HONG KONG — Faced with an appreciating yuan and rising labor costs, Chinese apparel, textile and accessories vendors played up quality and workmanship at this season’s China Sourcing Fair.
Buyers and sellers complained about escalating prices, as well as a worldwide cotton shortage that’s further driven up costs. To cope, Chinese apparel and accessories makers have been seeking to move up the food chain, producing higher-quality, more labor-intensive goods. Buyers, on the other hand, reported moving some basic manufacturing to cheaper locales such as Bangladesh and Cambodia.
The fair, which ended its four-day run at Hong Kong’s AsiaWorld Expo on Oct. 30, had nearly 1,000 exhibitors, including 600 fashion accessory makers and around 200 booths of apparel and textiles. The latest fair had 15 percent more exhibitors than in April and included about 200 underwear and swimwear vendors that previously showed separately, as well as clothing and accessories vendors from India.
While exhibitors were out in force, buyers were less so. Vendors reported being squeezed by escalating prices and said order sizes have been smaller. According to a recent survey of 239 exporters by Global Sources, 60 percent of respondents expect some decrease in export orders, while 8 percent believe sales will be hit significantly because of a stronger yuan.
To cope with the yuan’s appreciation, 30 percent of exporters surveyed by Global Sources said they intend to increase focus on the domestic market, 15 percent plan to use more imported materials and 10 percent believe focusing on high-end products may bring in higher profits.
King Lee of South Korean textile maker King Tex said he’s been seeking out more Asian clientele. European clients once made up 90 percent of his revenue, but since the economic crisis in 2008, that figure has dropped to 30 percent. Hong Kong and Chinese clients now make up 25 percent of revenue, he said.
Cotton prices were another major issue for vendors and buyers.
Apple Zhou of Ningbo Jincun Knitting Garment Co. Ltd. said the company has had to raise prices by an average of $1 a garment. The company, which has produced for Tory Burch, Eland and T.J. Maxx, said in addition to the currency appreciation, it, like other manufacturers, has been hit by increasing labor costs and high cotton prices.
Achmad Saborta of Indonesian men’s wear maker Pt. Multigarmentama, said he’s been looking for cotton alternatives for items such as sweaters. The firm is also buying fabric rather than manufacturing it.
“If we order today at today’s price and ship in three months, by the time we have it, the supplier wants to change the price,” he said. “We’re now looking for plan B — we buy the fabric.”
The rising price of cotton and other factors has driven up cotton yarn prices to 38,000 yuan, or $5,674, a ton from 27,000 yuan, or $4,031, a ton, said another buyer, Jackson Liang of Trueworth Corp., a Taipei-based sourcing company that oversees manufacturing for Guess in New Zealand and South Africa.
Liang noted a trend in seamless garments, such as for tube tops and underwear, which use little or no cotton. He also said that jeans are increasingly manufactured in Bangladesh and India, but for higher quality “special occasion” wear or aged and “distressed-looking” garments, factories in Ningbo and China’s Canton province are preferred.
Sellers at the fair said they kept the focus of their displays on their particular strengths, from knits to party dresses.
As labor prices keep going up, “Chinese manufacturers are moving to more value-added services,” said Arthur Pruijit of U.S.-based women’s wear firm Orchard Brands.