David Tinworth
Martin & Savage, managing director.
Martin & Savage is a textile wholesale company.
Interestingly enough, we buy mostly from the East but we’re prepared to buy from anywhere as long as the fabrics are correct, fashionable and we think we can sell them. Some of the people we speak to out of China, they were a little bit tongue in cheek here, but even they were saying a couple of months ago, ‘oh we’re not selling wool anymore because people can buy it cheaper from Europe!’. Europe, they specify possibly more Italy, because that’s where a lot of the wool comes from. But if you’re comparing apples to apples now, it’s probably true that now people are saying, ‘Well, why would I buy from China when I can buy something of maybe a better quality from Europe and the prices maybe are comparable?’. There’s no question though, that I would think the rising prices out of China, particularly in wool, where the wool has been very strong, has maybe given some opportunity to other places that mightn’t have been there a few years ago. As the cost of one item rises, people look for substitutes in other areas. That is the nature of the way the industry works. I remember a few years ago when the price of oil went through the roof, everyone went to cotton. It’s like pouring water: if it all runs in one direction, it balances out somewhere else.
Bruce Haines
Dean World Cargo, managing director.
Dean World Cargo is one of Australia’s leading international supply chain and logistic facilitors.
The story of 2010 was one of increased cotton and synthetic prices and increased wages pressure from Chinese workers. Added to this, factories in Southern China closed down due to workers relocating back to Central China and the reluctance of workers to continue in the garment trade. Southern China has since become a sourcing area for higher value electronic products and the like. This trend continued into winter 2011 with prices rising quite a bit, and to counteract this sourcing shifted to central west and northern China. There was real concern as to whether or not you could actually get your goods produced for 2011, but this concern seems to have waned. The US and Europe markets have been trading very poorly at retail level and indications are that volumes for Australia, both winter 2011 and summer 2011, are similarly well down on projections. This is also backed up by shipping rates falling to very low levels in all markets ex China.
It appears that as a result of poor global retail trading and a subsequent drop in cotton prices since March that factories have come to the party and actually lowered pricing going forward for the balance of 2011. Whilst this seemed unlikely a month or so back, things change very quickly. Domestic consumption in China was increasing last year as well, however due to inflationary pressures in China this has fallen back as well, opening the door for export production which was planned to be scaled back. Together with our continued strong AU dollar, it looks like pricing might not rise as expected as retailers have been reluctant to raise prices at retail level in order to maintain market share.
Valerie Tolosa
Valerie Tolosa is both a womenswear designer and a sourcing agent for brands interested in manufacturing in China.
Prosperity for Chinese manufacturers is changing the game for Australian customers. There’s a generation of Chinese who have recently reached adulthood, are well educated and have witnessed the growing prosperity. Many of this generation no longer want to do manual work. This means that there is a diminishing supply of factory workers in the traditional manufacturing centres around Shanghai and Guangzhou. A smaller supply of skilled workers has lead to higher wages and higher production costs for you and I. The manufacturing base is shifting west into Central China, where land and labour is cheaper and factory work is seen as desirable over what has traditionally been an agricultural-based economy. Those people who traditionally worked on the factory floor for life are increasingly looking to run their own business. Nearly every manufacturing business I have met within the past two years has an owner younger than 40, who started out on the factory floor. Refreshingly, they are increasingly women. There is a new middle class emerging around the capitals and on the coast, which is great news for China. However with prices on the rise for the foreseeable future, as a customer your best option may just be to go west!