As the spending power of the nation’s consumers increases, more and more Chinese brands are targeting the domestic customer, creating a market for higher-end Western mills as well as for local textile producers looking to offset a decline in demand from abroad.
At the Intertextile trade fair here, China as a market for Western firms — plus the ongoing issues of spiraling inflation and labor costs — were the two main themes that emerged.
“In terms of apparel fabrics, this is one of our most important shows, because this is where the market is right now,” said Wendy Wen, textile trade fair director for Messe Frankfurt Hong Kong, the organizer of the event. “It’s all about market and demand. China is really an emerging market, and we don’t know where it will lead.”
Of the 3,000 or so exhibitors, more than 900 were not from China, a 20 percent increase from the year before, according to Messe Frankfurt. The number of manufacturers from Japan increased 72 percent from 2010. Overall, there were 62,000 buyers, a 10 percent increase from the previous year.
Wen said organizers plan to shift their focus on quality of exhibitors, visitors and products to meet the growing demand from an emerging segment of cash-flush Chinese brands looking to differentiate themselves from competitors by using expensive materials, particularly from Europe. The 2012 fair will feature a new premium hall to showcase European luxury fabrics and accessories.
“Many of our Italian exhibitors have commented that Chinese buyers are becoming more sophisticated and refined, more European even when sourcing fabrics,” Wen said. “Chinese buyers are now sourcing quality versus quantity, yet they still prefer classics over trendy men’s wear fabrics, especially for suiting.”
Chinese buyers were said to be looking for bonded fabrics, water-repellent materials and cashmere-touch cottons from Italian mills at the three-day event that wrapped up Oct. 21.
Manfred Borchers, head of marketing and sales for Dralon, a maker of acrylic fibers, said there is a growing interest among Chinese buyers in natural and synthetic blends. The interest, he said, comes from a concern that natural fibers, like cotton, may become more scarce.
“They are aware natural resources will go down in the long run, so they want to be prepared for future developments,” Borchers said. “Sustainability is a big issue in China.”
Borchers said he is also seeing more demand from Chinese underwear brands for new product developments, such as thermal technologies.
For those who were there to source from the Chinese, the picture was a bit more bleak. Rising labor costs, inflation and an appreciating currency are making it harder for foreign buyers to bargain with domestic manufacturers who are now shifting their once export-oriented business inward to the domestic market.
“It’s really tough,” said Janette Griffiths, director of the U.K.-based Adlin Designs Ltd., which makes garments for Marks & Spencer. “The dollar against the pound is really difficult, and we buy in dollars, so that is making the Chinese prices high.”
Domestic manufacturers continue to demand down payments of up to 30 percent, and if prices are not locked in within one week of placing an order, they will be raised, Griffiths said.
“You have to be really tough with them,” she added.
Chinese fabric makers also pointed to currency shifts as the main culprit for reducing their export business. The value of the yuan remains of major concern in the West, with growing pressure from members of the U.S. Congress to declare China a currency manipulator. President Obama is resisting the pressure, while the Chinese government has said that if that does take place, a trade war could result.
“The Chinese currency is very high, so I think our company will delete some foreign customers and start to take more Chinese orders,” said Jimmy Jiang, a sales executive with Firstextile Co. Ltd., a manufacturer based in Jiangsu Province near Shanghai, which specializes in yarn-dyed poplin, dobby and stretch.
“Foreign customers can only give us lower prices on fabrics and garments, so there is only a little profit per order. But for Chinese orders, we can earn a lot of money,” he said. “They are willing to pay more.”
Buyers from other emerging markets are, it seems, also willing to pay more for premium product lines, which, according to Vivek Aggarwal, head of the New Dehli-based Mangla Apparels India Pvt. Ltd., are being produced more by Chinese manufacturers looking for new ways to improve the bottom line.
“It is clear now China is not meant for the budget product,” said Aggarwal, who attended the Shanghai fair to buy rich fabrics with mixed blends. “They are going toward value addition and differentiation. We are buying in India, but we also need the Chinese.”
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