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China Exporters Keep Adapting

Innovation, Exclusivity, New Capacity are Tools in Struggle for Share

After years of breakneck growth, China's home textiles manufacturers are grappling with a somewhat stronger currency valuation and the recent 4% rollback on government subsidies, as well as the rising raw material prices that are impacting manufacturers around the globe.

Despite home textiles' relative slack performance in the U.S. retail market last year, China's home textiles producers' worldwide exports grew by 30%, according to the country's Customs division. While pricing pressures may put the squeeze on profitability this year, many manufacturers continue to build out their physical plants as they look to drive top-line business.

Zhejiang Multi-Glory, which makes utility bedding and other home textiles, is one of the exporters that is currently in expansion mode, adding capacity as it looks to develop new products.

Global competition has impacted the business "to a degree," said Zhejiang Multi-Glory president Zhang Junhau. "We put emphasis on design and quality, and keep on optimizing the proportion of our products and keep innovating," he said.

Bedding and fabric manufacturer Yantai North Home Textile Co., already one of the country's largest operators, expects more modest growth in the United States this year — around 10%.

"The U.S. market is already big for us," said Juliet Zhao, export manager. "Next we will try to open the South American market."

Towel manufacturer Loftex is expanding capacity, but also has grown more focused on developing new products for the mid-to-high range of the U.S. market, according to Yanping Wang, president.

"The company is focusing on its internationalized strategy to become the best supplier all over the world," Wang said. "Having made inroads into the U.S. market by innovation and fashion, Loftex is now focusing more attention on solid color volume business."

While China's leading manufacturing expand their enterprises, many of the smaller-scale manufacturers are working to broaden their horizons as well.

Zhejiang Babei Textile Co. Ltd. has added 30 looms from Italy and France to expand its ability to serve a broader market for its high-end upholstery and drapery fabric. Babei's 2006 exports to the United States totaled around $4 million, and the company expects to boost that by 25% this year, according the president Yak Wang.

"We are not worrying about the newly added capacities around the world," he said. "We are trying to develop products that other manufacturers are not doing."

But all manufacturers, no matter how optimistic or aggressive, are feeling the pinch of market forces.

"The price keeps sliding down for the competition," said Mo Wenjian, general manager of curtain and fabric manufacturer Hangzhou MeiYuan Textiles Co. "There's fierce competition," he said, suggesting and the challenge of maintaining suitable margins is tougher than ever given "China's currency appreciation and the rising price of yarn."

Still, Hangzhou MeiYuan Textiles has added 20 jacquard looms and expanded its design team as its looks to boost its $6.5 million in 2006 exports to the United States by 30% this year.

For fabric and curtain manufacturer Hightex Co. the answer is design innovation. "Competition is mainly coming from Turkey, India and Pakistan," said Ge, the Hightex general manager. "We will design more new product ourselves to avoid competing with OEM factories."

For bedding manufacturer Shanghai Luolai Home Textile Co., a brand leader within China, developing intellectual property is also key.

"It's more urgent now to create private trademarks," said Xue Weicheng, chairman. "It's necessary to develop for targeted customers — directional development in line with business trends."

TOP MANUFACTURERS: CHINA

Company Name, Highlights 2006 exports to U.S. (millions)
Source: HTT research
1. Zhejiang Multi Glory Group $180
Expanding by 30% this year.
2. Sunvim 180
Designation as exclusive towel provider for Beijing Olympics tripled stock price.
3. Yantai North Home Textile Co. 67
Looking to enter the South American market next.
4. Loftex 53
Plans to double U.S. volume in the next 18 months.
5. Guangzhou Textile Industry Union I & E Corp. 50
Plans to double U.S. volume in the next 18 months.


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