Shanghai Exhibitors Shift Strategies
September 3, 2007,
Export-oriented Chinese manufacturers facing hikes in labor and raw material costs, as well as steadily eroding tax rebates from the government, are reassessing their strategies, said mill execs exhibiting at Intertextile Shanghai here last week.
China's rising currency valuation is a key factor. "Trying to sell a stronger currency product into a weaker currency country is always a challenge," said Lu.
Several execs also predicted the profit squeeze will force smaller factories producing low-end goods out of business
"Competition can't just be based on the lowest cost," said Jing YuTang, chairman of bedding manufacturer Tevel. "It doesn't affect us as much because we don't compete on price. Also, our market in the U.S. is not as big as our market in Europe." Tevel is also cushioning itself by producing for the domestic market, but only at the high end.
Expansion simply for the sake of size is likely to hurt some manufacturers, said Wallace Hui, managing director of China Home Fashions. "The world doesn't need another factory. What the market needs is originality," he said.
China Home Fashions has deliberately managed its size, with an emphasis on original, hand-painted artwork from its design team "We are small, but we don't want to outgrow ourselves," Hui said. "So we focus on execution."
In the meantime, the heady pace of factory expansion has largely ended for the Chinese industry, according to Thomas Chen, vice general manager of Yantai North.
"The capacity will be steady — there's no profit now in looms," said Chen, who added that to boost its value-added positioning, the long-time sheet manufacturer has expanded into top of bed, which Yantai North had on display at Intertextile.
This year's fair also featured a greater number of non-Chinese home textiles exhibitors. Though they represented a small fraction of total exhibitors, their profile is rising, with producers from 21 countries represented.
And penetrating the market in China isn't their only goal.
Towellers of Pakistan took a booth in the fair to see U.S. and European accounts. Tariq Mohammad Khan, director and company secretary, didn't see as many U.S. buyers as he had hoped, but did have inquiries from Europe, Lebanon, and Brazil. However, he was upset during the fair by non-trade visitors peddling cheap watches, playing cards, and massages to exhibitors, commenting, "It's very unprofessional."
Al-Abaid of Pakistan sees entry into China as inevitable within a few years; however the company is showing here because so many of its customers have buying offices here.
Still, taking the long view, "It's only a matter of time that a good Chinese company will open a retail chain," said Amar Shaffi, general manager of marketing, Al-Abaid.
CM NET of Australia, which with its Chinese manufacturing partner produces fashion bedding sets under the Orient Sense and Chameleon brands for Australia and New Zealand, is seeking either a Chinese distributor or retailer.
Said sales director Thomas O'Dea: "I'm not going to call it until I get money in the bank," but added, "We've had a good response today."
Among those who passed through were potential accounts or distributors from the U.S., U.K., India, Germany, and Estonia.
Fiber manufacturer Lenzing, of Austria, has been exhibiting at the show for four years and its executives noted the fair's evolution.
"Of course, most of the customers here are Chinese, but this is also an opportunity to contact the tertiary customers who source from China," said Susanne Jary, textile marketing, business development, home textiles. Jary said on opening day she met with attendees from Europe, India, and China. "It's necessary to visit these fairs because you really have the opportunity to meet people from a big region in one place."
Caldeira, a five-time exhibitor, had hoped to see more American buyers — as opposed to agents from Shanghai-based sourcing offices for U.S. retailers and suppliers. Nonetheless, "we had some good quality meetings, and there were several buyers who came over," said Jeff Shaffer, U.S. national sales manager. The dec pillow company, which owns manufacturing both in its U.K. home base and in China, was also happy with the European contacts it made at Intertextile.
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