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Laptop sleeves: Exports target emerging markets

Factories lower prices and enhance selections to tap nontraditional buyers and stimulate outbound shipments.

China suppliers of business bags and cases are boosting sales to developing economies amid the slow financial recovery of traditional overseas destinations.

The focus on buyers in Eastern Europe, South America and Africa is proving profitable for companies despite pressure to lower prices and heighten product variety.

Laptop sleeve
  Danbio S.E.P.'s laptop bag measures 34.5x27.5x9cm. It has a removable shoulder strap and a zipped front pocket.

This is because clients there are less stringent than industrialized countries when it comes to safety and manufacturing standards, decreasing testing fees as a result.

Small factories benefit the most from this strategy as new markets fill up underutilized production capacity and provide revenue for continued operations. Eastern Europe, South America and Africa are therefore quickly becoming the main export destinations for such workshops.

To stay competitive and attract buyers in these areas, suppliers bank on lower prices. Specifically, manufacturers keep costs at a minimum while maintaining quality.

Makers in Wenzhou, Ningbo and Yiwu in Zhejiang province, for instance, use locally sourced raw materials, which are less costly. Fabric and leather are procured from their home industries or surrounding cities such as Jiaxing.

Moreover, small factories opt to pay output-based wages rather than hourly ones to reduce spending when demand is low. This also heightens employee productivity since poor turnout amounts to marginal compensation.

Further, suppliers of this size hire designers and pattern makers with more than three years of experience. They work closely with buyers as most models are OEM-based.

The expansion into new regions, however, will not affect the ability of small companies to meet EU and US demand for the low end. This is because manufacturing capacity remains underused despite rising sales.

Midsize and large enterprises, meanwhile, are building a customer base for upscale versions in both emerging and traditional markets.

To do so, companies boost product development by keeping up with the latest trends. Suppliers normally hire independent designers and release between two and 10 original items each month. International fashion magazines and online advertising are often used as reference points. Other specialists are sent to countries such as South Korea and Japan to observe the newest styles.

Companies also draw ideas from established foreign brands.

Attending overseas trade shows is popular among makers because it provides direct contact with the global industry. Further, some local governments offer incentives for participating in such events. Ningbo authorities, for instance, give subsidies for attending 2009 and 2010 exhibitions. Depending on the significance of the show, suppliers can receive allowances between 70 and 100 percent.

Some businesses, on the other hand, continue keeping track of old clients in developed countries. This is especially true for large enterprises thatmaintain trade relations with EU and US buyers.

Although big companies can export low-end models to emerging markets, it comes mainly as a disadvantage since they do not specialize in the line. Compared with smaller suppliers, large manufacturers cannot easily bend operations to accept a lower MOQ or adopt cut-rate raw materials.

Regardless of size, shipments of business bags and cases to developing countries are expected to increase by 5 to 10 percent in the next six months.

Materials & sourcing
Products & prices
Industry overview
Production hubs

Laptop sleeve
  This portfolio from Dongguan Qishi Zest is made of PVC leather and comes with multiple compartments and card slots.
Materials & sourcing

China-made business bags and cases are commonly fabric or leather models. Laptop bags come in polyester or nylon, while briefcases and portfolios are usually in PU leather or nylon.

The materials are primarily chosen for their lightweight and easy-to-cut properties, which make the textiles popular even among other bag lines. In fact, this versatility is encouraging suppliers to widen product range in the long run.

Fabric and leather are provided by a number of local companies spread throughout the country.

Other manufacturing inputs are harder to source. Aluminum accessories such as trolleys, in particular, are turned out by very few factories. Further, these plants are concentrated in select regions such as Yongkang, Zhejiang, and Foshan, Guangdong province.

The inability of China's aluminum industry to meet the line's current component requirements is pushing up production costs more than fabric and leather outlay would.

Despite the lack of certain inputs, suppliers of low-end models still use local components to save on logistics and shipping.

Similarly, midrange versions utilize raw materials from Guangzhou, Guangdong, which is the country's largest distribution center for textiles.

