China´s Silk Industry: A "New Silk Road" to the International Market 11-26-2003 13:38

Today, more silk is produced in China than anywhere else in the world. In 2002 China's silk production accounted for 70 percent of the world total. Mass production has made silk exports one of the main sources of foreign exchange for China. Unfortunately, there are no world-recognized brands in China's silk industry. In today's Market Analysis, we take you to see the latest developments in the industry and the opportunities that may be available for foreign companies.

It looks like an ordinary fashion show. The variously colored garments make the models look more attractive, these garments aren鈥檛 made of cotton, polyester, nylon or other fabrics, but only authentic silk. At present, silk-made products in China aren鈥檛 just limited to clothing, and different kinds of silk products can be found even in the form of ornaments such as silk paintings. There is one product that enjoys particular popularity.

The anchor wearing traditional Chinese clothes said to reporter, "The clothes I am wearing are traditional Chinese clothes. In Chinese, it is called "Tangzhuang". During the ancient times, 鈥淭angzhuang鈥 were only worn in the special and formal occasions such as wedding receptions and traditional holidays. Today, "Tangzhuang" is making the great comeback. And has gained more reputation nationwide and worldwide particularly through Shanghai APEC meeting in 2001."

This scene was the highlight of the Shanghai APEC meeting in 2001. This has not only won world fame for the silk-made "Tangzhuang" style, but has also encouraged good sales.

Liu Guolian, Professor of Garment Dept, Suzhou University, said, "The silk made "Tangzhuang" showed a very good sales performance during the 2002 Spring Festival. This has greatly promoted China's silk industry. Sales of "Tangzhuang" have been very stable since 2001. Silk made "Tangzhuang"has captured a larger market share than "Tangzhuang" made from cotton or other natural fabrics."

Westerners originally became acquainted with ancient China through the Silk Road. China is a country with a long history of silk production. Currently silk production has become a pillar industry in Zhejiang and Jiangsu provinces in eastern China, the birthplace of China鈥檚 silk industry. More than 50 percent of silk companies in these areas have the latest up-to-date equipment.

Furthermore, in 2002 China's silk output reached over 650,000 tons, making up 70 percent of the world total and with an output value reaching 10 billion US dollars. There are currently more than 2300 silk companies nationwide.

Xavier G, Lavergne, Secretary General of International Silk Association, said, "We have seen impressive development of Chinese silk industry. The western companies used to buy raw materials in China. From the past two years that has moved to more fabrics and more finished garments. They are quite good quality. This is where the Silk Road started. It looks the Silk Road is coming back."

The quality of China's silk products has improved a great deal. But unfortunately China's silk industry has no world-recognized brands. Chinese silk companies have realized the importance of brand building and made this their top priority.

Sheng Jianxian, Deputy GM of Hangzhou jinfuchun Silk &Chemical Fiber Co., Ltd, said, "Our brand building is far behind western countries. Brands are a means of dividing up the market. Brands must be recognized by consumers."

Xavier G, Lavergne, Secretary General of International Silk Association, said, "Marketing is really important to build a brand. We have seen some silk groups put a lot effort to build brands and put a lot of money to develop their image. This is time consuming and energy demanding. Still there are a lot of marketing activities to be developed."

Besides brand building, WTO agreements are another challenge facing China鈥檚 silk industry.

According to the WTO agreements, all export quotas for textile products will be lifted by 2005. On the one hand, this will have the effect of promoting China's textile industry. But on the other hand there is a lot more that needs doing for China to face an open and competitive international market.

As far as China's silk industry is concerned, silk products must also comply with the agreements. China鈥檚 products will encounter other barriers more difficult to cope with than trade barriers.

Ji Liming, GM of Hanzhou Wan Gu Textile Co., Ltd., said, "When trade barriers disappear, there will be other barriers such as technological barriers. Foreign companies want to buy Chinese silk products, but they are afraid abundant Chinese products will have a negative impact on their own industry. Therefore, I think the challenges outweigh the opportunities."

In order to take up potential challenges, increasing numbers of players in China's silk industry have started to set up their own R&D centers to develop silk products with new colors, patterns and styles. Take, for example, the Wan Gu Textile Company, 10 percent of annual revenue is used for the development of new products, ten times higher than five years ago.

Ji Liming, GM of Hanzhou Wan Gu Textile Co., Ltd., said, "Improve overall competitiveness by means of CAD, CAM and EEP system. Speed up the development of new products. And so more products can be provided for customers. New products have an advantage in the initial stages of development over higher added value. If we keep producing the same traditional products, it will be difficult to earn higher profits."

Currently, silk products are favored in the world fashion industry. This requires domestic players to catch up with the latest fashion trends in terms of colors and styles. It also provides opportunities for foreign companies. Patrick Assuline is the chief designer of a French-based fashion company. He thinks international cooperation may be the best way out for China's silk products to gain more world recognition. Currently he is seeking new silk material and making preparations for his business plans in China.

Patrick Assuline, Chief Designer of Ebene, said, "I am very optimistic in China鈥檚 silk industry and I will come to set up my business in China mostly in silk market because silk is the best of the best."

There's no doubt that China silk industry has changed from being a provider of raw materials to a manufacturer of finished products. The export of silk products has become one of the major sources of foreign exchange.

Last year, silk products earned 3 billion US dollars for China, still far lower than China鈥檚 neighbors and western companies. This gap means there is a lot more that needs to be done for Chinese silk products to earn greater added value in the international market. Moreover, more opportunities will come up for international cooperation.

Editor:Zhang Wenjie

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