Mixed joys and sorrows: the current situation of China's cashmere industry

Interview with Tian Hong, Director of Animal Carpet Department of China Food, Native Produce and Animal Import and Export Chamber of Commerce

my country is a big country of cashmere raw materials, but the quality of raw cashmere has been declining in recent years; my country's cashmere processing companies abound, but technological innovation capabilities are lagging; my country's cashmere sweater exports are increasing year by year, but the price and brand influence are negligible. In a word, mixed happiness and sorrow is the true portrayal of all aspects of China's cashmere industry.

The Source of Cashmere: the Contradiction between Quantity and Quality

Reporter: the output of cashmere raw materials in China ranks first in the world. Has this position changed in recent years?

Tian Hong: There is no doubt that China has always been the world's leading cashmere country. Because the world's raw velvet production is about 15000 tons, of which China accounts for more than 75% of the world's raw velvet production. In addition, China also imports 3000 to 4000 tons of cashmere raw materials from Mongolia, Iran and other countries every year. At the same time, more than 95% of the world's cashmere raw materials are processed in China. In other words, China controls almost all the cashmere raw materials in the world, and the control of the source part of the entire cashmere industry chain is particularly important, because it is directly related to the quality of cashmere products and the influence of the brand.

Reporter: China's cashmere raw material quality is so? Why?

Tian Hong: The quantitative advantage does not mean that the quality of cashmere raw materials in my country is constantly improving. On the contrary, the quality of cashmere in my country has gradually declined.

From a practical point of view, due to factors such as the macroeconomic environment, excessive liquidity, and the contradiction between supply and demand, although my country is the country with the best cashmere quality in the world, the quality of cashmere has declined significantly in recent years. For example, I have done a survey. Since 1980, the original breeding farm of Liaoning cashmere goat in Gai County, Yingkou, Liaoning Province has begun to cultivate high-yield cashmere goat breeds. Through years of efforts, the improvement of cashmere goat breeds has been successful, which has not only increased the yield, but also controlled the cashmere diameter at 15.38 microns. It is already a high-quality cashmere. However, as scattered farmers are guided by the market to feed a large number of foods that stimulate cashmere goats to produce cashmere, the cashmere goats produced in Liaoning have the problem of coarsening cashmere to a certain extent. At present, fiber fleece is between 15.5 and 16 microns, most of which are between 15.7 and 15.8 microns. In fact, affected by the market, Liaoning sheep are currently promoted at a faster rate, and they are no longer limited to Liaoning, Inner Mongolia and other cashmere goat breeding areas. Liaoning sheep are also widely raised. In order to save costs, many breeders blindly introduce sheep instead of buying sheep farms, but directly hybridize with Liaoning rams, which poses a certain threat to the quality assurance of cashmere.

Reporter: How to improve this situation?

Tian Hong: I think, on the one hand, we still have to adhere to the policy of limited breeding. Under the existing conditions, we should take the road of variety optimization, starting with scientific breeding and scientific breeding.

On the other hand, due to the large proportion of cashmere raw materials in the cost of end products, strengthening consumers' recognition of cashmere grade can effectively control the further deterioration of cashmere quality. To this end, the Ministry of Commerce issued the "cashmere and products grading standard", which divides cashmere into three or six grades, telling consumers that cashmere also has different grades, corresponding to different prices, and telling consumers what kind of cashmere is high-quality cashmere.

Cashmere Processing: Competition between the New and the Old

Reporter: China's cashmere industry status?

Tian Hong: China's cashmere and products processing quantity is the first in the world, the production capacity is the first in the world, and the export volume is the first in the world. More than 3/4 of the products in the world's cashmere consumer market are produced in China. Although in recent years, for the purpose of vegetation protection and ecological harmony, the Chinese government has implemented policies such as "banning grazing, restricting grazing" and "captive breeding", the status of Chinese cashmere in the world cashmere industry has not changed, and the share of Chinese cashmere products in the world cashmere market continues to grow. Moreover, we are pleased to see that Chinese cashmere enterprises are paying more and more attention to scientific and technological innovation, brand building and sustainable development, and China's cashmere industry is gradually transitioning from the stage of economies of scale to the stage of quality benefit.

Reporter: Can you describe the development characteristics of China's cashmere industry in recent years?

Tian Hong: as far as I understand it, China's cashmere industry has the following characteristics: first, with the structural adjustment of the international manufacturing industry, the cashmere processing industry continues to shift to China, and the export structure of China's cashmere has rapidly changed from raw materials to cashmere products, and has completed the transformation from a big country of cashmere raw materials to a big country of cashmere products. In 2001, the proportion of cashmere export and domestic sales was about 7:3. In 2006, the proportion of export and domestic sales reached 4.5:5.5. According to customs statistics, from January to July this year, China exported 1451 tons of cashmere and plush-free wool, totaling 146.66 million US dollars, up 57 percent and 51 percent respectively over the same period last year, while imports reached 5228 tons, totaling 87.61 million US dollars, up 47.8 percent over the same period last year. Imports have increased 2.38 times over a decade. The export of cashmere products was 692.23 million US dollars, up 19.9 percent year on year. This is a very brilliant number that arguably has never been seen in all these years. On the one hand, it shows that the world economic situation has begun to improve, on the other hand, it is because of the high-end product cashmere price elasticity. China's cashmere business entities have also achieved or are realizing the leap from family workshop management to group management and joint-stock management.

