According to statistics from the United Nations, China manufacturers captured a 64 percent share of world leather garment exports in 2005. Decreasing overseas shipments, however, are resulting in consolidation of the industry and a shift to other markets and product lines.
In the first eight months of 2006, leather garment exports from the country dropped 24 percent to US$1 billion and 21 percent to 28 million pieces, compared with shipments made in the previous corresponding period. Exports are anticipated to continue falling by at least 10 percent in 2007.
More than 80 percent of the country's leather garment exports are shipped to OEM and ODM buyers, with the balance sold under suppliers' own brands.
Russia is the largest importer of China-made leather garments, purchasing more than 12 million pieces worth US$984 million in 2005. This constitutes about 43 percent of China's total exports in the line.
The US is the second-largest importer with shipments totaling 21 million pieces at a value of US$627 million.
The following are some of the key trends we see in China's leather garments industry: The industry is expected to consolidate further within the next two years. Low demand, rising costs and the changing business environment have made it difficult for smaller companies to compete against midsize and large suppliers.
Many suppliers will implement minimal price increases over the next two years. But companies are expected to raise prices significantly once the industry stabilizes.
An increasing number of companies that used to focus on Russia are now expanding to the US and the EU. Stricter regulations in Russia have resulted in declining exports, especially from manufacturers in north China.
More suppliers are also expanding their product lines. Some companies are offering products made from off-cuts such as leather bags, while others are diversifying into other apparel lines, including denim and
knitwear.
The majority of leather garment suppliers in China are privately owned and a few are foreign-invested. Reflecting the industry structure, 80 percent of suppliers featured in this report are China-owned and 19 percent are foreign-invested.
Production is concentrated in the provinces of Hebei, Zhejiang, Shandong and Guangdong, which together account for 74 percent of all leather garments exported from China.
The majority of companies in this report are from these main manufacturing centers, with 38 percent from Zhejiang, 16 percent based in Guangdong, 13 percent from Hebei and 12 percent from Shandong.
