The next 'Big Spenders' of the Leather Industry – ACLE & CIFF

09 Jul '09

5 min read

This important autumn event, the leather industry's premier international exhibition in China, is a bell-weather not only for the sector, but many others too. Simply put, the All China Leather Exhibition (ACLE), will reflect a trend of wealth and commercial activity away from the dominant western economies into Asia generally, and China in particular. It builds on the industry confidence first detected at APLF in Hong Kong in March of this year.

The transfer from the traditional to the new economies is not 'new news', but the pace is starting to accelerate. Happily, there is much 'good news' for the leather sector.

ACLE runs 2 - 4 September, 2009, in Shanghai.

With the US retail consumer looking ever more like an endangered species the role of ”Big Spenders” is falling upon the Chinese. It's a role they appear to be a little under-prepared for. A piece in the 'China Daily', June 15, 2009, explained:

“Clearly, few had expected China's domestic consumption to hold up so well amid the global recession. But it may be the Chinese consumers themselves who are most surprised by the ongoing consumption boom.”

At precisely the moment General Motors in the US applied for Chapter 11 bankruptcy the two Chinese joint ventures they are involved with reported record sales within their domestic market.

One of them, Shanghai GM, reported that their sales are up a whopping 50% over last year. Sales in May alone reached 56,000 units, mostly under the Buick name. China's annual car sales could top the 10 million mark this year.

That's very good news to leather manufacturers everywhere who supply the auto industry and have watched in horror as established markets collapse. It's an attractive market because the leather tends to be high-end, carries better margins and, of course, each vehicle uses a lot of leather.

Apparently, the demand for leather upholstery in cars is significantly higher in Asia generally than in mature markets such as the US or Europe. Local buyers are more likely to insist on leather even for relatively inexpensive vehicles.

Established up-market car manufacturers in China, such as Mercedes, BMW or GM would be expected to have quite extensive buying experience of high-grade leather. However, in this rapidly developing market, with about 50 Chinese car manufacturers right now, rare opportunities exist for leather manufacturers to walk through open doors to Chinese car manufacturer buyers and develop lasting relationships.

CONSOLATION BUYERS?
Until very recently the perceived wisdom on China's economy was that it would fare better than most, but some sort of downturn was inevitable.

This does not seem to be the case, and certainly not at the retail buying level. Demand has held up remarkably strong. This could be due, in part at any rate, to the Chinese government's efforts to boost spending, which benefitted consumers (rather than elsewhere when money was diverted into the banking and related sectors.)

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