Strategic location and government-initiated incentives strengthen city's production hub position.
Backed by favorable financial policies, a strong supply chain and well-entrenched transport infrastructures, Xiamen has steadily positioned itself as a sourcing center for baby strollers and playpens in China. This city in Fujian province accounts for 5 to 15 percent of the country's output in the line. The area now also hosts about 50 to 100 suppliers, thanks to its special economic zone standing.
One of the four original SEZs established in the 1980s, Xiamen has provincial-level autonomy in its economic administration. This status has allowed the local government to give out incentives to export-oriented foreign enterprises, attracting new entrants. Companies that reinvest profits or establish new export businesses in the city are entitled to a 40 percent tax refund or a full rebate, respectively. To strengthen product development, tax breaks are also given for R&D expenses.
In 2006, the city was recognized in a World Bank survey as one of the best in China to invest in. The citation was based on favorable trade mandates, environmental protection and social equality.
Another advantage Xiamen enjoys is its proximity to other key manufacturing bases in the province. This gives local players easy access to raw materials and parts, and the latest fabrication technologies. For instance, makers are able to source metal tubes from Longyan, a production hub for bicycles and parts. Zhangzhou and Quanzhou, meanwhile, are home to several ancillary industries providing key components and services. Interviewed companies said several Xiamen-based suppliers operate factories in these cities, while some establish partnerships with local enterprises.
Additionally, Xiamen lies in the crossroads of important trading centers in Shanghai, Guangzhou, Guangdong province, Hong Kong and Taiwan, and is the principal gateway to mainland China's Pearl River Delta region. This strategic location plays a major role in keeping the local baby strollers and playpens sector strong.
With its natural deepwater port, Xiamen also serves as an exit point for export products from cities in the nearby provinces of Zhejiang and Guangdong. It runs a first-class shipping facility that has 81 berths, ChinaÂ¡Â¯s eighth-largest container dock and among the world's top 50 harbors. It accommodates almost 40 worldwide shipping routes.
Complementing the port is a series of extensive rail and highway networks that connect Xiamen to adjacent Guangdong, Zhejiang and Jiangxi provinces.
The hub also boasts well-developed airfields such as the Gaoqi International Airport, which has direct flights to 75 cities worldwide and ranks among the 10 busiest airports in China.
Makers strengthen QC
Rising costs, slowing demand pose challenge
|Makers strengthen QC|
As in other baby and children's furniture industries, Xiamen's stroller and playpen segment faces stricter export conditions, particularly in the US, the EU and Canada. Models sent to these destinations require ASTM, EN 71, CE and AS/NZS 2195 approval.
Following a series of recalls of related products in August to September 2009 and the early part of January 2010, local makers are taking extra measures in ensuring the quality of their latest releases. They conduct full QC procedures and perform more stringent tension, impact resistance, compression, torque and component inspection. Some manufacturers send samples of new designs to third-party testing laboratories for additional physical, chemical and mechanical analysis, including flammability evaluation.
Most companies, however, have yet to secure ASTM 963, EN 71 and EN 1888 certification as accreditation expenses have gone up since 2008.
Xiamen-made strollers and playpens generally have metal frames and fabric bodies. Starting at $9 apiece, these are targeted at the low-end and midrange segments. High-end models constitute only about 5 to 10 percent of suppliers' output. These are priced up to $90, depending on the style and add-on features.
Standard strollers or buggies are the most common type of baby transport from the city. Constructed typically with steel or aluminum tube frames, the line comes with seats and hoods in cotton, polyester, nylon or a blend of any of these fabrics. Inflatable wheels with suspensions, springs for vibration resistance, reversible handles, five-point safety harness, adjustable seats, washable canopies and additional carrying baskets are some of the more popular features. Basic designs are from $9 to $15, while midrange models go from $20 to $70. Upscale products range between $71 and $90.
In the playpen line, metal-framed models in square or rectangular shapes are mainstream. These have rolling wheels with lock, padded guardrails or fences, soft protective mattress and bedding, and adjustable platforms. Foldable versions are also available. Canopies, changing tables and carrying bags are optional add-ons. Unit price is from $15 to $30.
Apart from baby strollers and playpens, Xiamen makers also offer a line of baby furniture. Walkers, high chairs, bouncers, beds, car seats and carriers, and bicycles and tricycles are popular products from local suppliers.
|Rising costs, slowing demand pose challenge|
Local players are apprehensive about the continuing increase in raw material costs. Interviewed suppliers estimate that spending for manufacturing inputs has risen 5 to 15 percent in 2009. They said stroller frames went up about 5 to 10 percent, other metal parts by roughly 5 percent, and wheels and plastic accessories by 10 percent. Slowing orders, particularly from the EU, have compounded the situation, as export sales last year barely made it to 2008 levels.
Industry players predict the trend will continue this year, threatening to narrow further makers' profit margins.
Under efforts to stay afloat, manufacturers adjusted quotes by as much as 10 percent last year to offset rising materials expenditure. Spending about 1 to 3 percent of annual revenue on R&D, companies target to release five to 10 new models per year to broaden their product lineups.
Some enterprises, meanwhile, are exploring alternative export destinations such as South America, Eastern Europe and Southeast Asia. In fact, shipments to these regions have gone up almost 20 percent.
Still, the EU remains as Xiamen's primary export market, accounting for at least 50 to 70 percent of the city's entire overseas shipments. About 80 percent of orders are from ODM clients, while OEM takes the rest.
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