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

July 09, 2009 - China

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.)

The Chinese tend to save more and, of course, they are not experiencing excessive debt levels because the personal credit market is still in its infancy.

Many business people and analysts - local as much as foreign - predicted that Chinese retail buyers would react to the global economic downturn by forgoing the really big-ticket items, such as a car, and plumb instead for a consolation purchase - such as a new pair of high end shoes from overseas, or a top brand leather bag - and put the car purchase off for the time being.

But China’s workforce is becoming more productive, which typically benefits the more skilled section of the workforce: the very people most likely to be profiled for buying big-ticket items.

In the event it seems that Chinese consumers are indeed buying high-end foreign shoes and brand name leather handbags - and the car as well.

All China Leather Fair 2009
Since its inception over 10 years ago ACLE has offered international companies in the leather sector the best access to the China market. It’s the place where companies from around the world can meet Chinese buyers face-to-face, discuss business, examine fashion trends and keep abreast of new innovation.

Last year a total of 1,120 exhibiting companies from 38 countries and regions, welcomed 15,755 buyers, almost all of the latter came from mainland China.

The exhibition is held in tandem with, and at the same location, as the China International Footwear Fair (CIFF) and Moda Shanghai.

This year, as before, the three fairs will occupy five halls of the Shanghai New International Exhibition Centre. Three months out from the fair, more than 90% of the space available is already booked by international and local exhibitors. In the international halls, 18 group pavilions from Australia, Bangladesh, Brazil, Ethopia, France, Germany, India, Italy, Japan, Korea, Mexico, Pakistan, Portgual, Spain, Taiwan, Thailand, Turkey and USA will present their latest products and know how.

ACLE, CIFF and Moda Shanghai are organised by APLF (who celebrated this year the 25th anniversary of their fairs held in Hong Kong), and the China Leather Industry Association (CLIA).