Good accessibility and a mature product development sector gives Shanghai a competitive edge.
Boasting a strategic location and competent R&D capability, Shanghai continues to be one of China’s main hubs for baby and children’s apparel. Accounting for 10 to 15 percent of the country’s exports in the line, the area generated about $3 billion in sales last year.
The city is easily accessible, situated close to major sea- and airports. There is also a developed subway system, which helps facilitate meetings between buyers and makers.
Given these advantages, the hub has become a major venue for global trade exhibitions. Such events not only draw in foreign customers but also enable suppliers to keep abreast of the latest trends.
In fact, several companies based in provinces such as Zhejiang and Jiangsu are setting up satellite sales offices in Shanghai to leverage the influx of activity and build brand recognition.
As regards R&D capability, most manufacturers allot 2 to 15 percent of revenue to the enhancement of baby and children’s apparel. On average, suppliers employ two to 10 design specialists, the majority of whom possess 10 years of relevant industry experience.
Businesses such as Alpha Ocean Ltd maintain skilled members that boast a 30 to 40-year background. The maker also has partner experts in the EU. They hold telephone conferences with the local team periodically to update them on the latest trends.
Shanghai Hefu Knitters Co. Ltd sends R&D personnel to workshops and trade fairs at least once a year. The manufacturer even employs specialists from Europe. Moreover, several suppliers have the capability to develop OBM models, allotting 20 to 60 percent of capacity to such products.
About 50 percent of Alpha Ocean’s exports carry its in-house brand. Every year, 100 to 250 new styles are released. The current design directions for the line point to fabric innovations and visual appeal.
Higher expenses impede recovery
Shanghai manufacturers of baby and children’s apparel are facing slow export growth as global economies are still recuperating from the effects of the financial crisis.
Overseas sales in 2010 were similar to the figures achieved in 2009, leaving little or no increase in profit for most companies. Only a few reported a 10 to 15 percent improvement.
The gloomy condition is heightened by mounting material and labor costs, and the manpower shortage. In 2H10, input expenses escalated 50 percent. During this period, trimming rates climbed 30 percent. Cotton outlay jumped 20 to 30 percent in the last three months.
Resultantly, most companies were forced to augment quotes in the past quarter. Makers, however, are limiting the adjustment to 15 percent to avoid losing price-sensitive clients even at the risk of narrower profit margins.
To reduce outlay, businesses are moving factory operations inland where labor is less expensive, while maintaining sales offices in the city. In addition, manufacturers such as Shanghai Feiyangshun International Trading Co. are switching to automatic equipment, which requires minimal human supervision. Suppliers are also venturing into or heightening OBM-oriented production considering in-house releases typically command higher value.
In coming months, makers expect prices to continue rising as operating costs increase further. The weak global demand and the appreciation of the yuan also exacerbate the situation. In view of these challenges, exports in 2011 are projected to remain the same or go up 10 percent at most.
Shanghai’s baby and children’s apparel industry comprises 100 manufacturers. About 70 percent are small operations and 25 percent are midsize. The rest consists of large enterprises.
Alpha Ocean Ltd
Alpha Ocean Ltd
Note:This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.