Automobiles are still an expensive item to many Chinese and most cars sold in the country are low and medium range models. Having said that, the number of motor vehicles being manufactured or imported into China is increasing year on year as the economy opens and the Chinese become more affluent. In China, as is seen in markets such as the US, leather is not exclusive to the luxury car market but is also becoming more prevalent in medium range models.
Currently, automotive leather is made outside Asia and imported into the country where it is cut and fitted. A number of US and European car makers, such as GM, Volkswagen Audi and Citröen have already established production sites within China.
Last September, the French car maker Citröen made around 6,000 vehicles from their factory in China and according to a source within the leather industry around 50% contained all or part leather trim. Citröen would like to source their leather trim closer to their factory rather than import from their parent company in France.
Chinese tanners already produce automotive leather for the ‘after market’ but at the moment they do not sell directly to the car producers since the strict chemical and physical parameters are not consistently achieved by local producers. Chinese ‘after market’ car leather can sell for as little as US$1 per ft2 although you pay for what you get. Many car owners have complained of feeling unwell and suffering from headaches due to volatile chemical odours being emitted after the car has been upholstered. This arises because of the poor leather making techniques applied and undefined specifications in the local ‘after sale’ market.
With China expected to join the WTO soon many leading tanners have identified that to compete internationally they have to improve the quality of their production and predict future changes in environmental legislation. Companies such as Kasen have looked at other market sectors such as automotive upholstery and have invested in the latest process technology to fully take advantage of China’s low labour costs and increasing industrial strength, which is particularly evident in the leather industry.
Tanners such as the Kasen Group are not far from meeting the tough standards laid out by the motor manufacturers and are gearing up to compete in the already competitive yet lucrative market. When Leather visited the Kasen tannery in Haining the foundations were being laid for a second phase, 35,000m² facility, which is due to be completed around the middle of 2001. The new factory is to be fitted with the latest equipment and will produce automotive and furniture upholstery leather for both the domestic and export markets. Phase two will take dyed leathers and will process them through to fully finished upholstery. The aim is to make leather which conforms with all of the strict criteria required by the leading volume motor manufacturers. The company want to be a player in the market within the next two years. The first phase and current tannery was completed at the beginning of last year.
The Zhejiang Kasen Group
The new tannery is located in the city of Haining which is approximately 200km south of Shanghai. The beamhouse is housed 1.5km from the site of the new finishing plant located on the outskirts of the city. Haining City is home to a number of tanneries and was the subject of an article published in Leather in February 2000.
The company were founded by Kasen Zhu in 1988 and initially produced any type of leather (mainly pig and sheep) for the local market. The tannery began importing chemicals in 1994 to improve the leather quality for export and in 1997 began producing furniture upholstery leather.
Today the tannery produces around 3 million ft² (3,000 hides per day) of finished furniture upholstery and garment leather each month. The tannery has a capacity to process around 5,000 hides each day. Garment leather production at Kasen has scaled down over recent years. In 1999 some 3 million doubleface and nappa skins were processed which fell to around 2 million in 2000. Some contract tanning of wet-blue is also carried out.
The total sales turnover in 1999 was US$60 million which rose to US$100 million in 2000. Kasen Zhu, president, believes that if the new tannery is successful, sales turnover could reach as much as US$200 million this year.
Today, the total Zhejiang Kasen Group employs a staggering 2,600 people with an average monthly salary for workers ranging between US$100 – 150 per month.
The US is now a significant market for Kasen accounting for sales worth US$30 million in 1999 and an estimated US$60 million in 2000. The company now employ six sales people in the US. Important customers include the US firm Ashley and the Swedish furniture specialists, Ikea.
Outside China and the US, Kasen have major markets in Eastern Europe, France and Germany, particularly in the garment sector. Kasen Zhu has identified that he may need outside or joint-venture partners to enable Kasen to market their leathers through a third party.
The arrangement would be similar to that of Bermas, the jv company set up by the Rino Mastrotto Group from Italy and Bracol from Brazil. Kasen would make the leather and another established company would market the product on international markets.
Kasen have recently been host to a delegation from Australian leather upholstery manufacturer, Gosh Leather, and technical staff from German upholstery specialists, Louis Schweizer GmbH & Co.
Cutting and sewing
The Kasen Leather Garment Factory is located close to the tannery and produces men’s and women’s garments, mainly jackets, using leather from the tannery. Also located next to the garment factory is a cutting and sewing line for furniture upholstery leather. Panels are cut and sewn under contract for the customer. The venture has proven to be an important value added element to Kasen’s tanning capabilities.
Raw materials
Approximately 30% of the company’s requirements are sourced from the domestic market with the remainder being imported. Kasen Zhu told Leather that he had many problems in the past acquiring consistent and good quality raw hides and skins from China. Today, he prefers to buy wet-blue in square feet from local suppliers rather than risk buying green or salted material.
‘I have seen everything. Some people have put stones or sand between hides and skins to make them weigh more and I have even heard of some local traders employing people to jump on the hides to try and increase the area’, he said.
Zhu would like to increase the volume of domestically sourced raw material in 2001 but at the moment he prefers to source raw or wet-blue hides from the US and Australia. ‘I prefer to buy dairy cow, ox and heifer hides from the US although they can be expensive, particularly at the moment. Otherwise I buy from Australia as well as the local market.
During the All China Leather Exhibition (ACLE) held in Shanghai last October I bought around 100 containers of hides from overseas. If I want to be a player in automotive market within two years, I need to buy good quality hides in order to achieve my objective’, he told Leather.
Kasen have the capacity to store up to 200,000 hides with cold storage facilities.
Kasen Group Co Technique Centre
Located next to the finishing plant is Kasen’s technical centre. The building has been designed to carry out a mixture of process and product development as well as chemical and physical testing. Kasen have 15 technicians working both in the centre and the tannery and they liaise with technical staff from leading leather chemical companies such as Schill + Seilacher, Stahl and TFL. Kasen also employ their own technicians from Germany and Italy to work in the centre and tannery.
Upholstery production
All bovine hides processed at Kasen are wet-blue. At the time of the visit from Leather there were no plans to follow the example of US and European automotive tanners to switch their production to wet-white chrome-free tannages. Leathers are tanned and retanned in the vast 140 drum beamhouse area before drying and toggling.
Most production is destined for the furniture business and Kasen have built-up a large arsenal of modern, largely Italian, machinery to produce medium quality furniture upholstery. Corrected leathers are buffed and de-dusted before a ‘stucco finish’ is applied by hand to cover any deep scratches or scars.
The current finishing is located in three large detached buildings which have been purpose built for the application. The entire area covers 20,000m2. Finishing light and dark coloured leathers takes place in different locations to avoid contamination. The finishing area contains several spray finishing lines and a number of rollercoating machines. In fact, during Leather’s visit, nine operatives on a single 3P Dualcolor rollercoater were witnessed!
The plant is also equipped with several vibrational staking machines and milling drums as well as ironing and embossing machines and a leather perforating machine. Needless to say the tannery is very well equipped and most machinery in the finishing area appeared to have been acquired within the last three years.
Conclusion
It is inevitable that sooner or later Chinese tanners will compete head to head with European, US and Latin American tanners for the lucrative automotive leather sector. At the moment tanners such as Kasen have the correct infrastructure and pricing structure to compete with the best. However, providing a consistent product which meets all the tough criteria laid out by the motor manufacturers and then marketing it, is proving to be a more difficult challenge for the Chinese.
Judging by the progress made so far it should not be too long before large modern Chinese tanneries, such as Kasen, are competing for large contracts from the motor industry.
For further information visit: [http://www.kasen.com.cn]
