China’s internal consumer demand spells competition for overseas companies sourcing in China

What people are saying about Mulberry Fields
“What you say is absolutely true about what you need to do in order to succeed in China.” – a company in Italy

I was reading a report on China’s textile industry recently. The astounding thing is that demand from inside China for home textiles is growing while demand from outside China is decreasing. In the first 6 mos of 2012, for example, domestic demand for home textiles grew over 20% over the previous year whereas demand from outside China in the same period grew just over 1 %. The same trend can be seen in other industries as well. For example, domestic demand was a driver last year in China’s seasonal decorations industry as orders for Christmas goods from abroad slumped. Over 30 % of orders for seasonal goods in some manufacturing belts came from within China. Christmas after all is big in China too, believe it or not.

This really underlies what I have been seeing over the past couple of years, namely that China vendors are no longer desperate for orders from the countries that have traditionally driven China’s export industry over the last 30 years, for the simple reason that there is growing demand from within China. I would add that China’s export markets showing the most growth recently are from emerging market countries ASEAN Nations, Russia, Africa et al. These were the countries driving home textile exports from China in 2012. And this is why on some projects when I send out inquires some vendors do not even bother to return my emails if they have decided they do not want the business based on my target costs or QTYs. Many vendors nowadays have a simple take it or leave it attitude. I think this is the most challenging thing about doing business in China nowadays.

If you are sourcing in China you really need to be aware of this. You need to be organized, polite and most importantly flexible on price and on quality as well. As I am in the habit of saying recently, over the next decade sourcing in China may be as much a case of you soliciting their business as they soliciting your business.

Here are some other blog posts on how China is changing and the implications for you:

Work on that attitude when you do business in China
Quality not cost
The End of Cheap China; Book Review
Buyers and suppliers nowadays



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s