China's knitted fabric export industry is poised for growth, after recovering from a slowdown in the first few months of 2005.
The country's nearly 3,000 exporters shipped close to US$3 billion worth of knitted fabric in 2004, registering 17 percent growth. But exports slowed at the beginning of the following year as orders from garment-exporting countries in Asia, China's main market for knitted fabric, decreased. These garment makers suffered from the lifting of WTO quotas in January, with many of their overseas buyers turning to China for their apparel sourcing.
Safeguards on a number of China-made knitted apparel categories and an increased focus on the EU market, however, have propelled growth, with sales in the first seven months of 2005 increasing 13 percent to US$2 billion.
The following are some of the key trends we see in China's knitted fabric industry:
• Rising material costs will continue to have a major impact on prices, with the majority of suppliers increasing quotes by up to 15 percent.
• Many companies are upgrading their facilities to improve production efficiency and capability. A number of makers in this report are purchasing new machines that can make either more types or larger amounts of fabric.
• Single-jersey knit fabric will remain China's largest export product in the line, as it is the easiest to make and has the most number of applications. Unlike other types, single-jersey knits do not require specialized types of machines in production. The manufacturing process is also simpler, and the fabric can be used in many types of apparel.
• Buyers can expect more functional knitted fabric releases from China in coming months. Apart from coating the fabric with new or improved functional finishes, more companies are using yarn made of plant-based synthetic fiber. This is indicative of an upmarket shift in production focus and a growing awareness of environment-friendly materials.
China makers can offer most types of knitted fabric, which can be classified in many different ways. For the purpose of this report, knitted fabric is divided into six major categories: single/jersey, double/ interlock, rib, purl, tricot and raschel.
While most suppliers offer a range of knitted fabric across all categories, some specialize in one or two lines. More than 80 percent of the suppliers in this report make at least two types of knitted fabric, with about two-thirds making only weft knits for export.
The features and prices of each type of knitted fabric are discussed according to low end, midrange and high end in the Products & Prices section of this report. It also details the other types of knitted fabric that fall under each major classification.
Industry Overview
Knitted fabric makers in China are taking a range of measures to remain competitive amid an uncertain export environment and rising material costs.
Early this year, there was a decline in orders from garment-exporting countries in Asia that were hit by quota elimination.
In contrast, knitted fabric suppliers enjoyed healthy domestic sales as demand from local apparel companies increased significantly.
However, safeguards imposed by the US and the EU are now limiting exports of some China-made knitted apparel categories to these markets.
For this reason, knitted fabric makers in China are again looking at overseas markets to boost sales. But with a large number of suppliers competing to ship fabric to garmentexporting countries, many companies are now eyeing the more lucrative EU market.
While the US is also an option for suppliers, a looming safeguard on China-made knitted fabric has pushed more companies to focus on the EU instead.
Low prices are still the major advantage of China-made knits. To complement the industry's attractive prices, makers are improving the quality of their low-end and midrange products through equipment upgrades. Many companies are purchasing new equipment that operates at maximum efficiency but consumes less energy and occupies less floor space.
High-speed tricot machines from Karl Mayer and universal tricot machines from LIBA are popular purchases. These machines are able to generate either larger volumes or wider varieties of fabric.
Systems that produce more designs save on cost and factory space, and companies would not need to buy a separate machine for each particular type of fabric.
Larger makers are also boosting R&D capability to offer more models that cater to the high end. Many new releases from these companies are made of environment-friendly but high-performance fiber such as modal, Tencel, bamboo, soybean and Ingeo. These types of fiber are all derived from renewable sources.
Functional knitted fabric is also becoming a staple at most companies, regardless of their size or business type.
Most suppliers increased prices by up to 10 percent in 2005, due mainly to the rising cost of synthetic yarn. Export prices are expected to rise further in coming months as the cost of synthetic materials continues to rise.
Industry Composition
China is the world's largest producer of knitted fabric, exporting close to 800 million kilograms in 2004. Exports topped US$3 billion, accounting for roughly one-third of global sales.
The country is home to about 2,700 suppliers engaged in the manufacture and export of knitted fabric. Most makers are small or midsize, with 95 percent having less than 500 employees each.
About one-third of China's suppliers have direct export capability, and the rest ship products through trading companies.
Eighty percent of the suppliers are locally owned companies, some of which used to be state-owned enterprises. Only about 3 percent of these remain SOEs.
Supplier Profile
Changshu Changsheng Warp Knitting Co. Ltd
Established in 1992, privately owned Changshu Changsheng makes and exports tricot fabric. Having acquired direct export rights in 2004, sales that year increased 50 percent to US$10 million.
Even with direct export capability, the company courses 40 percent of outbound shipments through trading companies. About 30 percent is directly exported and the rest is sold to the domestic market.
The Middle East is the largest export destination, but the company is targeting to increase shipments to the US and the EU in coming months. Currently these markets each account for 10 percent of exports.
Despite the uncertain trade environment in the textile industry, the company is confident of at least 30 percent export growth in the next 12 months.\
Products
The majority of Changshu Changsheng's tricot fabric is for car seat cushions, about one-third is used on toys and home textiles, and the rest is for apparel.
Tricot fabric for car seat covers is priced below US$1 per meter while those for home textiles and toys are from US$1.50 to US$2 per meter.
Apparel fabric is usually priced at US$2 per meter and above. Depending on the number of properties, fabric with functional finishes costs 20 to 70 percent more.
About 80 percent of the company's fiber requirements are purchased from Yizheng Chemical Fiber, one of China's main suppliers of the material. Other materials, such as a special type of nylon fiber used to make massage chair covers, are imported from Japan or South Korea.
The company does not have a separate team for fabric development. Instead, its R&D team focuses on developing designs according to buyers' specifications.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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