Why is Chinese cashmere products cold?

China is the largest exporter of cashmere raw materials in the world, but it is a scarce country for cashmere luxury goods brands. In the West, expensive cashmere products embody the preciousness of their "soft gold" in price, while the domestic market is a mixed bag with low prices ranging from a few hundred yuan to a thousand dollars.

A noble industry must jump out of the circle of low-price competition, and it must be polished and carved with time. It is not possible to show the original value of the industry unless it is large, fast, and fast.

It is understood that nearly 3,000 cashmere enterprises in China have supplied more than 90% of cashmere raw materials to the world, and their export volume accounts for 80% of the world total. However, China's cashmere products have not been bargaining power, about 85% of cashmere production companies only for European and American brands OEM.

Although after decades of development, China has developed into a “cashmere factory in the world”. The domestic cashmere industry has formed a complete industrial chain, and the world’s cashmere processing technology, equipment, and enterprises have also accelerated their transfer to China, but China’s cashmere There are still many problems in the product market, "such as the lack of industry self-discipline, disorderly competition, lack of technical innovation and product development, lack of branded products, price reduction and marketing issues," said Xiong Xiaokun, a light industry researcher at CIC Advisors. “At present, domestic cashmere companies are generally feeling the pressure due to the weak external demand, rising factor costs, and fluctuations in foreign exchange rates. How can Chinese cashmere companies resist the cold? Improve the core products with brand, quality, and technology. The value of promoting the transformation and upgrading of the cashmere industry has become the only way to escape the predicament, said Bian Zhenhu, chairman of the China Chamber of Commerce for the Import and Export of Animals, Animals, and Animals.

The limited nature of disorderly competition cashmere determines the special identity of its luxury goods. However, in China, cashmere products do not show their "soft gold" noble.

"Now the cashmere market is confusing, and it can be said to be a fisheye." Meng Fanshen, director of marketing operations at Haoshi Weixin Investment Co., Ltd., cuts the shortcomings of the industry.

Due to the low barriers to entry of cashmere processing technology, some products are filled with inferior goods and deliberately imitated, and markets are sold at low prices. These small brands lacking in design and R&D capabilities pursue “acquisitionism” and follow the popular styles of well-known brands. “Adding wool to cashmere and removing the scales after silking process is very similar to the feel of cashmere, which is a real degree of confusion.” Meng Fanshen stated that even professionals need to be carefully identified to distinguish between authenticity, not to mention ordinary Consumers.

Because of the low cost, these "Liceng Card" cashmere sweaters are popular for prices as low as 200 yuan. According to industry sources, an ordinary cashmere sweater costs 600 yuan to 800 yuan, while the more complex process is more expensive.

The gap between the price of a few hundred dollars and the actual price of 10,000 yuan makes the watershed of the monopolistic market and the low-end market suddenly appear.

Consumer Li told reporters that the retail price of cashmere sweaters has risen by an average of 300 yuan this year. After the price of cashmere at the beginning of the year, the price of the cashmere brands in the mall exceeded the price of more than 2,000 yuan, and at least 1700 yuan to 1,800 yuan. However, in order to win customers, the phenomenon of discounts in shopping malls is also very common. “You hit 20 percent, I hit a 70 percent discount,” and the profit margin of cashmere products is further compressed.

At the same time, the low-cost competition of export companies allows foreign merchants to take advantage of the benefits of fishing. It is understood that cashmere raw materials last year, the price of 17 to 18 cents / gram, this year an average of 3 to 5 cents per gram, but the price of orders for various companies are not the same, between 19 to 22 cents. In the short term, low prices can indeed attract large orders, but this undoubtedly lowers the value of cashmere and is not conducive to the development of the entire industry.

In addition, the lack of industry standards has led to chaos in the market. Industry insiders expressed concern: If you let loose the disorderly competition and shoddy work, the industry ecosystem will certainly be destroyed. Therefore, a unified industry standard and the Chinese cashmere trading market need to be established.

