Shanghai captures a troubled leather marketThe latest All China Leather Fair shone the spotlight on the challenges of the Chinese leather industry, added to which are now the concerns of an excalation in the trade war with the United States
A slowed down leather market due to different kinds of obstacles surrounded ACLE 2018. From last August 29 to 31, the big Shanghai fair celebrated its 20th edition providing the opportunity to look closely at the big challenges the Chinese leather industry is facing today. The latest in terms of time is the trade war with the United States that has led to the application of huge duties on both sides, which now weigh heavily on both American raw hides and Chinese leather finished products. The tug of war between Beijing and Washington scares today globally all operators in the sector, partly because this adds up to the already known critical situations like the forced closure of tanneries that fail to comply with environmental regulations, the competition of neighbouring Asian countries and the one of synthetic materials, which is increasingly felt in particular in the footwear segment.
The data of the Chinese leather industry confirm the slowdown phase, albeit with values that remain enormous. In the first six months of 2018 the Chinese tanning industry lost 11.4% in terms of volumes of finished leather produced. A small recovery, however, is highlighted in the production of leather shoes that in the first half of this year reached 2 billion pairs, equal to an increase of 3.2%. A still growing sector is the one of leather car interiors (more than 24 million cars sold in China last year) while the upholstery is stable.
The attendance of visitors at ACLE 2018 (which had a total of 1,081 exhibitors on 92 thousand square metres) was lively on the first day, to then continue in a decidedly more peaceful manner. Most of the international exhibitors commented on the results of the event as “in line with the expectations of the moment”, but of course there is always someone who worked a little better and someone who worked a bit worse compared to the previous year. However, many have noticed a lower inflow of non-Chinese visitors, especially from countries like India, Pakistan and Bangladesh, which in the past had been more numerous. From this point of view, it must be said that the organisers of the fair (APLF) together with the China Leather Industry Association (CLIA) are working hard on the promotion of the fair, particularly in the segments related to car interiors, upholstered furniture and the Asean member countries, primarily Vietnam which is the number one competitor of China but must import 70% of the hides and leather it needs.
At the press conference of the fair the questions dealt also with the concerns related to the worsening trade relations between the US and China. The association of Chinese industry is very alarmed about it. “The CLIA is against this trade war, which is harmful to everyone,” said General Secretary Mr. Chen Zhanguang. Also honorary president Su Chaoying spoke on the subject, explaining how the CLIA is opposed to the escalation of duties and has worked in this direction. “We have succeeded in persuading the government of Beijing to lower the duty on the American raw material from 25 to 5% but this measure has not yet been implemented and we do not know when this will happen because it depends on the next round of negotiations with the United States”, said Mr Su. The CLIA leaders were also very concerned about the leather goods/luggage industry which, by exporting 70% of its production to the United States, will be extremely damaged by the duties. At the fair there was much talk about the need to take a step forward in communicating the values of the leather. It is no longer enough to defend the sector from the continuous attacks of its opponents, it is necessary to play a pro-active role. In this regard, the international initiative Leather Naturally is gaining momentum, working on a very complex project to launch a multi-channel information campaign able to intercept the younger generations. The project was announced by the president of Leather Naturally Egbert Dikkers (Director of sustainability at Smit & zoon) and by Fernando Bellese of JBS during a networking event organized on the last day in the large LN space dedicated to the promotion of leather and throughout the duration of the fair has seen seminars and training talks addressed to young designers.
Amongst the side events of the fair, should be noted the interesting discussion forum “Shanghai Shake up” organised on the eve, which saw the presentation of a series of reports dedicated to the future of the industry and the change of consumers with a particular focus on Generation Z, meaning young people born after 1995. There has been talk of market evolution, the need to find new leather applications, environmental footprint and sustainability. The Dutch project of a perfectly self-sufficient floating farm (www.beladon.com) that responds to the need to produce food while saving land resources is amongst the most revolutionary ideas.
In the end, a note of Italian political news, the undersecretary of the Ministry of Economic Development Michele Geraci, present in Shanghai as part of the official government mission led by the Minister of Economy Tria, visited the leather fair stopping at the Italian collective Assomac/Ice where he listened to the requests of some of the Italian exhibitors present. With a long academic and professional experience in the country of the dragon, Geraci has been put in charge of a special ministry task force to attract investments from the former Celestial Empire.
The next edition of the ACLE fair is scheduled from 3 to 5 September 2019.