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Shoulberg PUBLISHER/EDITORIAL DIRECTOR

Why Is This Chinese New Year’s Different From All Other Chinese New Year’s?

February 21, 2011

At the risk of mixing cultur al, religious and geographic metaphors, allow me to ask and answer this question...doing so four times, of course. (If you don't get it, ask someone who does.)

1. Why is this Chinese New Year's different from all other Chinese New Year's?

Ever since the textiles industry packed up and relocated to Asia, American customers - importers and retailers alike - have scheduled their lives around this all important event on the Chinese calendar.

Everyone knew the country essentially shut down for the better part of two weeks and if you didn't get what you wanted before the holiday began, you pretty much could assume the dumpling position and sit and wait.

But you had a reasonable expectation that once the holiday was over, things would quickly return to normal and the world would again be safe for sheets and towels.

Not this year. As the holiday ends, we're going to see the gradual transformation of the Chinese textiles industry really pick up speed. A lot of factories are not going to come back up on line. This has been happening slowly for the past two or three years, but this New Year's it's going to be huge.

2. Why is this Chinese New Year's different from all other Chinese New Year's?
In the past, the resumption of production in China almost represented a back-to-school moment, signaling a fresh start.

That was often the case for prices, whether they were going down or whether they were going up. As cotton has continued its rock-and-roll pricing pattern, there has been an expectation that commodity costs would come back down to earth when the new year started.

Not this year. Cotton will cost substantially more as the looms are powered up again than when they were shut down a few weeks ago, and there's nothing on the horizon to suggest that will reverse in any meaningful way. Higher cotton prices - and polyester too - are here to stay.

3. Why is this Chinese New Year's different from all other Chinese New Year's? In the past, once those factories and mills did start cranking up, it meant the pipeline was reopening and in four to six weeks goods would land in Long Beach and Charleston and points in between.

Not this year. This may be the Year of the Rabbit, but it's also the year of the Chinese consumer. An unprecedented percentage of the products coming out of Chinese textiles plants are never going to leave China. They are going to go straight into stores in Shanghai and Beijing and dozens of other cities that are bigger than any of their counterparts on this side of the Pacific.

4. Why is this Chinese New Year's different from all other Chinese New Year's?

This Chinese New Year's is going to be different than all other Chinese New Year's because this year marks a turning point in the worldwide home textiles industry. China is passing the percale baton in 2011 as the focal point of the business.

It will still be the largest source for home textiles products and it will still be a powerhouse for product. But India - and to a lesser extent Pakistan, Southeast Asian countries like Bangladesh and even Latin America - are increasingly going to become equal and viable alternative choices for American companies looking to source home textiles.

It's a seminal moment in the global business model, truly happening even as we speak. And it's not something that's going to pass over.