Why are Chinese cases and bags sold overseas?
The production line is running at full capacity, and the container traffic volume has doubled. In Zhejiang, Hebei and other places in China, the luggage enterprises have ushered in the grand occasion three years ago.
Why do Chinese bags explode overseas? According to some data, Chinese bags have accounted for nearly 40% of the global market share, establishing a greater manufacturing advantage. At the same time, however, in the global high-end luggage market, the “volume” of luggage in China is still not high.
The insiders said that China’s suitcases are popular overseas, which is the result of a series of factors such as the integrated advantages of China’s suitcases industry. Of course, the market situation is changing all the time, including epidemic, regional conflicts, trade frictions and other factors, which also deserve close attention.
Overseas orders rose sharply
Hebei Gaobeidian Pengjie Leather Co., Ltd. is a company that produces and sells medium and high-end bags. The company is located in Baigou New City, Hebei Province. Its annual export volume is tens of millions of yuan, accounting for about half of the business volume.
Wang Jinlong, the chairman of the company, told China Newsweek that since this year, its foreign trade orders have rebounded. According to conservative estimates, the export business has increased by more than 30% compared with last year.
Hebei Baigou New City is one of the important bases of the luggage industry in China. Statistics show that in the first eight months of this year, the total amount of cases, bags and similar containers exported from Hebei was 1.78 billion yuan, up 38% year on year.
In Pinghu, Zhejiang, another important luggage production base, a local insider said that its foreign trade orders had maintained an overall growth of more than 50% this year, and the export volume of luggage in the first eight months of this year had increased by 60% year-on-year.
Statistics show that from January to August, Zhejiang’s exports of cases, bags and similar containers reached 30.38 billion yuan, up 59% year on year from 19.07 billion yuan last year.
Hebei Baigou and Zhejiang Pinghu are traditional production bases of the luggage industry in China. In recent years, with the growing demand for luggage, the number of luggage enterprises in China is also increasing, and luggage manufacturing involves more and more regions. For example, Shandong, Jiangsu and Hunan have become emerging bases of luggage production in China.
In these emerging industrial bases, the situation of luggage going to sea is also very gratifying. Take Hunan as an example. In the first eight months of this year, Hunan’s exports of bags and similar containers reached 11.8 billion yuan, up 40.3% year on year; Among them, the export value of leather bags and similar containers reached 6.44 billion yuan, up 75% year on year.
Jiang Xiaoxiao, director of CIC Insight Consulting, told China Newsweek that the output of cases and bags in traditional bases such as Baigou in Hebei, Pinghu in Zhejiang, Shiling in Guangdong and five emerging bases such as Hunan has accounted for about 80% of the country’s total, and the foreign trade orders in these important production areas have generally increased, indicating that the export of cases and bags in China has shown a trend of recovery.
According to the data released by the General Administration of Customs recently, in August this year, the export value of cases, bags and similar containers in China increased by 23.97% year on year. In the first eight months, China’s accumulated export volume of bags and similar containers was 1.972 million tons, up 30.6% year on year; The accumulative export amount was 22.78 billion US dollars, up 34% year on year.
The data shows that in the first eight months of 2019, the cumulative export volume of bags and similar containers in China was 2.057 million tons, and the cumulative export amount was 17.69 billion US dollars. The export volume of bags in the first eight months of this year has exceeded the amount in the same period of 2019.
Li Wenfeng, vice president of China Chamber of Commerce for the Import and Export of Light Industry Crafts, told China Newsweek that the luggage market suffered a precipitous decline in 2020 due to an outbreak of disease. Since the second half of 2021, the market has recovered. The first eight months of this year have increased significantly compared with last year. This year, China’s luggage export is expected to reach a new high.
The performance of some listed companies is also rising. The financial data of the American luggage brand New Beauty in the first half of this year showed that the company’s net sales were 1.27 billion US dollars, a year-on-year increase of 58.9% compared with 2021. In the first half of 2022, Karun, a domestic luggage listed company, had an operating income of 1.319 billion yuan, up 33.26% year on year.
Outstanding productivity advantages
Jiang Xiaoxiao said that an important reason for the recovery of luggage is the recovery of overseas economy and demand.
At present, many European and American countries have released restrictions on tourism and commerce. With the increase of outdoor activities such as tourism, there is more demand for luggage such as trolley boxes.
Zhejiang Pinghu Ginza Luggage Co., Ltd. is a professional trolley case manufacturer. It is understood that since this year, the company’s trolley case business has exploded, and orders have been scheduled for next year. In addition, the sales of trolley cases produced by Hebei Gaobeidian Pengjie Leather Co., Ltd. also increased greatly.
The financial report data of New Beauty shows that compared with Asia, the company’s performance in Europe and the United States has rebounded significantly. Among them, the net sales of North America, Europe and Latin America in the first half of 2022 increased by 51.4%, 159.5% and 151.1% year on year respectively, while that of Asia in the first half of 2022 increased by 34%.
Wang Jinlong said that in such a situation, the exchange rate changes since this year, especially the appreciation of the US dollar, have strengthened its purchasing power and further stimulated demand.
