Cashmere, environment need better balancing
By Jiang Jingjing (China Daily)
Updated: 2005-04-19 09:13

Cashmere is known as "soft gold" or " the diamond of fibre," due to its rarity and incomparable quality.

But China, the world's largest cashmere producer and exporter, seems not to be enjoying the golden opportunities to be had from a properly run industry.

There are many problems to tackle in the industry: redundant construction, chaotic competition, rampant fake products, low brand value.

But most disturbing of all is the impact the industry is having on the environment. Large-scale breeding of goats and their grazing habits has resulted in widespread damage to eco-sensitive grasslands.

And enterprise and experts alike are calling for a balance between the healthy development of the sector and effective environmental protection - the message ringing loud and clear from the China International Cashmere Forum, held in Beijing last week.

Over the past decade, the annual raw cashmere output in the world stabilized at around 16,000 tons.

China produces 12,000 tons each year, accounting for over 75 per cent of the world's output.

It processes not only domestically produced cashmere, but also cashmere imported from Mongolia and other countries.

Currently there are over 2,000 cashmere companies, controlling 93 per cent of the global cashmere raw materials.

As the largest exporter in the world, the Chinese mainland exports over 60 per cent of cashmere products to Europe, the United States, Japan and Hong Kong.

Statistics from the General Administration of Customs indicate China exported US$1.21 billion worth of cashmere last year, up by 41.24 per cent.

Despite the large volume, cashmere manufacturers lack advanced technology and strong brand image, which are core to competitiveness within the industry, said Zhang Zhibiao, deputy secretary general of China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA).

"Advanced computer spinning machines and world renowned cashmere brands are dominated by developed countries, such as Italy, Britain and the United States," he said.

The cashmere processing capacity in China is "extremely superfluous," and its redundant construction negatively impacts the market competition order, said Zhang.

Wang Linxiang, president of Inner Mongolia Erdos Cashmere Group, agrees.

"Due to the comparatively large profits from the industry, some small peddlers started knitting. Those regions which had only produced raw cashmere began large-scale processing projects and many woolen textile enterprises converted to cashmere production one after another," Wang told the forum.

The consequences were skyrocketing prices of raw materials.

Furthermore, said Wang, rapid expansion of the industry has led to rampant fake products.

"Some small peddlers mislead and deceive consumers, who have little knowledge of how to differentiate between cashmere and wool," he said.

Karl Spilhaus, president of the Cashmere and Camel Hair Manufacturers Institute, said in an interview with China Daily that Chinese firms should work harder to guarantee the quality of their products and the integrity of cashmere.

The institute is an international organization of leading processors of luxury fibres.

"Fake products will seriously damage the overall image and long-term interests of China's cashmere industry," he warned.

Low added value is also a big problem for Chinese enterprises.

Small companies find it hard to upgrade the quality of their products and instead simply lower their profit margins to win orders, said Zhang.

Environmental impact

Due to the large demand for cashmere, the breeding of goats has grown faster than other livestock in the past 10 years, said Jia Youling, director-general of Veterinary Bureau of the Ministry of Agriculture.

He said the continuing growth of the human population and the numbers of livestock on farmland, is resulting in serious overload of grasslands.

Jia said the average overload rate of farmland is 36.1 per cent in the north.

The average grass output has decreased by as much as two-thirds, compared with that in the 1960s.

Jia urges that China puts more effort into building farmland, and maintaining a balance between livestock and grasslands.

He suggested that goat species be improved in order to increase the individual cashmere output.

"China has the best cashmere goat species in the world. Much effort should be spent on the selection of breeding species," said Jia.

The Viction Group, China's leading cashmere manufacturer, has been carrying out research on how to improve cashmere quality and individual goat productivity.

The firm invested 62 million yuan (US$7.49 million) to establish a goat research centre, said Hao Xukuan, president of the firm.

He has called for greater co-operation between domestic firms, in terms of research and development.

"This would improve the overall competitiveness of the whole industry."

He also suggests launching a special fund for research on stock raising and environmental protection.

Industry trend

Cashmere supply will remain stable, while demand continues to grow rapidly, according to a CFNA report.

Due to the environmental protection policies and decreasing raw cashmere prices, China's cashmere output has maintained a level of 12,000 tons each year, a trend forecast to continue in the coming few years, the report said.

In the meantime, domestic market demand for cashmere products has doubled in the past five years, and is predicted to remain high.

And China's status as the global cashmere processing centre will be further consolidated.

With its advantages of abundant resources, suitable geography and climate, low labour costs and preferential government policies, some advanced cashmere processing bases have been established, such as Baotou and Linhe in the Inner Mongolia Autonomous Region, Qinghe and Lixian in Hebei Province, and Lingwu and Tongxin in the Ningxia Hui Autonomous Region.

These regions process more than 80 per cent of the country's total processing volume.

At the same time, cashmere enterprises in the United States, Japan and Europe have gradually transferred their production bases to China.

More and more large and medium domestic enterprises have realized the importance of the strong brand image, said Wang, citing an example that Erdos has been working hard to maintain and promote its brand not only in the domestic market, but also to the world.

There are currently several hundred brands of cashmere product in China.

Wang predicts that with the rapid development of China's foreign trade and the improvement of the country's intellectual property rights system, Chinese brands will play an important role in the world's market.

At the same time, the industry will experience a series of integrations. Those small and poor-managed enterprises will be eliminated from the market.

Textile experts also point out the export of finished cashmere garments will grow rapidly, with the lifting of the WTO textile quota.

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