High-end releases, meanwhile, employ imported components purchased typically through agents. Fabric and leather from Japan and South Korea are often adopted.

To ensure product standards are met, makers request certification from suppliers or source from those with proven track records. Other large enterprises have QC departments and several laboratories for inspecting manufacturing inputs.

In the next six months, raw materials costs are expected to increase 5 to 10 percent amid unstable oil prices.

Fluctuating crude oil rates have affected sourcing, particularly of synthetic fibers and leather, which are made using the fuel.

Products & prices

China-made business bags and cases are mainly differentiated by material, function and design, while durability depends on the quality of components and workmanship. With prolonged use, the fabric of some designs can fade or peel and the seams loosen.

Low-end models adopt polyester or PVC leather, and 120 or 190d polyester lining. Releases have one to three compartments, and other accessories and closures such as locally sourced zippers and side-release buckles. Designs are priced between $5 and $8.80.

Midrange variants use China-made polyester, nylon, canvas, or PVC or PU leather. The lining is 190 or 210d polyester, nylon or cotton. These bags are from $8.90 to $22.

Although traditional rectangular models dominate the segment, the latest types are more innovative. For instance, laptop bags, especially trolley versions, adopt softside luggage features. This includes multiple pockets, expandable compartments and 3D cutting.

Other products have padded handles and panel walls that heighten comfort and provide shock absorption.

Built-in organizers enhance convenience. Releases have specific pouches for notebooks, pens, mobile phones, business cards and keys.

Ornate trimming is used as well.

Quoted at $22.10 to $30, high-end versions adopt materials from South Korea, Japan and Taiwan, including polyester, nylon, TPU, Cordura, and PU and cowhide. Designs have 210 to 600d nylon lining and boast better product features. They usually have a 1 to 5-year warranty as well.

Regarding export share, low-end and midrange models account for 45 and 40 percent of total shipments, with high-end ones representing the rest. Midrange orders are expected to increase in comings months as the economies of developed countries recover.

Compared with previous months, prices at the time of writing have increased 5 percent due mainly to rising raw material costs. Another factor is the labor shortage in Guangdong.

Because of this, export quotes for midrange and low-end releases are forecast to go up an additional 5 to 10 percent.

Industry overview

There are more than 1,000 business bags and cases makers in mainland China, 90 percent of which are SMEs. Many suppliers offer a selection of sports, travel and handbags.

At least 75 percent of companies are private locally owned, while 20 percent are Taiwan- or Hong Kong-invested. The rest is state-owned.

Exports of the line contribute marginally to the entire bag and luggage industry. The products represent only 10 to 15 percent of total outbound orders.

Of this amount, OEM and ODM contracts account for 70 and 20 percent. The balance is credited to a few in-house brands.

Operation-wise, makers are avoiding investment in fixed assets amid the current economic climate. Suppliers see no immediate need to upgrade equipment, especially as existing ones still meet their requirements.

Companies are also subcontracting to partner factories to offset the labor shortage. This strategy is more cost-effective for suppliers, particularly as the peak Christmas sourcing season has passed, decreasing the need for additional manpower. To illustrate, in an order of 10,000 pieces, about 30 percent is done by other plants.

Production hubs

Guangdong, Fujian and Zhejiang provinces are the three top China sourcing hubs for business bags and cases.

The first specializes in upscale models and boasts a fully consolidated and comprehensive industry chain.

For more than three decades, Guangdong has been providing raw materials, and logistics, design and aftersales services to the bag and luggage industry.

The province is also known for its amicable policies for foreign investors. It is home to the pioneer Hong Kong- and Taiwan-backed factories of business bags and cases.

Companies in Fujian, meanwhile, release mainly laptop, shoulder and messenger bags. In addition, suppliers there have strong manufacturing capability for sports and travel models. The hub attracts particularly investors from Taiwan as the two areas are closely located.

Zhejiang specializes in low-end variants that are 5 to 10 percent less expensive than Guangdong versions.

Many manufacturers have actually moved to Zhejiang to take advantage of low labor costs.

This article "Laptop sleeves: Exports target emerging markets" is originally posted in Global Sources.

Note: 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.

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