Bling Bling: Shrink or Swim

With minimal protection from import tariffs, accessory manufacturers have had little option but to send production offshore or become local "kitchen-table" manufacturers. Melissa Gulbin reports.

During Kevin Rudd's visit to China earlier this year, the Prime Minister put the China-Australia Free Trade Agreement (FTA) back on the front burner, agreeing to "unfreeze" the stalled bilateral negotiations and infuse "fresh political momentum" to Sino-Australian talks. Since then, New Zealand has inked its own FTA with China, giving Australian trade officials further impetus to overcome their trade stalemate.

TCF imports currently attract a tariff which ranges from five to 17.5 per cent.  Of these, the tariffs on clothing and certain finished textile products are set to fall to 10 per cent in 2010 and then to five per cent in 2015, and the tariff on footwear will be reduced to five per cent in 2010. 

But while clothing and finished textile producers brace themselves for steep tariff phase-downs under the proposed FTA, many accessories manufacturers - who already endure negligible tariff protection - have less to lose. Jewellery and handbags from China, for example, currently attract a meagre five per cent import tariff and will trade duty-free under an FTA. Australian accessories manufacturers, therefore, could provide the litmus test for the rest of the TCF industry looking down the barrel of 5 to 10 per cent tariffs in the coming years.

Should I stay or should I go?

Young jewellery designer Samantha Wills is the brains, beauty and brand name behind Sydney-based jewellery business Samantha Wills. The Coffs Harbour former-model has just returned from the US with a new sales agent and over 40 new US accounts, including department store Nordstrom, doubling total sales.

For Wills, the decision to bypass Australian manufacturers and take production straight from her kitchen table to the Chinese factory floor had as much to do with meeting demand as it did with cost. Until last year the designer did all the labour herself but after a run of new orders she had to bite the bullet and move some production offshore in order to meet deadlines and keep prices steady.

"It [moving offshore] was not something I leapt at. Giving up some of the production was like giving away my children. It was difficult to let go," says Wills.  Her small team still do 80 per cent of the "compiling" in her Sydney showroom, joining gems with Chinese-made bracelets, for example.

"I did a lot of research on the internet and I attended a couple of great accessories shows in Hong Kong where I got to see examples of manufacturers' work, so the process of finding a manufacturer was quite easy," says Wills.

Wills maintains quality by hand-making every piece herself, inspecting factory samples and sending them back for at least a second round of changes before starting production. After the pieces are compiled in Sydney, they undergo a final quality check. She adds her jewellery escapes the 'Chinese-made' stigma as, unlike clothing, it doesn't require a washing instruction tag complete with country of origin.

Wills expects the US orders to keep rolling after August, when she will exhibit in the ENK Accessories show in New York.
The stricken US economic climate makes her recent sales all the sweeter, says the designer. "I know I'm not getting too big, too fast. Because of the recession, everything in the US has slowed. For me, it's made for a good, secure transition."
 
The small shall survive

Bucking the import trend is founder of online business Ruby & Crickette, Debbie Su Dennon, who gave up importing accessories to design and make her own jewellery locally.  Ruby & Crickette is testament to the fact that you can be more successful with locally-made accessories than with Chinese imports if you follow Su Dennon's philosophy of "small and simple".

"Basically I'm a one-woman-show. The only real expense I have is the website. That's the only way I stay competitive."
Su Dennon supports other independent jewellery artists, selling their unique pieces as part of the Ruby & Crickette collection. She still sells some mass-manufactured imported goods but plans to phase out that side of her business.

During Su-Dennon's initial foray into importing it became apparent that Chinese-sourced jewellery didn't quite hit the mark with the Aussie woman. "Sure there will always be girls who follow the trends, but I think more want something unique - designer items without the designer price-tag," says Su-Dennon.

The designer takes advantage of the robust Australian dollar, sourcing many of her vintage materials from the US. "Nobody does vintage like the US. It's such a huge market over there that prices are very competitive," she says.
In terms e-tailing, perseverance is key, says Su Dennon. "Things were looking slow for a while but eventually we were placed number one on Google for 'handmade jewellery' and things have just grown from there."

Aussie Battler

Andrea Sirninger, co-owner of Overlander Hats, manufacturer of traditional Aussie hats, admits competition from cheap Chinese imports combined with a lacklustre tourist market have left the company "struggling".

"There is not many of us left," says Sirninger. "Many of our stockists have closed. We're told that tourist numbers are still strong, but we're seeing fewer tourists, or at least the wrong kind."

But it is a stubborn love for its skilled, loyal workers that keep the business alive. "We can't just abandon everything and everybody. We are a well-known, established brand with a highly-skilled team who are mostly in their fifties," says Sirninger. "Their chances of getting another similar job are slim."

"We're proud of who we are and what we make." However, the co-owner admits that the company may not replace some of its workers after they retire. Overlander Hats has resisted the temptation to follow its competitors' lead and produce part of the hat offshore, despite what they see as "unfair labelling" rules.

"We're competing against hats that are sold under the guise of Australian made, when very little has been made here." The offending hats are labelled, 'made from imported and local content', which, according to Sirninger, is very ambiguous. "The consumer may simply think that some of the material has been imported, but in reality, none of the labour and very little of the material may be local."

Import tariffs, says Sirninger, do little to protect the business. Even with tariffs, Chinese-made hats can wholesale at $10 and retail at $20. "We have to wholesale at $20 plus GST to make any money." Overlander Hats exports to Europe, Japan and New Zealand. Previously US sales made up the bulk of its export market, but the buoyant Aussie dollar coupled with spiralling US consumer sentiment put an end to that.

Sirninger however says the company is making inroads to combat Chinese competition by value-adding its product. "We're doing some beautiful embossing on some of our lines, which sets it apart as an authentic, high-end product."

By Melissa Gulbin