China's luggage export industry has been experiencing steady growth over the past couple of years. After a 15 percent increase in exports in 2003, the country shipped out close to US$4 billion worth of luggage last year, up 18.5 percent from the prior year.
Exports continue to grow, with sales in the first seven months of 2005 increasing 7.5 percent to US$2.4 billion.
Prices have been increasing because of higher raw material costs. But more makers in China are also exporting higher value luggage to move away from keen price competition in the low end.
The following are some of the key trends we see in China's luggage industry:
• More suppliers are expected to expand into upscale production in coming months. Makers that have already shifted into midrange and high-end manufacture are experiencing robust growth. This has encouraged many luggage makers to venture into these segments as well.
• Even though many companies are producing upmarket designs, low-end luggage will continue to be China's mainstay for the next several years.
• Rising material costs will still have a major impact on prices. Regardless of product focus, the majority of suppliers will be increasing prices by up to 15 percent in coming months.
• Although softside luggage will remain China's largest export product in the line, shipments of hybrid models are expected to increase. More makers are venturing into the production of hybrid luggage, which combines the strengths of soft and hardside models.
• Buyers can expect lighter and more durable luggage from China in coming months as more makers are now using stronger materials that can also reduce overall weight.
China luggage makers produce softside, hardside and hybrid models. These are also the scope of this report.
While most suppliers offer a range of luggage across all categories, some specialize in one or two lines. More than half of the suppliers in this report make at least two types of luggage, with about one-third making all product categories for export. Suppliers focusing on only one type of luggage usually offer softside models.
Of those suppliers offering at least two types of luggage, about two-thirds focus on softside models as well. While there are companies focusing on hardside luggage, none of the suppliers in this report manufacture only hybrid models.
The features and prices of each kind of luggage are discussed according to low end, midrange and high end in the Products & Prices section.
Industry Overview
Intense competition and higher raw material costs have made it crucial for luggage suppliers in China to improve the quality of new releases.
Speculations of US anti-dumping measures and a reduced tax reimbursement rate early last year for textile luggage in China were also among the reasons behind the move to produce midrange and high-end designs. But higher production costs and keen competition have driven most makers to cut or stop manufacturing low-end designs.
The majority of materials used in making luggage are petroleum-based and heavily affected by the fluctuation in crude oil prices in the world market. The cost of ABS for example, the main material used for the frames, increased 20 percent at the start of the year while that of PVC and EVA grew 30 percent.
With the continuing increases in raw material costs, makers have had no choice but to raise prices. However, heightened competition is making it difficult for these companies to offer the same product type and quality at a higher price. As a result, many suppliers have started producing more upscale luggage, which commands a higher price. At present, an estimated 30 percent of the country's luggage suppliers are already focusing on high-end production.
Many of those that have shifted production focus are now reaping the benefits. Export sales at these companies have been growing at a healthy pace, and many of them have had to boost capacity to meet demand. Assembly lines at some factories have already doubled in order to meet growing orders.
The majority of companies that kept their focus on low-end luggage production, however, are operating on razor-thin profit margins and a few have already stopped operations.
China makers' move to upscale manufacture has considerably raised export value. While the country's outbound shipments in the line increased 7 percent in 2004, value grew by 18.5 percent with average prices increasing 16.7 percent.
Prices are expected to climb by 5 to 15 percent in the coming months as makers continue to expand their upmarket product lines.
Industry Composition
With export sales of 2.8 billion pieces worth US$3.8 billion in 2004, China is the world's foremost producer of luggage, providing 75 percent of global supply. Eighty-five percent of the country's luggage exports is shipped to OEM/ ODM buyers, with the balance sold under suppliers' own brands.
There are currently around 1,500 luggage suppliers in the country, of which 70 percent export directly or through trading companies. On average, makers export 85 percent of output, mainly to the US, the EU, and Japan. Many of these are shipped to major luggage brands Samsonite, Delsey, Titan, Roncato, and High Sierra.
Supplier Profile
Carimax (Xiamen) Enterprises Ltd
Carimax is a large softside and hybrid luggage maker established in 2002 as a subsidiary of South Korea-based Carimax Corp. Last year, the company produced and exported 1.2 million pieces worth US$15 million.
Carimax mainly caters to ODM and OEM buyers. Patented luggage designs for Samsonite account for about 70 percent of export output.
The company manufactures only midrange and high-end models.
Products
Carimax manufactures luggage uprights in several sizes ranging from 45 to 80cm, with models standing 55 and 65cm as bestsellers. Depending on the type of material and components, prices range from US$15 to US$30 each.
Softside models are commonly made of EVA, 400 or 600d polyester, or 840 and 1682d nylon. Some versions can also be made of 200 or 1800d polyester. Hybrid luggage is typically made from a combination of ABS and nylon or polyester.
Different types of functional, breathable and water-resistant fabric are also used depending on buyers' specifications. Most fabric and synthetic materials are sourced from Taiwan.
Carimax has been able to develop an ABS and fabric-jointing technology that has decreased the weight of the finished product by 30 percent. The use of 360-degree rotating wheels for attachments make the luggage easy to pull and move around.
The company's R&D team develops countersamples within a week after receiving buyers' designs.
Manufacturing
Carimax currently carries out the combination of ABS and fabric into the luggage design at the company's mother factory in South Korea, where material development is also done. But with the increasing volume of orders, plans for installing the same technology and equipment in the Xiamen factory are underway.
A special machine from Taiwan that attaches plastic to fabric is now installed at a workshop close to the main building. In fact, the curved-shaped structure of the Xiamen factory adjoins all sections of the production process to facilitate the flow of work.
A team of QC inspectors checks the materials and sends those that pass to the cutting section, which has computerized machines.
Metal for the frame and trolley is molded in a separate section with four machines.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
If you'd like to order the China Sourcing Reports, please go to Global Sources website - http://www.globalsources.com, or click here. It is simply and convenient.