Second, although the world economic environment is in the doldrums, China has become the country with the fastest growth rate of cashmere products in the world. Mainly due to the economic downturn, especially since 2009, the international market downturn, the traditional foreign trade market and emerging wool processing enterprises began to turn to the cashmere industry, foreign businesses

They have also turned to domestic. On the one hand, it increases the pressure of competition in China's cashmere market, but at the same time, it also promotes the transformation and upgrading of China's cashmere industry, and promotes the novel style and quality improvement of cashmere products in China.

Third, the continuous expansion of the scale of deep processing of cashmere in China has a profound impact on the upstream. Cooperation between industrial chains is replacing troubled industries

A long time of vicious competition. At present, the determinants of cashmere raw material prices have gradually changed from a single foreign trade export price to a comprehensive market factors at home and abroad, and the leading role of Chinese cashmere deep processing enterprises in the market price of cashmere raw materials is becoming more and more obvious. With the continuous maturity of the cashmere market, the ability of enterprises in all aspects of cashmere trading to adapt to the market is also increasing, business behavior tends to be rational, and the blindness of price chasing has been greatly improved than in the past.

Reporter: This should be a good thing for China?

Tian Hong: Of course, but there are also some problems behind the vigorous development of cashmere processing. I think it's still a matter of changing the growth model. In recent years, the development of cashmere industry in China mainly depends on the expansion of scale, and the added value of products needs to be improved. In 2001, the average price of a cashmere sweater exported by my country was US $31.36; in 2006, the average price of cashmere sweater exports was US $28.86, which is equivalent to only about RMB 220. Some people in the industry said: "Cashmere sweaters sold woolen sweaters" Price. Cashmere such a high-end, scarce and highly concentrated resources of the industry is a pity.

Reporter: Why is there such a problem?

Tian Hong: There are many reasons for this problem. One is the lack of truly well-known independent brands. Our cashmere products exports often can only occupy the low-end market of international cashmere products, or for foreign brands to receive orders for processing, OEM exports, and become a processing base for foreign brands. In fact, the prices of cashmere products of well-known brands in the international market are very high, often more than ten times, dozens of times higher than our export prices. Second, China is still lacking in high-end technology for deep processing of cashmere. Advanced processing equipment such as computerized flat knitting machines and computerized spinning machines have not yet equipped our cashmere processing industry in large quantities. The third is the lack of effective marketing channels. The consumer market needs further cognition and experience on the quality of Chinese cashmere products and the deep processing ability of Chinese cashmere.

Terminal Market: The Embarrassment of Multi and Strong

Reporter: Can you talk about the current situation of China's cashmere brand?

Tian Hong: as far as China is concerned, there are a large number of cashmere brands in China, such as Ordos, Mihuang, Deer King, Snow Lotus, Zhenbei and other brands have a good influence and credibility in China. However, in terms of the international situation, China has not yet formed the advantages of cashmere brand, and the added value of products needs to be improved. A considerable part of Chinese cashmere products are still hovering at the low end of the international market. Although there are many cashmere products made in China in the high-end market, Chinese brands are rare, and some cashmere brand enterprises are still slowly exploring in the competition of international brands. Most of the cashmere products exported by our country enter the international market as "OEM production", but less than 20% of them are really linked to Chinese brands.

However, we should also see that with the implementation of the national export brand strategy, the pace of "brand going out" of Chinese cashmere enterprises is gradually accelerating, and more and more well-known Chinese cashmere brands are seeking markets overseas. some well-known cashmere brands have initially opened up access to the markets of Europe, the United States, Japan and other developed countries.

Reporter: What are the problems in China's cashmere terminal market?

Tian Hong: First of all, there is a lack of sales channels and a simple way. The industrial chain urgently needs to extend downstream. Products without brands will not form self-controlled sales channels; without multi-level, multi-way direct and smooth sales channels, it is difficult to accurately capture market signals, it is difficult to keep up with the consumer demand of the market, and there are obstacles to the realization of product value. There is cashmere products production of high-end technology penetration is small, product innovation ability is weak. Most enterprises still stay in the traditional design management mode, product design, new product development cycle is long, the market response is slow. The third is that in the Chinese cashmere market, the quality and style of cashmere products are too similar, and the homogenization competition is becoming more and more fierce, which inevitably leads to price competition and inventory backlog, resulting in product devaluation and capital turnover difficulties.