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Dealing With China’s Shifting Market

Asian fairs reacting to global economic and political factors.

SHANGHAI — Despite a slowing of economic growth in the world’s second-largest economy, trade fair organizers say China’s textile manufacturers are experiencing a boom thanks to growing domestic demand and strong growth in emerging markets.

“Looking ahead, we see the demand for textiles, yarns and fibers will be tied closely to the health of the domestic economy, so the outlook for these sectors remains bright,” said Wendy Wen, senior general manager of Messe Frankfurt Hong Kong Ltd.

Over the past two years, some Chinese manufacturers have struggled to stay in business as exports to Western markets decreased due to ailing economies. China’s imports to the U.S. posted the largest decline by any country in March, with combined apparel and textile shipments falling 17.8 percent to 1.26 billion square meter equivalents compared with a year earlier.

Many exhibitors complained of few foreign attendees at trade fairs and brands from the West that were unwilling to pay higher prices for fabrics that cost more to make as labor and materials costs increased in China. Yet, Wen said that there has been a sharp increase in visitors at Messe Frankfurt’s shows in recent months.

“Overall we haven’t seen a decrease in either exhibitor or visitor numbers that would tell us the economic situation in the West, a slowing domestic economy or rising production costs in China are having a negative impact on the trade show industry,” she said.

At Yarn Expo, which was held in Shanghai in March, there was a 43.5 percent increase in visitors year-on-year, with a significant portion coming from the domestic market.

Many exhibitors said while there is still hope for growth in Asia and the U.S., they have moved their focus away from Europe. But as moneyed Chinese brands strive for more expensive garments, there is continued demand for European fabrics on the mainland.

“We’ve noticed a shift in the buying habits of domestic visitors, reflecting the changing spending habits of Chinese consumers,” Wen said. “Increasingly, domestic visitors to our fairs are looking for high-quality products and are less cost-conscious than before. They are also attending our fairs to look at products rather than looking at the latest items.”

Trade fair organizers said geopolitical tensions, including strains between China and Japan, and North and South Korea, have had little impact. Wen said that there was a 5.8 percent drop in exports of home textiles to Japan from China during the first two months of this year. Political tensions played a part, but the decline can also be contributed to a stagnant Japanese economy.

“We don’t expect it to be an ongoing factor,” Wen said.

“Political tensions have had little or no effect on trade shows in the Asian region,” said Perrine Ardouin, an event director with UBM Asia Ltd., the organizer of a number of exhibitions in the region, including APLF Fashion Access, which will be held in Hong Kong from Sept. 25 to 27. “Business interests appear to have top priority. Trade shows in Asia will remain steady to strong, as it is the only region in the world, along with South America, that is maintaining growth and employment.”

Some Chinese manufacturers said they are starting to see orders return, particularly from brands that had outsourced to Bangladesh, where there has been a spate of catastrophes in the textile industry, including the collapse of a factory that killed hundreds of apparel workers last month.

“Some buyers are moving their orders to other countries, like China, Vietnam and Cambodia,” said Vincent Qin, general manager for marketing and sales at the Guangzhou-based Prosperity Textile denim manufacturer, adding that compared with last spring, the company has had a 30 percent increase in business.

 

There are also a growing number of trade fairs focused on serving as a platform for brands to enter Asian markets. In 2012, ENK International launched ENK Mode Shanghai, which will be held in October this year. A new entrant to the market is The Hub, a fashion trade show organized by Entrepot Asia that is scheduled for Aug. 28 to 30 in Hong Kong. Novomania, organized by Novo Holdings, which also has a distribution and multibrand concept store business in China, will hold its fourth fashion trade show from July 17 to 19 in Shanghai.

Organizers said while there has been a decrease in the number of European brands looking to expand into China or elsewhere in the region due to weak economies at home, the number of brands looking to sell in Asia, and particularly in China, is growing. One major shift at such fairs is a change in the attendees. More Chinese clients are coming who are interested in developing their own multibrand concepts, rather than shopping mall developers looking to rent out monobrand space. There are also more buyers from Chinese e-commerce companies.

“There is a slight shifting on the visitor side from the monobrand side of the market to small boutiques that are starting to pop up,” said Guilherme Faria, Novomania’s general manager. “The buyers are starting to evolve in China. The Internet is starting to play a big part in this. The market is transforming to a multibrand-driven market.”