Promotional Gift Industry Ponders China's WTO Entry

The latter scenario obviously hasn't happened. But freer trade with the world's most populous country is already having an impact. Communication barriers are being whittled away, more factories have sprung up, and manufacturing prices are coming down. Never before has it been as easy for distributors to directly contact factories, and never before has it been as treacherous with swarms of neophytes hanging out their shingles.

The general easing of trade restrictions with China could upset the industry's delicate balance of co-reliance, at least for a time. Distributors and suppliers may find their old teeter-totter ride a bit wilder, with familiar but emboldened spectators eyeing a seat.

If the pressurizing scenarios aren't exactly new, they have taken on a fresh insistence: Will more Chinese factory agents directly approach distributors and end users? Will more distributors cut out their suppliers? Will suppliers, getting squeezed from both ends, have to choose price over quality to compete? Maybe they will market to end users out of necessity. And what about Corporate America's rush to infiltrate the Chinese market? Access to direct sources for promotional products will be right down the street.

Michael Bernstein, president of Leed's, a bag manufacturer, regards China's WTO membership as an 800-pound elephant bearing down on the industry. "I think the access to factories will be broadened quite a bit but the control of quality will ultimately diminish," he says. "I think we'll see pricing go down, quality go down and, from a supplier standpoint, we are going to have to make a decision: Are we going to compete on price or on quality? It's hard to do both effectively."