Lack Of Stamina For Profit Growth In Leather Industry

"Indeed, the lack of stamina in the growth of the leather industry is noteworthy." Su Chaoying, deputy director and executive secretary of the China Leather Association, said: "the decline in profit margins is warning us that it is not enough to just be satisfied with the bright surface of the industry. It is not feasible to continue to produce low value-added products and share profits. We must profoundly reflect on the problems existing in the industry, speed up the guidance of the industry to readjust the economic structure and pform the development mode, otherwise, complicate with the international situation.

Who has eaten our profits? The question is not to find an answer, but to understand and sort out the confusion of the industry more objectively, and to ponder deeply about the way to go in the future.

One of the culprits who nibble on profits: raw material prices skyrocketing.

"The first thing I do every day at work is to turn on the computer and see the price of these materials.

Now the price of many materials has reached the highest point in history. The cost is so high that it can keep the capital intact, and the profit is dared not think.

Sun Zong, who runs a shoe material enterprise, told the author.

Since last year, with the recovery of the global economy and the rising oil prices, the price of main raw materials has increased, which has affected almost every link of the leather industry chain.

It is estimated that since the end of last year, the cost of a pair of shoes has increased by more than 5% because of the price increase of raw materials.

"The rising price of raw materials will not be directly pmitted to the terminal and will be digested. This is due to the impact of supply and demand on the one hand, and the limited space for product negotiation. On the other hand, because of the supply cycle, there will be price lag."

China Leather Association footwear Office official said.

from

In Hebei Baigou original auxiliary material market, I learned that the purchase price of zippers increased by 5% over the same period last year, and the average price of pull rods increased by about 1 yuan. The average price of handle boxes rose by 0.2 yuan per month.

A salesperson who has been selling leather for many years told me that the price of PU rose by 0.5 yuan last month, which is the second time that the price has been raised in the first half of this year.

Take pig skin enterprises as an example. Since last year, due to the rise of pork prices, the rate of pigskin peel and peel has dropped significantly, and the skin of pigskin is tight.

Zhang Zhengshu, deputy general manager of Fubang leather, told the author: "at the beginning of last year, a piece of raw leather was about 60 yuan, the highest price rose to 100 yuan in the second half of the year, and the trend of price rise did not seem to stop."

The cost increase has greatly squeezed the profit margins of enterprises, and enterprises have reduced production. Even leather tanning enterprises above designated size are no exception.

Compared with last year, the production capacity of leather industry in Sichuan decreased by 20% to 30% this year.

The production of cattle and sheep skin has been more affected, because China's high-quality cattle and sheep can be used as leather materials, and its raw materials are heavily dependent on imports. The price of international raw materials has surged, rising from $20 at the end of 2008 to $80.

Downstream products enterprises have been picking up orders since the global economic recovery, and demand for finished leather is large. However, they are affected by bargaining power, market and other factors, and prices can not rise. Tanning enterprises are sandwiched in the middle.