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China Manufacturers Grapple with Fast Growth

Although China stands as monster competitor to most in the global home textiles community, China's leading manufacturers are as concerned as their colleagues elsewhere about pricing pressures and exploding capacity levels.

“Compared with India and Pakistan, China doesn't have pricing advantages, so Chinese manufacturers should focus on product quality, delivery times, customer service and packaging,” said Chen Yizhon, general manager of Yantai North Home Textile Co.

Many of China's manufacturers see their country as a late arrival to the home textiles game, noting that China's industry has been expanding and modernizing for only a decade or so. Most insist that labor costs are cheaper in India and Pakistan. They see China's advantages as having access to regional packaging plants and greater production efficiencies.

They also see a looming shakeout among manufacturers in all three countries, as capacities continue to escalate.

“Some Chinese manufacturers blindly assume that the home textiles industry is a good, growing industry without considering the cost advantages and production capacity increase from India, Pakistan, Brazil and Vietnam,” said Qu Zhiming, chairman and general manager, Shanghai Worldbest Hometex Group Co.

“This kind of blind capacity expansion,” he said, “will just lead to another round of fierce inter-company elimination and price competition between Chinese manufacturers.”

On another front, the domestic market has not yet shown that it is ready to absorb greater levels of relatively high-end goods, according to manufacturers who spoke to HTT on and off the record. China's citizens remain savers rather than big spenders, and their interest in better home goods lags their interest in other consumer products.

“The domestic Chinese market needs guidance,” said Zhang Junhua, president of Multi-Glory International Feather Co. “The concept of 'enjoyment-oriented consumption' needs to be built up to attract the consumers.”

Said Yantai's Chen: “In the domestic market, many companies focus solely on the packaging rather than the product's quality, often with problems of shrinking, pillowing, balling up, etc.”

Chen pointed to Australia as the next major market ripe for Chinese goods. “Australian consumers' habits and tastes are similar to the Americans' and the Brits', so our business is going well at the moment.”

As for Europe, its better profit margins are offset by the fragmented assemblage of countries, each with its own tastes and standards. What makes America attractive is its colossal volume buys, manufacturers said.

And buy America does. Through the end of February, U.S. imports of cotton sheets from China were up 183.8%. However, Pakistan and India each shipped twice as much volume into the country.

In the cotton bedspread/quilt category, China's product jumped 270.9% last month, but Pakistan still managed to ship nearly 16 times more volume.

China's growth has been most severely checked in the towel category, owing to the re-imposition of quota levels in late 2005. China's exports of terry towels to the United States rose just 70.7%.

Not only did the major competing home textiles-producing nations of India, Pakistan, Brazil and Turkey do more towel business than China, but so did Bangladesh and Thailand, while Vietnam's towel volume was nearly on par.

“The disadvantage of the U.S. market is that as most global manufacturers are striving to enter, the United States is gradually getting saturated in terms of quality,” said WorldBest's Qu.

He pointed to quality, credibility, product development and solid customer service as the keys to prevailing in the market — for all manufacturers.

Multi-Glory's Zhang concurred. “The companies that lack product-designing ability and product quality will be eliminated. Those focusing on the improvement of their design ability and product quality will become more mature.”

TOP MANUFACTURERS: CHINA

Company Name 2005 Exports to US (millions)
Source: China Ministry of Customs
1. Sunvim Hometextiles Co. $105.5
2. Huaya Industry & Trade Group 86.3
3. Shanghai Worldbest Hometex 61.9
4. Loftex Industries 50.3
5. Zhejiang Orient Holdings 50.3
6. Yunlong Import & Export 34.8
7. Yantai North Home Textile Co. 34.2
8. International Feather Co. 33.5
9. Haining Mengnu Group Co. 32.5
10. Holding Shanghai Home Textiles 31.9
11. Knitewar & Home-Textiles Corp. 31.4
12. Shaghai Minguang Import & Export 29.9
13. Jiangsu Hong Lui Sheet Group 26.2
14. Quingdoa Xiyingmen Import & Export 26.1
15. Shandong Haiyue I & E 25. 1
16. Native Produce Copr. 24.6
17. Orient International* 24.2
18. Shandong Machinery I&E Group 23.3
19. Shanghai Home Textile I&E Co. 21.8
20. Qingdao Yijia Artex I&E Co. 21.6


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