Silky Beijing Olympic mascot - Fuwa, made by Wensli
China has a 5,000-year old silk making history and it still makes over half of the silk in the world. But its historic glory is long gone and today virtually no one can name even a single Chinese silk brand. Instead, most Chinese companies stand obscurely behind luxury brands such as Hermes in Europe and the expensive kimonos of Japan as raw material providers.
Silk companies in China mainly export raw materials and other low-end products, according to Xin Zhehua, deputy director of China Textile Commerce Association. As a result, Xin says most Chinese companies cannot control the prices in the world market and the profit margin is very narrow for most companies.
"Too much competition in the early 1990s has worsened the market and damaged the industry as a whole," says Tu Hongyan, vice-president of Wensli Group.
Wensli is one of the few Chinese silk companies that have started to move up the value chain since early days.
The company's founder, Shen Aiqin, invested 30 million yuan in the early 1990s on hi-tech machinery from Germany and Italy, with which the company created an operation that integrates dyeing, weaving, printing and making the final garments from the original silkworm cocoons.
But still, the industry as a whole is sluggish. According to a report by International Business Daily, the silk sales in China from January to November 2007 were 7.6 million yuan, and the average profit rate was 2.74 percent, lower than the average profit rate of the whole textile industry. It is one of the textile sectors that was hit the most by the removal of export tax rebate and yuan appreciation.
People from the industry also worry that silk is faced with competition from fabrics that look and feel like silk. Some say that some of the faux silk products are even smoother than the real deal.
But Shen still believes that silk has its own advantages over other textile materials. "It is natural, and it is healthy, both for human beings and the environment, " says Shen. While running other businesses to provide capital for the development of silk, Wensli is trying to figure out a proper model for the silk business.
The export value of Wensli silk was around 100 million yuan in 2007 and Shen says the company has started to appeal more to consumers in China as people are getting richer and can afford expensive silk products.
As the new head of the company, Tu says the firm focusing on innovation and design to appeal to customers in China. "The price for a single dress now may equal what hundreds of textile products cost before," says Tu.
As the market leader, Wensli has seized the Beijing Olympics as a chance to promote itself. It is going to make 6,000 silk necklaces for gold medals and it is making an Olympic mascot, Fuwa, in silk as one of the providers approved by the Beijing Organizing Committee of the 29th Olympic Games (BOCOG). Shen says the silk Fuwa has been very popular.
The marketing strategy with major events is also nothing new for Wensli. The Chinese actress Gong Li dressed in a qipao (traditional Chinese dress) made by Wensli when she was head juror of the Berlin International Film Festival in 2000. And in 2001, the company made gifts made of silk for international heads of state during the Shanghai Asia-Pacific Economic Cooperation (APEC) meeting.
