China accounted for approximately 60 percent of the world's output of sleepwear in 2005. More than 10,000 exporters of sleepwear shipped out US$1.6 billion worth of the products in the same year.
As with most garment industries in China, sleepwear makers enjoyed significant growth in the first few months after the WTO textile quotas were eliminated. Export volume in the first two months of 2005 grew by 46 percent and sales, 29 percent, compared with the previous corresponding period. Exports from January to November 2005 to the US alone were 231 percent more than total outbound shipments to the country in 2004.
Shortly after the US and EU filed safeguard petitions, exports began to drop and average prices started to climb. However, an agreement between these countries and China late last year has eliminated the possibility of restrictions for shipments of sleepwear. Government-imposed export taxes were also removed in December.
These developments have affected suppliers' production strategies for the year, with many taking a cautious attitude toward expansion, and exploring other options to generate more overseas orders.
The following are some of the key trends we see in China's sleepwear industry in response to this situation:
• Suppliers are expected to produce more upscale models in coming months. The threat of possible safeguards, export taxes and higher operating expenses are the factors that have contributed to this upmarket shift. The growth experienced by the midrange and high-end makers is propelling many companies to venture into these segments as well.
• Higher material and labor costs continue to be a challenge for most makers, with 46 percent of companies in this report planning to raise product prices by up to 10 percent in coming months. However, intense competition in the line is keeping price movements at a minimum, with the majority planning to keep prices stable.
• More suppliers will invest in automated machinery and vertical integration to improve efficiency and allow for greater design variety. Some companies are purchasing weaving and knitting machines to produce part of their fabric requirement in-house.
• Women's pajama and shorts sets will continue to dominate sleepwear exports from China, followed by women's nightgowns and nightshirts.
China makers can offer most types of sleepwear for men and women, but most focus on the latter.
More than 80 percent of suppliers featured in this report produce all the styles of sleepwear for export, and more than 90 percent have women's styles as their main line.
Industry Overview
The uncertainties in the global garment trade environment and challenges at home have affected China's sleepwear suppliers, leading them to take a more cautious outlook for this year.
Speculation about US and EU restrictions in the line coupled with government-imposed export taxes, which were abolished only late last year, were also among the reasons behind the move to produce more midrange and high-end designs.
The bilateral agreement with the EU in September 2005 and the US in November came as a relief to China makers because sleepwear is not included in the list of categories with import limits.
But the volatile export environment has already affected many companies' expansion plans, leading them to take a more cautious outlook for the year. Instead of investing in the construction of new or bigger factories, many suppliers are opting to upgrade their existing facilities instead.
Apart from the possibility of new quotas, suppliers had to deal with rising production expenses as a result of the continuing labor shortage and higher raw material costs.
The labor shortage was initially limited to Guangdong province, but is now widespread in Zhejiang and Jiangsu, which are the main production hubs for sleepwear.
Many of the industry's skilled workers are enticed to work in other sectors by companies offering higher wages and better benefits. Makers are thus forced to match such job offers with higher pay, better housing and training for their employees, consequently raising operating expenses.
The rising cost of synthetic fabric largely used in designs, plastic and lace trims, and other garment accessories has decreased companies' profit margins further.
Because of these factors, as many as 40 percent of sleepwear makers in China will be increasing product prices between 5 and 10 percent in coming months. But the majority will keep prices stable in efforts to maintain competitiveness.
Some established makers are trying to pull down operating expenses by investing in automated machinery and vertical integration, while the bulk of suppliers are increasing R&D capability to improve designs and increase the variety of styles offered.
To boost competitiveness, many companies are expanding their product lines, improving buyer services or enhancing product quality through the use of new types of fabric.
Models made of functional fabric such as modal and Tencel have been released, increasing softness and luster in sleepwear. The use of natural materials such as silk, linen and bamboo blends has also become popular, providing designs with better breathability and anti-bacterial features.
Supplier Profile
Chaozhou Qiaodong Garment Fty
ISO 9001:2000-certified Chaozhou Qiaodong has been manufacturing sleepwear, casual wear, evening dresses and wedding gowns for more than 20 years. Sleepwear accounts for 40 percent of output, the sale of which accounted for 80 percent of the company's total turnover.
All sleepwear output is exported to OEM clients based mainly in the EU and North America. Dove of France and Keds of Israel are among the company's major clients.
Products
The company produces low-end and midrange nightshirts and nightgowns, and pajamas for men and women. Knitted designs account for 70 percent of all sleepwear output and women's models, 80 percent.
Sleepwear designs are made mostly of pure cotton, satin, polyester and nylon. The fabric is sourced mainly in Zhejiang province because suppliers there can offer more competitive prices for the material. Accessories such as lace, buttons and ribbons are sourced within Guangdong province.
Prices range from US$1.50 to US$5 per piece or set. Higher raw material and labor costs have affected production expenses, prompting the company to raise export prices up to 5 percent in the next 12 months.
The company invests US$40,000 annually in its 18-person R&D, tasked mainly to develop and improve buyers' designs. However, the team also creates its own designs and releases more than 1,000 new styles each year. It usually takes five days to develop a new model, which is designed mostly by hand.
Manufacturing
Chaozhou Qiaodong's 500-worker, 20,000sqm factory has separate workshops for sampling, cutting, sewing, finishing and embroidery. Printing is subcontracted.
The four-building facility is located five minutes away from downtown Chaozhou. In the sampling workshop, there are 12 workers creating patterns according to design specifications. The cutting section has six cutting boards and six machines sourced from the US. The machines can cut a stack of fabric as thick as 20cm.
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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