资讯 1 10 英文网 307 Feature 548784 Message from 115th Canton Fair 2015-05-13 15:40:11 yangfang
Home  >>  Column
Message from 115th Canton Fair
2014-05-14

Wu Faxin

General Manager of HongKong JKN International Group

 

There has long been a saying that the textile industry has a three-year waiting time before bouncing back. So a friend of mine asked me whether the textile industry is embracing a golden period along with the recent sign of RMB depreciation. My answer is negative. Short-term bounce-back will not change the longtime depressed landscape.

 

For those Chinese textile companies who believe in the aforesaid saying, the cold realities of 115th Spring Canton Fair in 2014 might mean their dreams have fallen through once again and the big challenge to textile industry is here to stay.  It can be predicted that the destocking process of tremendous national cotton reserves will last much longer than anticipated due to the use of large quantities of substitute products.

 

The author has attended all Canton Fair since its inception in 1991, except for one during the SARS epidemic. The feel of Canton Fair was strong in Liuhua Exhibition Hall where the fair was first held, despite the huge crowds and poor air quality. But the traffic through Canton Fair seems to be declining after it moved to new exhibition hall at Pazhou. (The official statistics, of course, look good). Canton Fair is indeed a window to the market dynamics, and for those frontline marketing personnel, visiting exhibitors and overseas purchasers face to face at Canton Fair is the only way to have a personal touch on the dynamics and trends of textile and clothes industry, and within the shortest possible timeframe.

 

As the old saying goes, insiders know much more about the way it works than outsiders. At this year’s 115th Canton Fair, the textile and clothes industry were characterized by more new customers, fewer regular customers, more non-cotton products, less pure cotton products, more new models and fewer old approaches. It is particularly worth noting that the percentage of pure cotton fiber products is declining as opposed to the rising percentages of non-cotton fiber and chemical fiber. Companies are advised to fine-tune their raw material procurement strategy in response to the trends of finished products. The author provides some insights into these new characteristics of the textile industry, in hopes of informing cotton-related companies.

 

1. More new customers and fewer regular customers

The official statistics reveal that both the numbers of participating buyers and the trade volume of the 115th Spring Canton Fair declined.

 

The traditional export market for Chinese textile goods is losing.  The regular overseas customers at Canton Fair think the value of the fair is declining year by year. With high cotton prices, Chinese textile goods are almost noncompetitive. For an example, the traditional fabrics used in production of trousers, the price of twill, ring-spun 20x16/128x60 57/58”pure cotton dyed cloth is quoted by Chinese textile companies at Canton Fair at USD1.95/yard CIF Chittagong, Bangladesh, as opposed to the price of USD1.56/yard CIF Chittagong, Bangladesh as quoted by overseas textile mills, a difference of 25% ( 1.95-1.56/1.56=0.25=25% ). That is why purchase orders all go to Vietnam and Bangladesh and why overseas buyers and exhibitors go for these countries given the close proximity to local markets. Meanwhile, Chinese textile companies have been losing confidence in Canton Fair over years, as several major textile companies I know were all absent from this session of Canton Fair and went to overseas exhibitions for higher-value orders. It is just like seafood sellers move to wherever restaurants are opened.

 

While the customer base of traditional export market shrinks, such emerging markets as South Asia, Middle East and Africa see a remarkably growing customer base.

 

Official statistics indicate that 188119 foreign individual buyers from 214 countries attended the 115th Canton Fair, 0.81% fewer than those at the previous session and 7.23% fewer than the 113th Canton Fair. In terms of distribution of customer base, 55.46% of foreign buyers came from Asia, 17.19% from Europe, 14.68% from Americas, 9.17% from Africa and 3.40% from Australia. The largest YOY increase was seen with African buyers, while the largest YOY decrease with European and American buyers.

 

Many new customers came to the fair for fun, with even some longtime foreign residents in Guangzhou on a mission to defraud it of some samples.