Tian Wei, head of the Animal Husbandry Division of the China Food and Animal Commodities Import and Export Chamber of Commerce, expressed that the Ministry of Commerce and the Food and Gas Merchants Association and the Tianxiang Group will issue industry standards to divide cashmere into five grades according to fiber diameter, length, and physical and chemical indicators. Satisfy consumers' right to know and further regulate the market.

High raw material prices In addition to the impact of low-cost defective products, the cashmere industry is still experiencing the pressure of raw material prices.

Cashmere raw material prices have been operating at high levels since 2009. Customs statistics show that from January to August 2011, China's cashmere, lint-free exports 1,505 tons, the amount of 148,390,000 US dollars; a year-on-year decrease of 9.8%, but the amount of growth of 24.6%.

"The direct consequence of the nearly 30% increase in raw material prices is the high cost of end products, which makes the cashmere processing industry, which is already at a disadvantage, very vulnerable. How to crack this pressure is the most important issue in the cashmere industry," Tian said.

Ningxia Zhongyin Cashmere Co., Ltd. Xue Qun said that the price of domestic dehaired cashmere has risen from 800,000 yuan per ton at the beginning of last year to 950,000 yuan per ton, and it has encountered the low tide of international cashmere market in 2011, and the market demand is lower than expected. There are many unfavorable factors for companies going out.

Tian Hao pointed out that the rise in cashmere prices is actually a double-edged sword. From another perspective, it means that the degree of scarcity is becoming more and more obvious, which is conducive to further cultivating the high-end market. Therefore, cashmere is expected to achieve potential value.

It is widely estimated in the industry that the annual output of cashmere this year is less than 10,000 tons. "It is hard to imagine that the global consumption will be less than 10,000 tons. The rare characteristics of cashmere determine that it is not a people's livelihood product, and its continuous development power lies in high-end demand." Tian Hao stressed.

According to relevant data on domestic sales, from January to September 2011, 1,689 tons of cashmere and lint-free exports fell by 11% year-on-year to reach US$169 million. The export value of finished goods was 974 million U.S. dollars. Among them, cashmere sweater exports 50,900 U.S. dollars, a year-on-year decrease of 3.8%. The number of scarves exports decreased by 12.5% ​​and the amount was 86.27 million U.S. dollars.

The above data shows that China's exports of cashmere raw materials and manufactured goods have declined slightly year-on-year this year, but there has been no significant decline in cashmere raw materials, indicating that enterprises have begun to increase their efforts in opening up the domestic market.

Weixin Cashmere Group has been exporting garments for over three years, exporting accounts for more than 80%, and exporting three to four hundred thousand cashmere sweaters every year. “The export volume this year has increased slightly. The European debt crisis has had little impact on the luxury consumer market. After all, the spending power of this group is still relatively stable. However, we are gradually considering increasing the domestic sales share. We have started to transfer in the last three to five years. Domestic sales, especially this year's investment is relatively large." Meng Fanshen said.

Although the export market is relatively stable, many brands are still beginning to seize the domestic market opportunities. It is understood that brands such as Ordos and Luwang have already begun to occupy the domestic market.

However, the intensive cultivation of the domestic market still requires patience and perseverance. Meng Fanshen admits that "the cashmere industry is very tired in the domestic operation", the preparatory work is indispensable, it takes a lot of effort to investigate the market, grasp the fashion trends of colors, styles, and shape the brand style.

The difference in cash flow is the main reason why exports are more favored. “Although the profits are thin for export, the risk is almost zero.” Meng Fanshen stated that, usually after foreign customers place orders, they can produce prototypes and the cost can be quickly recovered after processing. The cycle is about a month.

In contrast, the domestic investment is large, the risk is high, and the return is small. "General cashmere finished products have a sales rate of more than 60%. It is very good. If there is a large backlog of stocks, the cost will be difficult to recover. It may take one year for the operation." But in Meng Fanshen's view, the domestic market has the potential, but it still needs Nurture, so the task as a pioneer is even heavier, but in the long run, this is a path worth exploring.