China is the world's leading supplier of home textiles, with exports in 2004 rising 24 percent to reach $4.7 billion. The elimination of quotas on certain home textile products in January 2005 helped accelerate export growth even further. Overseas shipments in the first five months of 2005 amounted to $2.2 billion soaring 40 percent year-on-year.
However, the steep rise in exports raised an alarm in the US and the EU, resulting in safeguard actions from the two regions. While China agreed to limit exports of bed and table linen to the EU, the US has begun investigating the surge in shipments of drapery. If the quotas are reinstated, the limits could be determined by the last quarter of the year. Similar action on bed linen is also possible from the US, as exports in the line increased by 77.6 percent in the period January to May 2005 from a year ago.
The following are some of the trends we see in China's home textiles export industry:
• Embargoes on exports to the EU will not greatly affect the industry, as the region accounts for only 14 percent of total home textile exports from China. However, limits on shipments to the US, China's top export market for home textiles, could slow the industry's growth rate.
• Many suppliers will raise prices in coming months. However, most will limit the increase to 10 percent, mainly because of competition in the industry. Some companies will even drop export prices, although by only about 5 percent.
• Many China makers have started shifting emphasis to alternate markets in anticipation of the export restrictions. Shipments to Japan and Australia, therefore, should rise in the next six to 12 months. Some companies have also started to increase sales to the domestic market.
• Although OEM orders will continue to dominate production, many suppliers will enhance their in-house R&D capability in order to distinguish themselves from other makers.
• Suppliers will use more environment-friendly materials and functional fabric, especially for bedding and towels. These include antimicrobial, hypoallergenic and nonflammable fabric, and those made of natural fibers such as soybean.
China's home textile exports are dominated by bedding, towels, table linen and drapery. Bedding, the largest line, totaled US$2.9 billion in exports in 2004 posting a year-on-year growth rate of 52.6 percent. These figures exclude quilted products. The second largest export category, towels rose to US$1.2 billion clocking a 16.5 percent growth rate, while drapery exports amounted to US$912 million, increasing 40 percent. Table linen raked in US$372 million worth of exports, growing moderately by 20.7 percent.
These four product categories are also the scope of this report. The Products & Prices section discusses the features and prices of these major home textile types. The R&D/Design module details the steps being taken by companies to improve functionality.
Production and QC testing procedures in a typical home textile factory are discussed in the Manufacturing section.
With more than 3,000 small, midsize and large suppliers, the home textiles industry in China is diverse and multifaceted. While most makers can produce several home textiles, many specialize in certain products. The Industry Overview section in this report elaborates on the industry composition, highlighting the key advantages of sourcing from different types of suppliers.
Industry Overview
Home textile exports from China surged dramatically in the first half of 2005 due in part to the removal of quotas on certain products in January. However, suppliers are looking at the rest of the year with cautious optimism as limits on exports to the US and the EU could hamper growth rates considerably.
While the EU lifted quotas on all home textiles in 1998, the US removed the caps on towels, drapery and table linen in 2002 and those on bed linen and quilts in 2005.
According to China customs statistics, total home textile exports from the country rose by a modest 24 percent in 2004. However, shipments in the first five months of 2005 soared nearly 40 percent to reach US$2.2 billion from a year ago. But even more remarkable export growth is evident in certain product categories to some of the country's key markets.
Towel exports to the US in January to May 2005 reached US$119 million, a massive year-on-year increase of 105 percent. Shipments of other product lines to the US also registered impressive growth rates — bedding increased by 77.6 percent to US$220 million, while drapery exports were at US$230 million, growing 25.7 percent.
Reacting to the jump in drapery shipments, home textile associations in the US have petitioned to curtail imports of China-made curtains. If quotas are reinstated, limits could be set sometime the last quarter of this year.
In view of the steep rise in bedding exports to the US, similar action on the product line cannot be ruled out.
In fact, bed and table linen have been the products of contention in the EU. In January to May 2005, imports of China made bed linen to the EU jumped 154.7 percent in volume and 57.6 percent in value from a year ago. In response, China agreed to limit shipments of table and bed linen to 5,521 and 6,451 tons, respectively. These limits, which took effect in June, are filling up.
However, embargoes on shipments to the EU will not have a major impact on the industry as the region accounts for only 14 percent of total home textile exports.
Restrictions on US exports, on the other hand, could have more far-reaching consequences, since it is the top market for China-made home textiles. The US absorbed US$1.2 billion, or 25 percent, total export sales in 2004.
In the shadow of these trade disputes, many China suppliers have already started looking for alternative solutions. While some are increasing sales to the domestic market, others are boosting exports to Asia, particularly Japan. The country is China's second-largest destination for home textiles, absorbing US$1.1 billion worth of exports in 2004.
Industry Composition
The home textiles industry in China is composed of more than 3,000 small, midsize and large suppliers producing bedding, drapery and towels.
Irrespective of size, the majority of companies make bedding products, with most offering both quilts and bed linen and some focusing on one or the other.
Suppliers that manufacture quilts can also produce bed linen, but those specializing in bed linen do not necessarily offer quilts. This is because quilt production requires specialized machines for cleaning, stuffing and quilting. Makers producing quilts usually also offer similar products such as pillows and cushions.
Very few companies focus on drapery, and even fewer specialize in table linen. Most suppliers have one or both of these product categories as their secondary lines and bedding as their primary line.
Makers offering towels usually specialize in the line, but some large companies offering multiple types of home textiles have separate factories dedicated to the product. The few small and midsize companies that offer towels as their secondary line usually subcontract production or dedicate a small portion of their factories to it. However, most of these makers might not be able to provide the expertise that towel specialists can offer.
Supplier Profile
Hangzhou Fortunate Co. Ltd
Established in 2001, Hangzhou Fortunate specializes in bedding, drapery and table linen. It will continue to expand its range of home textiles in coming months.
The company's total sales reached US$5 million in 2004, with about US$2 million worth exported to the EU and the US.
About 80 percent of its exports are on an OEM basis. Customers include Target and J.C. Penney in the US.
Hangzhou Fortunate will maintain prices even as material costs are rising. The company upgraded worker salaries and improved their working and living facilities.
Products
Hangzhou Fortunate focuses on midrange and high-end home textiles made of polyester, 100 percent cotton, polyester/cotton and synthetic fabric. It expects wrinkle-free home textiles to be among the hottest items.
Cotton is purchased from Shandong province, and polyester is procured from suppliers in Zhejiang province or South Korea.
Prices of linen and drapery depend on the type of material and thread count, size and decorative features. Design also affects the price. Low-end and midrange curtains, which are made of polyester, are priced at US$5 to US$12 per piece. High-end drapery made of chenille sells for more than US$12.
A bed linen set, which usually consists of a quilt cover, two pillowcases and a bedsheet, is priced at US$12 to US$30, depending on style, in addition to fabric and thread count.
Tablecloths come in oblong, oval, square and round versions. The smallest one measures 60x80 inches, and the widest is 60x144 inches. Price is US$2 to US$5 each.
Six R&D members release 500 new products annually, and produce samples based on customers' designs. About 80 percent of design work is done by computer, while the rest is done on paper.
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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