When will the leather industry go through the “high price leather” road?

Recently, the topic of “cost increase” has been extremely hot and it has become the focus of major companies and businesses. Since May of this year, the contradiction between the price increase of raw materials and the development of enterprises has begun to appear gradually. In early May, enterprises on the coast of Guangdong were hit hard. According to the survey, under the double pressure of rising production costs and shrinking markets, Guangdong's large-scale garment and footwear factories were in a semi-cessation state, and a few enterprises began to close down.

In today's leather market, high-quality sheepskin has increased from 24 yuan per foot to 29 to 30 yuan per foot from a year ago. The price of suede per foot has soared from 28 yuan to 52 yuan per year, almost doubling the price. The price has also increased by 50%. In this environment, some leather garment enterprises have to choose between “guaranteeing profits” and “guaranteeing customers”. Many companies choose to sacrifice their profits to keep customers. The person in charge of Haining Kaiyang Garments Co., Ltd. also stated that even at a loss, it must finish the orders of the old customers with quality and quantity, but no new orders will be accepted.

High-price skin is difficult to say For the current national wide range of cost increases, experts have given analysis, China's purchase of sheep skin mainly from Inner Mongolia, Shanxi, Gansu and Xinjiang. The main reason for the price increase of leather raw materials is tight supply. Like the animal husbandry in the Inner Mongolia region, the state has strictly controlled the number of herds in order to protect grassland resources and prevent the acceleration of grassland desertification. In the past, a sheep was raised for every 10 mu, and now it is reared for 20 mu. As prices have risen, there have been more and more cases of reluctant sellers and more sheep.

On the other hand, the price of imported hides has also continued to rise. The executive secretary of the Haining Leather Association, Gong Huihong, gave an example: "In April 2009, the price of a cow hide imported from Argentina was 18 US dollars, and now it has risen to more than 80 US dollars."

In addition, rising oil prices have also led to rising prices of chemical raw materials. On June 1st, LANXESS, a specialty chemicals group, raised the price of its leather chemicals globally, up to 20%.

The rising cost of transportation costs, the increase in labor costs, the increase in the cost of environmental protection, and the increase in power generation costs caused by the tight electricity situation are all drivers of the increase in leather production costs.

Enterprises still need to respond positively to "orders are closed! Not business is good, but prices are rising too fast! This year's market is crazy! The raw hides on the market have a price one day, and the finished products cannot be set at all!" Recently, Haining Fushengsheng Zhang Jianxin, general manager of Leather Co., Ltd. wrote a blog post in QQ space. This is the second time he has written an article on the price of leather raw materials this year. Relevant data show that this year's leather prices rose around 20%. “High price skin” has led some industry players to predict that this year’s leather market is not optimistic.

In view of the predicament of the leather industry, Zhang, general manager of Haining Fusheng Leather Co., Ltd. pointed out that how to get out of the “high price skin” dilemma and strive for more profit space, the tannery enterprises only pay attention to the internal management of enterprises, and strengthen technological innovation as a road. With high technical content, the added value will be high. Different from similar products, it will have pricing power.

Nowadays, when most leather companies are overwhelmed by the “high price” effect, Zhang always hits the ball. As a downstream commodity in the leather market, fur products play a fundamental part in the leather industry. The price of fur will directly influence the changes in the leather industry. Despite the fact that the price of fur raw materials has risen throughout the country, leather enterprises are not the only surrenderists. As President Zhang said, companies can use their own reforms to reduce the tensions of cost increase and market shrinkage. Moreover, a company can only control more initiatives in such a counter-current environment. Only the production of a product different from the average product will attract market attention. Only by grasping the characteristics of flexible, fresh and fresh products can we seize the initiative to give pricing to commodities.

In fact, this “high skin price” is not simply to set a “development” for the leather industry. It is also a test of the leather industry’s response to the market’s countercurrent and the vitality of the domestic tanneries. At this point, whether the domestic tannery companies can overcome the pressure to stand out, it depends on whether the company can identify breakthroughs in brand reform. Can you make big articles from the field of brand art? When will the leather industry finally pass the “high price skin” road? We will wait and see.


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