Business talks at the 2010 International Trade Fair for Cashmere in Beijing. China's cashmere clothing and accessories are finding a growing market at home. [Photo/China Daily]
ORDOS, Inner Mongolia - Factory worker Wu Suqing hunches over a machine knitting a green cashmere sweater bound for a department store in China where demand for the luxury wool is growing even as Western sales shrink.
Surrounded by towering piles of brightly colored pullovers, Wu and dozens of workers at a factory in North China churn out more than 100,000 sweaters a year that retail in Beijing and Shanghai for hundreds of dollars each.
"At the beginning, I was tired, but now I'm used to it," Wu told AFP above the clamor of knitting machines in a dingy building in Ordos in North China's Inner Mongolia autonomous region.
China is the world's largest producer of cashmere, churning out 75 to 80 percent of the global supply - worth an estimated 5 to 6 billion yuan ($770 million to $920 million) each year.
This "soft gold" or "diamond fiber", as highly prized cashmere is known in the industry, has traditionally been exported to affluent overseas markets.
But the country's growing taste for luxury products is changing that.
High-altitude North and West China are ideal for producing the cloudlike wool. Their cold, dry winters cause the long-haired goats scattered across the region to grow rich coats to keep warm.
The soft fiber is spun into yarn and then knitted into sweaters, scarves and shawls, to be sold by luxury brands such as Hermes Group and Eric Bompard SA in Paris, New York and Sydney.
More than half of the country's cashmere clothing and accessories are still exported, but it is now finding a growing market in increasingly affluent Chinese cities.
"It is easy for a Chinese person to buy a cashmere sweater now. People are much richer than before," Zhang Quanxiang, vice-director of the China Livestock Marketing Association's cashmere department, told AFP.
The number of Chinese-made cashmere sweaters exported in 2010 fell to 12 million, down 33 percent from 2007, as the global financial crisis hit buyers in the United States and Europe, said Zhang, a former vice-president of China's largest cashmere producer, Ordos Group.
But he added that the growing Chinese market has helped to offset the decline.
Raw cashmere prices have nearly doubled in recent years because of a combination of factors: Chinese demand, fewer goats following recent bitterly cold winters, and a ban on grazing the sharp-hooved animals on open land in Inner Mongolia to prevent soil erosion.
The rising prices have been life-changing for herders such as Meng Lounu, 77, whose family lives in a village on the edge of the vast Gobi Desert where they raise hundreds of goats in large earthen-floor pens.
The family earns 1 million yuan a year selling cashmere to factories in Ordos.
Recently, they have been able to buy a new pick-up truck and build several cement houses for family members.
"Our standard of living gets better and better," Meng said, herding dozens of long-horned goats around a yard strewn with dung and straw.
"Before, our life was bad, but now it's great. We can eat as much as we want - we make more and more money," she said.
China is the world's fastest-growing market for luxury goods and is forecast to be the biggest by 2015, according to the consultancy Pricewaterhousecoopers.
A female shopper at a wholesale outlet in Ordos, where a 100-percent cashmere sweater sells for up to 2,000 yuan, said she liked the soft fiber because it is comfortable.
"Our products are not considered that expensive - it is more expensive to buy them in the stores in Beijing," a saleswoman said.
The picture is less rosy for China's cashmere factories, whose profit margins have been eroded by soaring wool prices and increasing competition from other Chinese manufacturers, enticed by the growing market.
"The business is becoming more and more difficult," said Yang Wang, the owner of a factory in Ordos which makes about 100,000 sweaters each year, mainly for the Chinese market.
"Cashmere factories are popping up everywhere in China. And there are more than 10 factories of the same size in Ordos."
While Wu Suqing may not be able to afford one of the beautiful sweaters she makes, she understood why people are prepared to pay the equivalent - or more - of her entire monthly salary for the luxuriant wool.
"It feels nice and is comfortable to wear," she said.
Agence France-Presse
