Inward bound

Clothing and textile imports to Australia from all over the world have been badly affected by the recession, china included.but strong signs of a recovery can still be found. Ragtrader spoke to a few of those privy to the revitalisation.

There is absolutely no doubt the volume of imports of clothing and textiles into Australia from around the world have been down significantly since the crash last October, despite the fact retail activity has held reasonably firm over the period.

Estimates vary on exactly how low that volume has gone, but the situation is improving already, industry experts say.

Bruce Haines, managing director of logistics company Dean World Cargo, estimates clothing and apparel imports from China are down by 15 per cent this year, but with the Federal Government’s stimulus package having some effect on consumer spending here, the recovery is on its way.

“You can read all the statistics you like but I’d say in the vicinity of 15 per cent lower [import volume] this year,” Haines says. “It is picking up now, however. Retail sales have been okay, although not of the volumes of last year, but yes, we are noticing a pick up for the new season.”

Gary Hirsch of TCF Sourcing Solutions agrees. In fact, he thinks many retailers in Australia over-estimated the severity of the downturn and may very well be understocked. And for local suppliers looking to plug the gap, there is good business to be done.

“There is no question it is picking up,” Hirsch says. “Retail-wise here, most retailers appear to be understocked at the moment. David Jones [was] worried [it was] not going to have enough stock to sell for [its] mid-year sales, so I think with the local stimulus, some of the money did to go to clothes, although I’m not sure how much. It’s difficult to judge.

“But if you can offer [retailers] stock you can get good business, as long as it’s decent stock, not rubbish.”

Shen Gesheng, the Australian representative for the China Chamber of Commerce for Import and Export of Textiles, which runs the China Clothing and Textiles Expo in Melbourne each year, says the general textile and clothing industry in China has had a bad seven months or so since the crisis began, with total exports dropping 11.1 per cent from January to May.

The Australian market, however, has been is a bit more resilient. “For the same period, from January to May, [exports] still decreased but only by 8.8 per cent compared to the overall decline,” he says.

China still exported TCF goods worth $US1.23 billion ($A1.5 billion) to Australia in that period and preliminary statistics from the month of June showed there was a big increase in import volumes over the previous month, to the tune of 13.3 per cent.

With lower freight prices, particularly ocean freight, added to the relative strength of the Australian dollar, the crisis has been nowhere near as serious as many feared.

Rationalisation

China has done it tough in terms of factory closures since the crisis began. In fact, there is an element of rationalisation happening in China that would be very familiar to Australian manufacturers’ ears.
“We know there were about 50,000 exporters of textiles and clothing before the crisis, but now it has dropped to 40,000,” Shen says.

“We expect that number will keep dropping and will probably end up about 20,000, but they are good exporters and are picking up the orders from others that close down.”

Shen expects both exhibitor and visitor numbers to the expo in November to be slightly down on previous years, but there are many new exhibitors, particularly from small and medium-sized factories, who are interested in the Australian market.

“To be honest, for the first couple of years [of the expo] we had a few very big manufacturers but after a couple of years they thought they couldn’t get big orders so they decided not to come,” he says. “But the small and medium-sized manufacturers – they think this market is very suitable for them. Normally the big players in China don’t want to take small orders. The small to medium-sized factories want to meet people here who want to import directly from these factories.

“That way it certainly reduces the cost, and if the customer communicates directly with the factory, it always makes it a bit easier.”

Shen has noticed that with the decline of manufacturing capability in Australia, many companies that still do some of their own manufacturing here are looking to meet up with Chinese suppliers of part-processed garments. Smaller Australian companies then do not have to make the somewhat daunting trek to the Canton Fair or travel around China itself.

He says about 30 per cent of exhibitors at the expo each year are new on the scene, and this year will be no different. One new area of interest for Australian buyers is Nantong, located on the mouth of the Yangtze and a growing area for home textiles manufacture. At least six factories from Nantong specialising in manchester will be at the expo, he says.