follow us

  • Jennifer Marks

Class is in session

I'll be spending the last week of August in China doing the usual things trade editors do — visiting a few factories, spending time in the sourcing offices of U.S. companies and taking in a trade show.

And at week's end, I'm giving a presentation to the China Home Textiles Association, addressing the group 17 weeks before the last of the quotas drop.

I'm going to tell them about the choice between dealing through suppliers versus selling directly to retailers. I'm going to talk about the importance of product consistency, solid supply lines and all the standard components that go into today's buyer/seller relationship.

But I'm also going to tell them which issues HTT believes will be critical in the 18 to 24 months following quota elimination.

  • Safeguard provisions: Many executives believe that the government will enact safeguard provisions against Chinese goods within months of quota elimination. I say this based on anecdotal reports and a poll on HTT's home page, in which 51 percent predicted the United States will move forward with some sort of restrictions.

  • The portfolio approach: Because the U.S. market expects instability once quotas are removed, most players say they will spread their orders among several manufacturers in several countries. While most manufacturers predict that China will dominate in home textiles manufacturing, importers are concerned about the possibility of safeguard restrictions.

  • Pricing: Because of the impact of quota elimination, everyone expects pricing competition to be fierce, especially in the first half of the year. But as we move into the back half of the year, the market should settle down as U.S. importers determine which sources of supply are most reliable.

  • Consolidation: The wave of manufacturers that will gain access to the U.S. market is probably going to result in more consolidation on the U.S. supplier side. Recent sell-offs of SureFit (to J.R. United and investment house DE Shaw) and Cecil Saydah's rug business (to Glenoit), are probably the beginning of a wave that will roll for several months.

  • Partnership: We are starting to see smaller, privately owned suppliers quietly shopping their operations to overseas manufacturers. We expect more overseas manufacturers to open joint venture operations.

  • Global producers: Over the next 24 to 36 months, there will be a rising group of super-manufacturers that will sell to many countries. The super-manufacturers will sell to super-importers in major global markets — both retailers and suppliers. It's also likely, however, that there will be manufacturing consolidation in some of the major textiles-producing countries, including China. Smaller overseas manufacturers that cannot master the skills needed to deal with major customers will either have to combine with other small manufacturers to grow, or go out of business.

Finally, I'm going to tell them that the winners in the new global marketplace are going to be companies that have the most efficient production, consistent quality levels and reliable execution.

And that's just as true for U.S. firms that will ride into the future by leveraging their design, marketing and distribution expertise as it is for factories in China, India, Pakistan and Brazil.

Featured Video

Other Home Furnishings Sites

Casual Living
Gifts and Decorative Accessories
Home Accents Today
Kids Today
Furniture Today