This story first appeared in the November 18, 2008 issue of WWD. Subscribe Today.
Already reeling from a tough year of rising costs and slowing customer demand, China’s beleaguered textile and apparel makers are hoping to put their best feet forward for the latest round of trade shows coming up this winter and spring.
Yet despite the overwhelming sense that the shows must go on in the face of tough times, the prevailing attitude in the industry is one resigned to declining sales and thinning profit margins. Trade show executives say producers are still trying to regain some ground, but the outlook has grown even more grim in the wake of the global economic downturn. They are looking for creative solutions to bring buyers and sellers together, but the future is uncertain.
“It’s very bad right now,” said Liu Feng, marketing manager for the International Expo for Textile, Fabric and Accessories, slated for Beijing from Dec. 10 to 12. “Our attendance this year was about half of what it was last year, and I think the situation will be more or less the same for the next six months.”
For the textile and apparel industries, 2008 likely will go down in history as the year that the big production boom started to bust. The year got off to a rocky start in January with a new labor law that raised costs on manufacturers exponentially. As the months rolled by, inflation rose by record levels, taking up the prices of raw materials and further cutting into already narrowing profit margins.
Trade shows in particular took another hit with the Beijing Olympics in August. In the lead-up to the Games, public security officials tightened China’s visa policies and limited the number of foreign visitors allowed in. In response, some trade show organizers moved their shows from the Mainland to Hong Kong and other spots not subject to the visa crackdown.
Now that the visa situation seems to have resumed to normal, a full slate of trade shows is set for Mainland China for the next several months. Beijing, Shanghai and Guangzhou all have large trade fairs on their schedules. Canton Fair, China’s largest trade show, begins its 105th show in January, with the textiles cycle scheduled for the end of the year.
Canton Fair, whose organizers declined interview requests, seems to be a good gauge for the trends and potential successes of smaller fairs across the China region. The number of American importing customers involved in Canton Fair has declined this year from 22 to four, local media reported, while overall sales were down by 30 percent this year. From the first phase of the fair to the second, the number of overseas buyers declined by 47 percent, local media reported.
Yang Hongnan, director of the U.S.-China Export Association, told a Guangzhou newspaper: “It’s very difficult to attract U.S. companies.”
With the U.S. credit crunch squeezing demand to even smaller levels, Chinese producers are hoping to attract more business from the domestic market and other emerging markets, like the Middle East. But no single regional market, even China’s own domestic market, can make up for the lack of sales coming in from the United States, analysts said.
“There’s not enough new demand from both China and the world,” said Li Zhixian, a textile industry analyst with Guotai Jun’an Securities. “The world is having a global slowdown in demand this year. We are trying to encourage domestic demand, but it’s not easy to drive domestic either.”
A spokesman for the 2008 International Expo for Textile, Fabric and Accessories in Hangzhou from Dec. 5 to 7 said business and fair attendance numbers will definitely decline this year, but the outlook isn’t entirely bleak. Exhibitors are looking for new and creative ways to market their products, including more emphasis on specialty products and creations. More companies are apt to move toward greater specialization in general, the spokesman said. In addition, “We set up offices in Italy and Korea this year to help attract more business.”
In Hong Kong, meanwhile, APLF Fashion Access will run from March 31 to April 2. The fair, showcasing leather garments, shoes, handbags, accessories and luggage, has been steadily increasing its fashion and footwear components and has been drawing greater participation from European exhibitors. “We are seeing a lot of interest from Europe. French companies, for example, never considered Asia a number-one market priority, but they see it’s the only place with potential growth in the coming years — it might be slow growth, but it will be growth,” said Perrine Ardoin, senior event manager for APLF.
Italian and French pavilions will be present at the fair, as well as manufacturers from Eastern Europe, notably Hungary and Romania. “They see themselves rightly as an alternative to manufacturing in Asia. Eastern Europeans can offer competitive prices and proximity in Europe — it makes a lot of sense,” said Ardoin, who added that the fair will also feature textile garments for the first time.
Fashion Access runs concurrently with two other major events — the 25th edition of APLF Manufacturing, Materials & Technology and Prime Source Forum, at which major industry players discuss challenges and opportunities throughout the supply chain. The 2009 edition is set to kick off with workshops centered around the issue of sustainability. Central Textiles’ director Pat Nie Woo, who leads a major sustainability consortium of Hong Kong manufacturers, looks to be heavily involved. Other participants and topics will be confirmed closer to date so as to maximize the timeliness of the topics.
Interstoff Asia Essential, to be held in Hong Kong March 18 to 20, is expected to feature about 225 exhibitors and draw some 8,000 visitors. The fair, which places emphasis on innovative, multifunctional and ecofriendly textiles, has become very focused and has developed a strong program of seminars and labeling geared toward making environmental issues understandable for buyers and suppliers alike. Although the autumn 2008 edition suffered in the wake of economic upheaval in the U.S. and Europe, organizers are confident the event is on the right track. “The feedback from the exhibitors and visitors [in October] proved that our intention to develop Interstoff Asia Essential into a specialized event for cutting-edge fabrics and eco-textiles is correct,” said Wendy Wen, director of trade fairs for Messe Frankfurt HK, which organizes the fair.
CMP Asia has announced that it has renamed its Hong Kong Jewellery & Watch Fair. The event, which takes place in both June and September, will now be known as the Hong Kong Jewellery and Gem Fair. Organizers believe the new name better reflects the scope of the fairs. “The exhibit profi le of the fair is very different from 26 years ago when it started with the September edition,” said Celine Lau, director of jewelry fairs for CMP Asia. “Materials like diamonds, gemstones and pearls are of increasing importance alongside fine jewelry, so it is time to change the name.”
The September fair is the largest international jewelry fair in Asia and one of the top three in the world, drawing 37,000 visitors. Its last edition featured 2,630 exhibitors from 44 countries and regions and was held in Hong Kong’s two major convention centers.