Leather Industry Is Facing A "Shuffle" Crisis

In Xinji, Hebei, large and small leather factories spread all over the place. Zhao Jingchuan, general manager of Kimcheon tannery Co., sits in a pile of leather products, and his office is also a production workshop. Outside the workshop, there are piles of unprocessed animal skins.

"Business is bad," Zhao Jingchuan said in an interview. "The whole economy and industry are depressed."

According to official data, in 2012, the city named "leather capital" has 1148 leather enterprises and employs more than 80 thousand people. It is the largest sheep clothing production base in the country and the largest leather base in sheep's clothing in Asia.

　 　 demand Reduce environmental policy tightening

The demand for sheepskin at home and abroad has greatly affected the sheepskin industry in Xinji. Environmental Protection Act Since the introduction of various policies, a number of inefficient and highly polluting enterprises will be eliminated, and the industry will be reshuffled.

Zhao Jingchuan's products are mainly exported to Russia, but the Russian market has shrunk sharply due to the recent decline in rubles and the price of imported lambs. Meanwhile, after the US and Europe imposed sanctions on Russia's import of agricultural products (12.27, 0.23, 1.91%) last year, more Russian customers began to switch to their own domestic leather raw materials. In addition, Zhao Jingchuan believes that the decline in the volume of real estate market will also lead to the decline in demand for cortical furniture.

The new environmental protection act, which came into effect in January 1, 2015, is regarded as a "heavy blow" to deal with the severe environmental situation in our country. It is even called "the most stringent environmental protection law in history" by many media.

Zhao Jingchuan estimates that the environmental protection law and governance standards will increase the illegal cost of leather processing enterprises by punishing, sealing up, limiting production and shutting down production, which will shrink the whole industry by 20%.

After some of the leather factories in Hebei stopped production due to pollution control, Henan became the main force of leather production. However, the situation is also not optimistic. In Henan, the manager of a leather factory named Mei told the media that the sheepskins sold to Guangdong shoe factories in their factories last year decreased by 50% to 60%, which is also indirectly due to the decline in Russian demand.

"Russia is the largest export market for footwear products." He said. Last year, although the demand for leather products increased by the electricity supplier channel, it still could not offset the impact of the reduction of orders in Guangdong shoe factories.

　　 Spread to international market

According to a survey by the FAO of the United Nations [micro-blog], the Chinese market has shrunk and even spread to the origin of leather, Australia and New Zealand. Last year, the price of lamb skin dropped by about 85% in Australia, while the price of lamb skins in neighboring New Zealand also shrank by 40%, according to the Wall Street journal.

On the east coast of New Zealand's North Island, because of the decline in the price of lamb skins, taking into account the input-output ratio, RickPowdrell, sheep Nick Baode, intends to raise 2700 lambs this year. Rick said that this helped to prevent further decline in sheepskin prices.

Karl Alvel, a marketing manager at AllianceGroup, a meat manufacturer in Invercargill, south end of New Zealand, said that the decline in sheepskin prices was related to China's tightening environmental policy, and the weak global economy was also a big incentive for CarlAlsweiler.

According to the FAO data, China is one of the five largest sheep producing areas in the world, but it also absorbed 74% of the world's export sheepskin, followed by Turkey, Russia and Italy.

　　 Illegal enterprises will be eliminated

Zhao Jingchuan said that he has invested 15 million yuan in the construction of sewage purification equipment to deal with hazardous chemicals and sewage discharged from leather processing. He said that more stringent new environmental laws would eliminate a number of small businesses that could not meet modern production standards, and large factories like him would eventually benefit.

For most leather processing industries, some chemical substances, such as chrome used in tanning process and hydrogen sulfide produced during processing, are easily mishandled, which will greatly affect the environment and human health. In the past, some small businesses often took risks in wastewater treatment and avoided supervision, and later they did not dare, Zhao said.

Chen Zhanguang, Deputy Secretary General of China Leather Association, told the media that large enterprises can better comply with environmental regulations, while some small businesses are not optimistic. "Factories that fail to meet the standards will be turned off." He said.

Chen Zhanguang said that the decline in sheepskin prices was due to falling demand at home and abroad. The US economy has gradually emerged from low growth for many years, and will help stimulate the development of the leather market.

Mr. Feng, who ran a small leather factory in Xinji, told the media that the double blow of environmental policy tightening and declining market demand is really overwhelming. At the beginning of last year, he had to close the factory which had been in operation for eight years.