 

With the high cotton prices in China and noncompetitive Chinese textile goods, only some suppliers of low-end African batik and low and medium-end towels came to the fair with products and quoted prices attractive to new buyers from Africa. The demand of participating buyers for textile products has shifted to high-end products to low and medium-end products. In #16 exhibition hall, a Changzhou-based plant manufacturing over 80-count yarn-dyed fabrics for high-grade shirts spent hundreds of thousands Yuan attending this session of Canto n Fair, only to end up being visited by two participating buyers for several inquiries throughout the whole event.

 

2. More non-cotton products and fewer pure cotton products

 

As a result of high cotton prices in China, Chinese textile goods are no longer competitive and purchase orders can hardly flow back once gone. If you were a buyer, you would not buy Chinese textile goods anymore. 

The onsite observations indicate that even the varieties of commodities that buyers wanted to buy changed, due to the declining consumption of cotton fiber and rising consumption of non-cotton fiber and chemical fiber. We learned from several exhibition booths that few prospective buyers inquired about pure cotton products and most of exhibits were blends, chemical fiber and new-type fiber fabrics. In sharp contrast with previous sessions where some major cotton textile companies were seen, almost no exhibitors came to this year’s session with pure cotton products. The marginalization of pure cotton products was a commonplace. Chemical fiber, multifunctional products and multi-component yarn are widely used in towel, bed sheet, home textile, jeans and T-shirt products. Over the past years, hemp fiber and hemp-blended fabric especially linen and ramie-based products, are on the way to overtake cotton fiber. The traditional textile goods and clothes are heavy users of manmade cellulose fiber (viscose, modal and etc) and ramie and linen fibers whose percentages of consumption have increased from about 10% to 30% at present and are expected to rise at a quickened pace. (Ramie-based products enjoy very low customs duties when exported into the US). In the meantime, polyester cotton blended fabric and grey viscose cotton blended cloth products are highly popular. According to the boss of a famous knitted T-shirt and underwear factory in Nanchang of Jiangxi province, most of his customers had switched to CVC60/4060%cotton40% polyester yarn due to excessively high price of cotton yarn, resulting in 40% decrease in cotton consumption.

 

It can be predicted that the extensive use of non-cotton fiber will make the period of destocking 13 million tons of national cotton reserves much longer than previously anticipated. The message from the 115th Canton Fair is that the springtime for cotton industry is fading.

 

It is worth noting that the rise of e-commerce model at Canton Fair has produced considerable impact on the traditional way of doing textile and clothes business. The online version of Canton Fair and other online initiatives have made the low-cost international marketing practice based on e-commerce possible for textile companies. The onsite interviews suggest that the online version of Canton Fair realized online negotiation and onsite transaction and facilitated the export transactions of domestic companies effectively by leveraging the brand reputation as China’s first trade fair and the database of exhibits and buyers that has been built up over the past decades. Meanwhile, the website of Canton Fair provides a large-sized e-commerce platform where Chinese companies can find more business opportunities through easy information exchange with international buyers.

 

Several friends of mine came all the way from Burkina Faso to China for the 115th Canton Fair, selling cotton to China and purchasing and bringing Chinese light industry products back home. In addition to shoes and clothes, they came to the fair for pure cotton batik of 24x24/72x60.  These African friends first knew about the products and contact details of suppliers via the official website of the fair before attending the fair and then confirming the quality requirements and concluding a contract with a batik supplier right on the spot.

 

Canton Fair allows us to keep track of the true picture of the market and its future trends. Walking around on the showground makes it possible to keep track of the market hotspots. Many fabric and accessory suppliers and purchasers started quick matching online, since the online version of Canton Fair shares the same product database with the physical one, thus enjoying unparalleled advantages in resources, publicity and channel integration.

 

With government ceasing to stock cotton, Chinese cotton growers who used to enjoy governmental production have no idea what to do. The 3-year temporary stocking policy spoiled Chinese cotton growers instead of protecting them. The depressed market reminds cotton-related companies that the market remains cold although the spring has approached, that the fantasy about industry recovery is a wishful thinking. Once the fantasy broke, they wake up to a totally different landscape of cotton industry.

 

God bless cotton growers for a higher cotton price, and God bless textile workers purchasing cotton for lower-priced cotton. It is not something human beings can do. Let’s pray. Amen!