China's US$2 billion women's undergarment export industry is facing barriers at home and abroad that threaten to limit the explosive growth suppliers anticipated post-quota.
In 2004, total outbound shipments increased 20 percent from 3.5 billion to 4.2 billion pieces. Exports to the United States and the European Union increased in the first quarter of this year, but were down 17 percent overall despite quota elimination as a recent government-imposed tax affected growth in low-value products.
Apart from this, the US has imposed a safeguard on imports of China-made panties and those on bras may be reimposed following a surge in shipments in the months after quotas were eliminated at the beginning of the year.
The following are some of the key trends we see in China's women's undergarment industry:
• Even with the safeguards and export tax, the majority of women's undergarment makers will be significantly increasing capacity to meet overseas demand from countries other than the US.
• Although increasing production costs will continue to be an issue of concern for women's undergarment makers in China, US safeguards and the export tax will play a more vital role in makers' pricing strategies. While about half of the suppliers are keen on keeping export prices stable in the next 12 months, those affected most by the tax will definitely raise quotes.
• Bras will gain a greater share in exports as more makers reduce output of panties. The export tax has hit suppliers of low-end panties the most, and these makers are focusing production on bras instead, which are not levied.
Many women's undergarment suppliers in China also offer models for men, and some produce swimwear as well. This report features suppliers that focus mainly on women's undergarments, the production of which generally accounts for more than 50 percent of their total output. This report also profiles major women's undergarment suppliers in China that contract manufacture for established international brands such as Wacoal, Victoria's Secret and La Perla.
These suppliers export bras, panties, girdles, slips and camisoles. Most are offered separately but some are shipped in sets. All these products are included in this report.
Almost all women's undergarment manufacturers produce panties and bras, and there are some that specialize in just one line. More than 60 percent of suppliers featured in this report produce all three kinds of women's undergarments for export, and more than 50 percent have bras as their main product line.
The Products & Prices section in this report discusses the main features of each type of women's undergarment and its price range. It also explains the differences between low-end, midrange and high-end models in each product category.
Product development and design focus are discussed in the R&D/design section, while the Materials & Components module details the main fabrics used by China makers.
Industry Overview
Women's undergarment suppliers in China are in a state of tremendous flux. The industry was gearing up for phenomenal growth in 2005, when all textile quotas are fully eliminated. Suppliers, however, are wary of explosive growth because of a number of factors.
China's exports to countries that used to impose quotas on women's undergarments, primarily the United States and the European Union, have surged in the months after quotas were lifted, but total shipments have declined as a result of US safeguards and government-imposed export taxes.
To prevent the US and EU from applying safeguards on sensitive categories, the government in China has taken measures to curb a sudden surge in exports to these markets, such as setting export taxes. The initial tax implemented at the beginning of the year covers some 100 apparel categories, including women's undergarments. A second levy, which is up to 400 percent more than what was previously imposed, was implemented in June but does not apply to women's undergarments.
Under the policy, exports of slips and underpants are taxed at US$0.024 per piece. Although bras are not included in the categories to be taxed, the levy still applies for sets with panties.
While the tax has little effect on most apparel categories that are being levied, it is a burden for low-end underpants. The levy accounts for about 9.6 percent of a typical low-end underpant's cost. Since the average profit margin for most low-end makers is less than 10 percent per piece, most of these suppliers will face bankruptcy if they continue offering low-end products at the same price. To survive, many have passed all or most of the additional cost to buyers, while a few have shifted to more upscale manufacturing.
In fact, total exports of panties and girdles decreased 3 percent in the first three months of 2005 to 409.2 million pieces, with average prices up 34.8 percent from US$0.30 to US$0.40 per piece.
Because these products account for the majority of total women's undergarment exports, the sharp decline in shipments has significantly affected overall exports in Q1 2005, which went down 17 percent to 760 million pieces at a value of US$420.5 million.
However, exports of panties to the United States in the same period surged 1,169 percent to 19 million pieces. Because of the phenomenal increase in exports, the US imposed a safeguard, capping growth of underwear imports from China to 7.5 percent.
The US previously imposed a safeguard on China-made bras, 22 months after quotas on the product were lifted in January 2002. Exports of bras to the US grew 291 percent in this period, prompting the safeguard to be implemented in December 2003.
Supplier Profile
Beijing Juheng Garments Co. Ltd
Established in 1994, Beijing Juheng is an ISO 9001-certified supplier specializing in women's undergarments. Annual production yield from its two factories is 1.82 million pieces, with sales reaching US$3.8 million. Seventy-nine percent is directly exported, with OEM clients taking 65 percent and ODM 20 percent. The rest is exported under the in-house Y.G. brand.
Main overseas markets are France and Italy. The rapidly growing market in Russia, with its more active importers, will contribute to the expected 20 to 50 percent growth in 2005 export sales.
Products
Bras account for 65 percent of all exports, followed by panties and girdles at 25 percent, and slips and camisoles at 10 percent.
Bra prices start at US$0.80 each. Embroidered lace and special fabric, such as those made of soybean fiber, can raise the price of a bra up to US$6. Panties are between US$0.50 and US$1.50, while girdles are US$2 to US$4. Slips and camisoles range from US$1 to US$1.30 each, with silk varieties at US$3.50 to US$5.50. Prices are expected to be stable in 2005.
Cotton, nylon, modal, Lycra, spandex, polyester and silk are usually used. Buyers may also specify the use of elastic or nonelastic straps, polyester or nylon lace, and steel wire. Specialty bras, such as one made of far-infrared fabric for women with hyperplasia, can also be supplied.
Fabrics and accessories mainly come from Guangdong and Jiangsu. Molded bra cups are predominantly outsourced.
The company's 35-member R&D team develops 260 to 300 new products a year using the AGMS CAD system imported from Japan's Asahikasei Corp. R&D focus is on research into new materials that can increase comfort, such as the soybean-fiber fabric now being used in production. Fabric made from soybean fiber has the same luster as silk and the texture and hand of a silk-cashmere blend. A special steel wire is also replacing memory alloy as bra cup frames. The new steel frame molds itself to the wearer and maintains the cup shape for more than 80 times of fitting.
Manufacturing
Beijing Juheng's two factories in Hebei and Beijing together occupy a 25,200sqm area. The two factories have 15 cutting machines and 400 sewing machines, almost 40 percent of which are computerized.
The 13,200sqm Hebei plant employs 550 workers. It has one cutting workshop with eight machines, two of which are Fukushima-brand imports from Japan. The 12 sewing lines in the sewing workshop use 242 Singer, Juki, Kingtex and Pegasus branded machines. The packing workshop has two steam iron tables, each manned by four to 10 packers.
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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