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HONG KONG — The rising buying power of Chinese consumers and a corresponding drop-off in European demand was readily apparent at the latest Interstoff Asia fabric fair.
This story first appeared in the March 26, 2013 issue of WWD. Subscribe Today.
Suppliers at the show, who were mostly from China, noted a surge in domestic Chinese buyers over the last two years. At the same time, order sizes from American and particularly European buyers have become smaller and less frequent, they said.
“Exports have not been good for the last two years,” said Tracy Yin, senior merchandiser at Hansun Textile Printing Co., a specialist in ink-jet-printed fabrics. “Domestic sales have been much better.”
About 60 percent of sales are now domestic while 40 percent are exports, she said. That’s a reversal from two years ago when the majority of sales were from exports. Order sizes from foreign, particularly European, clients have gotten considerably smaller, she noted, with many buying less than 300 meters and many sales remain “pending” for a long time. American buyers have been more stable, she said.
Xing Hui, manager at Changzhou Runzhou Textiles Co., reported a similar trend, noting that his company now gets about 70 percent of sales from domestic Chinese buyers, while the rest are from Hong Kong or overseas.
Most exhibitors at the fair were from China, while Asian buyers dominated with Hong Kong, Mainland China and Taiwan the top three countries, according to provisional attendance figures from Messe Frankfurt, which organized the fair. In all, there were 229 exhibitors from 10 countries, down slightly from 246 exhibitors from 13 countries last year. There were 7,244 buyers from 42 countries, down from 7,625 buyers from 48 countries a year ago. Messe Frankfurt said the lower attendance figures were due to a boost at last year’s show, which celebrated Interstoff’s 25th anniversary in Hong Kong.
The growing importance of Chinese buyers to domestic suppliers isn’t only because of sluggish demand from Europe or the U.S., as Western buyers have also been sourcing more from cheaper markets such as India or Southeast Asia, said Xing.
Seong Moon Kang, president of Kay June Co., a South Korean firm specializing in organic cotton, said his company’s sales to China have been improving but that Chinese customers tend to be more price-sensitive. For now most customers are from elsewhere in Asia, particularly South Korea, Japan and Hong Kong.
Faced with growing competition from cheaper markets in Southeast Asia, Chinese manufacturers have been upgrading their products and services. But the timing of these efforts has been less than ideal. Chinese textile manufacturers are trying to move up the value chain at a time when U.S. and European customers are cutting back. Meanwhile, foreign buyers said that Chinese quality, while improving, still has a way to go.
“There are some customers that try to upgrade their product a little bit rather than just price fighting, but the market is so difficult in Europe, especially, you don’t really get the chance to upgrade,” said Birgit Sienz, a sales manager focused on the German market for Hong Kong-based Lucky Top International Trading Co. “You are forced to hold your price level or even go down.”
Kuldeep Raswant, a buyer for Golden Unicorn, a Hong Kong-based sourcing company, said, “China is getting better. But getting better is one thing and being very good is another thing. It takes time before you can upgrade that design.”
For now, Raswant said he continues to go to South Korea, Taiwan or Japan for “better quality and better finish.”
Even with the changing dynamic, buyers didn’t see Chinese manufacturers becoming irrelevant anytime soon.
“China has got a huge industrial set-up, which cannot be replicated so easily,” said Raswant.
Suppliers at the fair said that cotton and other natural fabrics have been popular. There were lots of bright, floral fabrics, laces and fancy finishes on display, as well as more traditional “English” style checkered patterns. Suppliers said silks were less popular, mostly because of rising prices.