At the beginning of January this year, the exchange rate of the US dollar against the RMB was 6.38, while as of October 18, the exchange rate of the US dollar against the RMB was 7.2, with the relative appreciation of the US dollar exceeding 10%.
In addition, due to the increase in labor costs, raw materials, freight costs, etc., the overall average unit price of bags and suitcases has increased significantly, which has also boosted the growth of export amount to a certain extent. The data shows that the unit price of bags and similar containers in the first eight months of 2019 is US $8599/ton, and it will rise to US $11552/ton in the first eight months of 2022, with an average increase of 34%.
Zhang Yi, CEO and chief analyst of iMedia Consulting, told China Newsweek that, fundamentally, the overseas sales of Chinese bags and suitcases are still due to their outstanding cost performance advantages.
He said that after 30 to 40 years of development, China’s luggage industry has cultivated a complete industrial chain on the basis of processing with supplied materials, including supporting equipment, talents, raw materials and design capabilities. It has a good industrial foundation, excellent strength, rich experience and strong production capacity. Thanks to China’s solid luggage production and design capabilities, Chinese luggage has won a very good reputation in overseas markets; From the monitoring results, overseas consumers are more satisfied with the quality of Chinese bags and suitcases. At the same time, Chinese bags and suitcases have enough advantages in price, which is also a major factor that overseas consumers attach great importance to.
On the one hand, in some regions, the average price of a single package is less than 20 yuan.
On the other hand, the quality level of luggage in China is also constantly improving. Wang Jinlong told China Newsweek that in today’s overseas market, the competition is very fierce, and overseas customers have very high requirements for quality. If the product quality is not improved, it will not stand still at all, and the performance will only get worse.
Li Wenfeng said that China’s suitcases and bags are popular overseas, which is the result of a series of factors such as the integrated advantages of China’s suitcases and bags industry. Of course, the market situation is constantly changing, including epidemic, regional conflicts, trade frictions and other factors, which also deserve close attention.
Weak brand weaknesses need to be strengthened
At present, China has become the world’s largest manufacturer of luggage. According to CIC Insight Consulting, Chinese bags have accounted for nearly 40% of the global market share. However, on the one hand, China’s luggage manufacturers mainly focus on OEM. At present, there are many enterprises in the industry, and the industry concentration is low; On the other hand, from the brand side, the domestic and international luggage market is still dominated by international brands.
CIC Insight Consulting and Monitoring shows that, from the perspective of export product structure, China’s export luggage is still dominated by international big brand OEM middle and high-end products. In the domestic market, the competition of luggage brands is characterized by different price segments. In the middle and low price segments, domestic brands are dominant, while in the middle and high price segments, foreign brands almost monopolize.
From the first half of this year, the performance growth of the American luggage enterprise Xinxiu, which has many famous brands such as Xinxiu and Meilv, was significantly higher than that of Karun.
In recent years, domestic luggage enterprises, such as Ginza Luggage and Kairun, have also launched their own brands, but at present, their competitiveness is still insufficient.
Take Karun Co., Ltd. as an example. In the first half of 2022, the company’s operating revenue was 1.319 billion yuan, a year-on-year increase of 33.26%. The company has two types of businesses: OEM and private brand. The growth of its performance is mainly due to the large increase in revenue from OEM orders.
Among them, the OEM business of Karun Co., Ltd. is the R&D and production of bags of famous brands such as Nike, Decathlon, Dell, PUMA, etc., with a revenue of 1.068 billion yuan, up 66.80% year on year. However, due to weak demand, the revenue of private brand business decreased by 28.2% to 240 million yuan, which instead slowed down the company’s performance.
Zhang Yi said that the brand power of luggage in China is too weak, which is exactly the dilemma that the luggage industry needs to solve. It is urgent to strengthen brand building and increase the reform of marketing methods.
Li Wenfeng believes that to make China’s luggage brand bigger and stronger, we still need to make efforts in three aspects: first, in terms of product quality, we should constantly strive for improvement and improve product quality; The second is to improve the development and design strength, especially when going to the overseas market, we need to consider the culture, habits and other factors of overseas consumers, so as to design attractive products, such as jointly designing and developing products with overseas designers; Third, strengthen channel construction and improve the ability to operate overseas.
For our luggage enterprises, there is no turning point at present.
Jiang Xiaoxiao said that from the perspective of the domestic market, as young consumers pay more attention to brand fashion, no longer blindly pursue international brands, and at the same time, their acceptance of China-Chic products and domestic designer brands has increased significantly, this change in consumption trends is a good opportunity for development, and local luggage brands need to strengthen their grasp.
Li Wenfeng believes that, for our luggage enterprises, on the one hand, we need to strengthen the construction of digital capabilities, including digital development and design, intelligent production and other aspects to increase investment; On the other hand, we need to speed up the pace of green low-carbon technology, such as using green production technology to improve the production process, starting with raw material procurement, and increasing the application of green environmental protection materials.
“Enterprises cannot regard these investments as a burden. On the contrary, they are all opportunities for the rise of Chinese luggage brands, but brand building is not a day’s work, and it needs to be accumulated over time,” Li Wenfeng said.
Post time: Dec-28-2022