In March 2009, just-style.com released an article about struggles in the Chinese clothing industry. There have appeared financial problems in both foreign retailers’ and Chinese suppliers’ sides which have influenced on cash flows and collaboration relationships. In some cases retailers have not been able to pay for their purchases whereas clothing manufacturers have been lacking resources to fulfil the supplies. Traditionally retailers have offered letters of credit (LC) by their banks in order to guarantee the payment for the manufacturers. However, the banks have tightened their requirements of LCs and manufacturers have been forced to ask down payments even up to 50 % of the total order value. Yet, a large number of Chinese textile companies have been shut down during the past year.
Though the struggles have been obvious, China is still the world’s biggest manufacturer of clothing. According to the statistics of European Commission the share of China was 42,6 % (2008) of the world’s total value in clothing supplies. The demand for Chinese clothing has been increasing steadily in the European Union. The manufacturers have improved the quality of their products and moved upmarket as they have been able to relocate their basic operations to lower cost areas in both inland and abroad (businesswire.com, 11.12.2009).
In my previous trip to China I visited several clothing manufacturers in Guangzhou and Dongguan cities. Manufacturers were talking about the problems they were having with foreign retailers. Some of the manufacturers mentioned that they are emphasizing on building long-term trading collaborations in order to gain trust in the whole supply chain. However, according to them, some of the foreign retailers are only seeking for short-term winnings. As in the article of just-style.com is stated, in order to overcome with the current challenges in the clothing industry the retailers and suppliers are asking for transparency and flexibility in contracting in the whole supply chain. Indeed, me and the clothing manufacturers agree that building trust in collaboration require openness, sustainability and compromises in problematic situations.
“Some of the manufacturers mentioned that they are emphasizing on building long-term trading collaborations in order to gain trust in the whole supply chain. However, according to them, some of the foreign retailers are only seeking for short-term winnings.”
I have also heard this more than once but never actually seen anything to support the claim. Personally I believe that those people who said to me the same thing as above is that they have just heard that foreigners prefer long-term relationships and are now repeating it like parrots without actually understanding the point. Furthermore I believe it’s the Chinese companies that seek for short-term winnings.
Good point Lasse and yes, many Chinese companies seek for short-term winnings. However, those companies that have survived over the years and recession are the ones that have been able to create long-term collaborations. The factories I visited last time had all been doing international business for some time already. They have relied on good relationships with buyers and therefore they have managed to run their businesses smoothly.
Hi,
I have been looking for a company from China that sells clothings and interior decorations and i have not come across any. Is that you do not operate in East Africa?. Suppose i want to have the connection of how i can buy from your company and sell in here in East Africa,Nairobi,kenya to be specific.
Kindly advice if you do that and how to go about it
Kind Regards
Stephen
Dear Stephen,
Thank you for your enquiry. As fascinating as it sounds to operate in East Africa, I unfortunately need to admit I do not operate there. Have you tried to contact with The Embassy of Kenya (http://www.kenyaembassy.cn) in China to ask their recommendations? Or if there are any Kenyan chambers of commerce operating in China, they should have useful information for you.
Alibaba (http://www.alibaba.com) is one of the most used services for finding sourcing partners. However, you must ensure the reliability of the companies. There are numerous international companies in China offering matchmaking services and due diligence checking on potential co-operation partners.
I hope I could be at any help and this piece of information helps you to proceed with your mission. Good luck!