Foreign lands, familiar problems
October 20, 2003,
Peering into China's future is like watching a documentary film about America's industrial past. That was the sensation last week at the Shanghai Hotel, where manufacturers and more governmental textiles officials than you could shake a stick at gathered to discuss what the industry needs to do to prosper.
Home textiles wholesalers in America and elsewhere see the clock ticking toward 2005 and imagine thousands of Chinese mills waiting for the chimes to sound midnight so that they can flood into the country with as much dirt-cheap product their looms can churn out.
The Chinese see things differently. From their perspective, what they've got on their hands is an inchoate industry populated by 10,000 small to medium manufacturers, many of them either so geographically remote or so out of step with modernization as to face an uncertain future.
The industry is frantically trying to pull itself together so that it can properly address the opportunity to sell to the mother of all consumer markets: China. It's got a lot of work to do to get there. The agenda — from the Chinese point of view — includes:
1. Educate consumers. Think it's a pain to deal with consumers who expect 600-count sheets for $12 and will only shop on sale? How about selling to a massive consumer base that largely considers home textiles the utilitarian equivalent of toilet paper and paper towels? The government and industry are working to teach consumers that home textiles should be part of a lifestyle expression, not just cheap crap you use to dry off after the bath.
2. Stop producing crap. If China's citizenry doesn't see much value in home textiles that's because there isn't much. Although the industry has upgraded its standards at the official level, far too many factories are incapable of producing to those standards. Many others are unaware that new standards exist.
3. Learn how to build brands. In the U.S., it seems we hardly see the word "brand" anymore without the words "erosion" or "irrelevance" following hard on its heels. China is still in the early stages of brand-building. And despite the fact that a manufacturer's margins on goods sold to Chinese stores run around 50 percent — the hitch, it's a guaranteed sale arrangement — brand marketing is considered an expensive proposition. Which it is. Especially if you're running a single factory that produces cheap crap.
Of course, not all 10,000 mills are producing cheap crap. There are any number of mills that are completely export-oriented, or nearly so. They not only know what the new standards are, they know what the international standards are. What this group may fail to appreciate is the growing opportunity in their own back yard.
So, in sum, what China needs is home textiles suppliers that are adept at marketing, brand-building, adding value to sharply priced products and influencing consumer expectations. Gee, doesn't that sound like somebody we know?