Madam Zhang, already well known in the leather industry as Chairman of the China Leather Industry Association (CLIA) was recently elected President of the International Council of Hides Skins and Leather Traders Association (ICHSLTA). Many might feel that this represents further the belief that China is beginning to ‘punch its weight’ on the international leather industry.
Given China’s impact on the industry over the years it could be said that when China’s leather industry sneezes the rest of the leather world catches a cold. These days, under present circumstances, it’s more a case of when the rest of the world sneezes China …. well, it may not catch a cold, but it certainly sneezes along with the rest.
APLF News spoke to Madam Zhang and asked her about recent developments in China’s leather industry.
We began by noting that there has been much speculation about the state of China’s leather industry, especially the (apparently considerable) reduction of sector activity along the coastal regions generally, and Guangdong Province in particular.
Madam Zhang pointed out that much of what is taking place is a movement away from the coastal areas, due to rising costs, and into the hinterland.
She said, “There are several reasons for this but high labour costs, materials price increases and the impact of the new Labour Law on the domestic market and influenced by the world financial crisis, some Chinese companies in the coastal areas, especially Guangdong companies, have moved their factories and production lines to the southwest hinterland like Jiangxi, Anhui, Hunan, Sichuan, and Chongqing, to save costs.
“Actually, this movement is natural and can meet the need of further
development of the industry. Compared to the coastal areas the hinterland provides more and cheaper labour for labour-intensive industries and now the transportation has been much improved it is more convenient than before.
“However, high value-added activities, like R&D, design, distribution and sales are still left in the south. So the coastal area, especially Guangdong, is still a significant centre for the industry.”
Madam Zhang provided more details on the adjustments of the tax rebates and other incentives, their actual effect on the industry, and the further incentives the industry would like to see.
“Current policies have played an active role in (developing) foreign trade. Now we are working on further policies for the industry. Such as:
1- Continue to raise the export tax rebate rate for leather gloves and other leather products
2- Continue to raise the current export tax rebate rate (11%) for leather and fur garments.
3- Continue to raise the current export tax rebate rate (13%) for shoes.
4- Decreasing the import custom tariff for raw hide and wet-blue.”
Madam Zhang was also robust in handling allegations of contracts, placed by Chinese companies, not being honoured: either by way of refusal to accept the consignment or agreeing acceptance on condition of a price reduction.
These allegations were bought up during a ‘round table’ discussion organised by APLF and conducted by leading leather trade analyst, Ron Sauer (of www.thesauerreport.com) during APLF in Hong Kong last week.
Madam Zhang responded by acknowledging that she had heard of some allegations but pointed out that the culprits were not exclusively Chinese companies. Moreover, there were substantiated allegations made by Chinese companies of foreign buyers refusing to accept consignments on what were clearly spurious or fabricated complaints.
This promises to be a story with a long lifespan ahead of it.
