China in transition

4 October 2010



The ACLE, the leather industry’s premier show for the Chinese market, is upon us again. Since the ACLE first took place, at the end of the 1990s China has become a major consumer market and continues to be the largest producer of leather and leather products in the world. However, as the 1960s Bob Dylan song goes, ‘the times they are a-changing.’


I am delighted that Philip Yang of Tyche Leather Group is our guest writer this month. Tyche are a Taiwan based company who saw the potential of manufacturing in Mainland China some time ago. But as Yang explains in his column, the original advantages of leather making in China are diminishing while new opportunities to supply to domestic market have arisen. Being based in China for the past 14 years he’s in a prime position to see the changes.
A new pattern is emerging. On one hand worker salaries, particularly on the eastern coastal areas are rising fast and labour intensive manufacturing processes such as tanning are finding competition for employees much tougher. Many are looking to recruit from central or western China where salary expectations are lower.
As well as labour shortages and increasing wage costs, Chinese based tanners are also finding that the local authorities are applying much stricter environmental regulations. According to the CLIA, between 2007-09 600 small to medium sized tanneries (below 30,000 pieces per annum) have been forced to close by the Chinese authorities.
You could argue that they have bowed to international pressure but you have to applaud the government in China for not just paying lip service to the environment issue but actively making companies clean up or close down. No messing about! 
In response to the environment question the CLIA has announced that between 5-8 purpose built tanning clusters will be formed over the next five to ten years (see page 28). Most will be located inland or in poorer regions of the country.
Increasing wages and environmental costs are having an impact on the Chinese tanning sector. The extension on anti-dumping duties into the EU must also count against Chinese manufacturers.
At the end of July, Asprindo, the Indonesian Footwear Association, announced that six manufacturers from China and Vietnam had relocated to Indonesia, mainly East Java. Asprindo claim that the companies have relocated because of rising labour costs and raw material issues in China and Vietnam. The six companies supply brands such as Nike, Adidas, Reebok and Geox and the investment into Indonesia is said to be worth $150 million.
While it may be more difficult to establish and run a tannery in China than it once was, a number of companies are still looking to set-up there. Tyche, SRL and others are building new tanneries as we speak. Having said that, I think the days are past where everyone is rushing to make leather in China and other countries in South East Asia and the Indian subcontinent are an attractive alternative to China.
China has become the world’s leading manufacturer, with more money than ever reaching Chinese consumers driving their thirst for branded goods. China is no longer just a leather maker but is transforming itself into a major end-user of leather itself. As Philip Yang says – ‘the Chinese domestic consumer market is still a
virgin land’.

Martin Ricker  Editor
[email protected]



Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.