Leather Industry: Upstream Supply Is Gradually Recovering, And Downstream Applications Are Declining.

The United States is China's largest source country of raw material imports. In 2015, China imported 416 thousand tons of raw leather from the United States, accounting for 30.5% of the total imports of raw leather.

Good trade rules and standards are very important for the healthy development of bilateral trade. The China Leather Association and the American raw materials Association have recently held a joint meeting in Beijing.

The round table conference invited the leaders of relevant departments such as the AQSIQ, the Ministry of agriculture, the Ministry of environmental protection, the China Light Industry Federation and other officials of the Embassy of the United States and the US Department of agriculture overseas service bureau, and the participants from China's raw material import enterprises and representatives of the US main raw material suppliers, with a view to strengthening the exchanges and cooperation between China and the US leather industry, grasping industrial policies, improving trade rules, promoting fair trade and promoting the development of the industry.

Upstream supply gradually recovered

As a by-product of beef slaughtering,

The quantity depends on beef demand and supply.

China is a big beef producing and consuming country. Its beef output ranks only third in the world after Brazil and the United States.

In 2015, China's beef production was 7 million tons, an increase of 1.6% over 2014, and the per capita share of beef was 5.1 kilograms, about 1/2 of the world average.

According to Wang Jian, deputy director of the animal husbandry department of the Ministry of animal husbandry of China's Ministry of agriculture, since 2015, the situation of beef supply and demand has changed, and some new features have emerged. First, the price is hovering at high levels, and the price of beef in 2015 is basically the same as that in 2014. The two is to accelerate the resumption of production and beef cattle production to maintain an increasing trend. In particular, the cows are gradually recovering, and the tight supply pattern of cattle supplies is further alleviated. Three, the efficiency of aquaculture has been greatly reduced. Due to the decline in the prices of live animals, the efficiency has declined significantly, and farming has entered a period of meager profit.

In 2015, a 450 kilogram beef cattle could gain a profit of about 1553 yuan, a decrease of 334 yuan compared with the previous year.

Coincidentally, David Sipho, JBS's senior director of the US leather company, also brought good news about the resumption of the American cattle industry.

For the worldwide stock of cattle, David Sipho compared the trend of major cattle producing countries in recent years, helping the industry to determine the supply and price trend of raw materials.

Among them, Australia and Mexico fell year by year, while Argentina and Canada were basically flat, while the United States and Brazil increased.

To the United States, since the large-scale drought broke out in 2006, the beef industry in the United States did not recover significantly until the end of 2014. With the stimulation of favorable factors of feed grain costs, the US beef supply is expected to increase slightly.

But considering that this year's growth is mostly breeding stock, heifers will be used for breeding, reduce short and medium term supply, and more cows are used for breeding, so this year's growth will be limited, and there will be a substantial increase after 2017.

The proportion of downstream applications is decreasing.

Not only restricted by the upstream cattle industry, but also affected by the downstream footwear industry.

Susan Johnston, from the US footwear dealer Flynn, analysed the production and retail of footwear from a market perspective.

Susan listed the development of many brand products such as cat, Mai Le, Tim Bai Lan and loa in recent years, and pointed out that the proportion of dermis in the footwear industry is declining. This is mainly due to cost considerations. Shoe companies can not pfer the price of upstream raw materials to the end of consumption, and can only use textile, synthetic leather and other alternative materials.

For example, she said, in 2011, the price of a pair of brand shoes was $70, which increased to $90 in 2012, and then broke through the $100 mark.

Susan also pointed out that the industry should not worry too much. Although the proportion of real leather applications is decreasing, the symbolic value of brand added value still exists.

Another factor contributing to the rise in the cost and price of the products is employment. The average wage in Guangdong, a big province in China, is about 2 times that of Indonesia, 3 times that of Vietnam and 5 times that of India. Therefore, the global layout of Flynn has changed in recent years. The proportion of orders in China has dropped from 90% in 2014 to 70%, and it may be further reduced to 40%~60% in the future.

However, for stability and risk reduction considerations, it still values China's leading position in manufacturing, and orders will not be pferred quickly.

Seek common ground while reserving differences and promote development together

At present, the export standard of North American cowhide and international contract No. six are widely used in the international raw material trade, which has played a positive role in the production and trade management of raw material skins in the United States.

However, some seemingly stringent provisions in the contract have become a stumbling block for many raw material buyers and leather manufacturing enterprises.

For example, the relevant provisions of the contract stipulate that the allowance of raw material is 1%, the allowable difference of the weight of the raw leather is 5%, and the original weight of the sheet is not weighted.

In this regard, the representatives of China and the United States had a heated debate at the round table meeting.

The "North American cowhide export management standard" is relatively backward in the formulation of the technology, and the controversial clauses are understandable.

However, the standards formulated over 10 years ago can no longer meet the needs of the current industry development.

The representative of mainland China and Taiwan pointed out that with the progress of technology, the 1% short rate can be avoided, which has been verified by the long-term and stable cooperation between the enterprises on both sides.

When the industry is in recession, the two sides should work together to overcome difficulties.

Exporters emphasize that the reason why they stick to the 1% short cut rate is often for the sake of safeguarding the interests of all sellers.

In view of this point, the Chinese representative suggested that some irregular leather traders would act as umbrellas and engage in non-standard trade activities. Therefore, according to the requirements of buyers, amending contracts would better regulate the trade of raw leather, protect the interests of related enterprises, and enhance the competitiveness of the United States' raw leather trade.

There is no right or wrong in the rule itself, but it can not be solved by technology.

At this round table conference, after a rational and heated debate, the two sides acknowledged that the modification of Contract No. six had practical necessity and technical possibility. However, there are still many details to be considered when implementing the contract, for example, the recognition of weighing, the definition of grade, and the equalization of pounds are still questionable.

The revision of the contract is not something that can be accomplished in the past. It is still necessary for Chinese and American buyers and sellers to enhance communication and mutual understanding, jointly safeguard trade fairness, solve a series of problems practically, and promote the healthy development of Sino US raw materials trade.