Prices that Chinese mainland wholesalers are asked by auction houses are up to 30% higher than last year. A fur salesman in the Dalian Plaza said the average price of fur garments had risen by over 30% with the approach of the peak season.
That has had a major effect on consumer sales. Ms Song, a shopper, was in several of Dalian's fur stores over the National Day Golden Week holidays this year and found to her dismay that the price of a fur coat had shot up.
Average unit prices of fur coats have risen by between Rmb3,000 and Rmb5,000 compared to last year. People in the industry said market prices have basically been fixed with the approach of the peak season, with no sign of a downward adjustment.
Ms Song said the prices of mid-to-high-range fur coats were between Rmb12,000 and Rmb13,000 last year, but this year those figures have jumped to between Rmb16,000 and Rmb17,000.
The fur salesman at Dalian Plaza said: "some people tried to bargain by making counter offers based on last year's prices. We can only explain to them that our price is the market rate and not the price fixed by individual retailers."
Zhang Guidong, Business Manager of Dalian Shengbang Fur Plaza, said most fur coats on sale in the market were new arrivals, with prices for ordinary fur up by about 30% compared to last year. Prices for higher quality styles had risen by between 80% and 90%.
"Most fur plazas in Dalian hoped not to see market price go up so suddenly. To us, stable and moderate prices are guarantees of turnover. Higher sales prices as a result of higher costs have very little practical meaning," said Zhang Guidong.
Since wholesale cost prices are too high for some styles and brands, dealers had no alternative but to reduce profit margins and make the merchandise more acceptable to retail buyers, he said.
Market to see Rmb multi million luxury items
Several of the world's leading fur auction houses actually had the power to fix prices and all appeared to be raising those in accordance with the cost of raw materials, experts agreed.
By the time the raw hide and skin was cut and sewn, with the substantial increase in labour and other costs, ex-factory prices of fur coats had risen at least 30% this year. Price pressures at every level had affected retail offerings.
Strong market demand was another factor pushing prices up. With a market penetration rate of less than 3%, fur coat and accessories held great potential in the Mainland market. As salaries rose, demand for fur from first-time or repeat buyers also grew.
However, rising prices were also turning some potential customers off. Initial estimates suggested that up to 20% of consumers had shelved plans to buy fur while others were hesitant, industry analysts observed.
Competition was intense in Dalian's fur market. In order to open up new markets and steer clear of cut-throat competition, some dealers were trying to tap into the opportunities available due to market dislocation, such as building luxury fur stores with price tags of close to Rmb2 million. It was understood that these "luxury furs" were made from Italian sable and their workmanship and styles were among the best in the world.
