Leather industry under threat
By Xiao Liang (China Business Weekly)
Updated: 2004-09-15 10:28

Despite rapid growth in recent years, China's leather industry still needs to improve the competitiveness to better weather possible impacts from growing international trade barriers, senior industry officials said.

"The industry should work out measures to tackle increasing thorny issues such as non-tariff trade barriers,'' said Zhang Shuhua, vice-president of China Leather Industry Association (CLIA), at a seminar held late last month in Shanghai.

CLIA represents over 1,300 leather companies in China.

The need is becoming more urgent with the coming of 2005, the first year after the transitional period following China's accession to the World Trade Organization (WTO), said Zhang.

According to WTO rules, during the first five-year transitional period, China could use administrative measures including tariffs to monitor the variety and amount of its imported products.

But after that, Chinese leather enterprises will not only see the inflow of more imported products, but will very likely encounter increasing difficulties in exporting their own products.

Chinese firms should learn to better address issues such as international technical standards, intellectual property rights and anti-dumping charges, Zhang said.

He made the remarks during the All China Leather Exhibition in Shanghai.

The event attracted nearly 880 companies from 35 countries and regions, including France, Italy, Pakistan, Thailand, Australia, the United States, Russia, Mexico, Japan and Brazil.

To Saengsuk Sricheewachart, head of Thailand's Sri Sinn Fah Tannery Co Ltd, a presence at the events -- the first time for his company as well as several other Thai firms -- was an important step.

"Hopefully our participation (at the show) will help us locate new ways to directly enter China's eastern markets,'' he said.

The company used to export grain and split leather mainly to South China's Guangdong Province.

Foreign suppliers' are craving to expand their business in China where there is also a strong domestic leather sector.

Official statistics indicate that about 16,000 major enterprises in China's leather industry, each with an annual sales volume exceeding 5 million yuan (US$605,000), last year chalked up a total 210.3 billion yuan (US$25.4 billion) worth of industrial output value, a year-on-year increase of 20.9 per cent.

While the leather products' total import and export volume reached US$26.4 billion last year, the industry's export increased 19 per cent to US$23.2 billion, or about 5.3 per cent of China's total exports.

Already the world's largest leather producer, China turned out nearly 500 million square metres of leather and over 6 billion pairs of shoes in 2003.

And the growth pace is expected to be faster this year.

Statistics from CLIA show that, in the first half of 2004, exports of China's leather products reached US$9.35 billion, an increase of 14 per cent on a yearly basis, and import volume also increased 24 per cent to US$3.48 billion.

In the total, the export volume of fur garments was the most outstanding, reaching US$178 million, an increase of 176 per cent over the same period last year. Meanwhile, exports of leather and leather shoes hit US$660 million and US$2.86 billion respectively, which was a year-on-year increase of 19 per cent and 13 per cent respectively.

Yet Zhang said some problems still exist, especially in meeting the challenge of WTO rules.

Domestically-made leather products may be dealt a heavy blow, having to meet varied non-tariff trade barriers while exporting.

Earlier media reports revealed some countries in the European Union are gathering evidence to post dumping charges against Chinese shoemakers later this year.

"To survive demanding international trade rules, Chinese enterprises must raise their core competitiveness and upgrade their added value,'' said Zhang.

Meanwhile, efforts to optimize the industry's structure, foster several world-famous brands and assimilate more up-to-date knowledge on international trade are badly needed, he said.

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