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Increasing production costs coupled with keen competition in the industry have been thinning profit margins of slipper makers in China, pushing many of them to increase export prices in coming months. Many suppliers are also shifting their focus from low-end to midrange and high-end slipper manufacture, which yield higher profits.

Prices of China-made slippers are expected to go up by about 10 percent in the next 12 months due to a number of factors that have been increasing makers' operational expenses. Raw material costs, which account for as much as 50 percent of a slipper's price, have been continuously rising. The cost of PU resin, one of the main materials for soles, increased from about US$1,100 per ton in February 2004 to more than US$1,800 by year-end.

In addition, the labor shortage that has been affecting nearly all industrial provinces in China's coastal regions is forcing companies to offer higher wages to retain or attract skilled workers, spend more on training, and improve factory and dormitory conditions. Over the past year, these measures have added at least 10 percent to most companies' operating costs.

The shortage of electricity in industrialized parts of China is likewise presenting a challenge to suppliers. Many have had to purchase generators in order to keep production running during the frequent power cuts.

Even with higher production costs, many slipper companies could not raise prices in 2004 because of intense competition in the industry. Growing overseas demand for China-made slippers has encouraged more and more companies to join the line, especially since production does not require high-technology investments. In addition, many slipper makers that used to focus exclusively on the domestic market have ventured into overseas trade, taking advantage of the China government's decision in 2004 to lower the registered capital required in acquiring export licenses.

Competition is especially severe in the low end, the line offered by most China suppliers. Prices of low-end slippers have dropped by up to 30 percent in the past five years, resulting in extremely low profit margins for makers. Because of this, an increasing number of suppliers that can afford to invest large amounts in R&D are now moving into more upscale production. Even some of the midrange makers are following suit, though to a lesser degree.

Apart from better-quality materials, design is a major element in the production of midrange and high-end slippers. Since their manufacture requires stronger R&D capability, only a few suppliers are currently producing these types of slippers. This enables companies to raise prices of their midrange and high-end slippers to compensate for overall higher production costs, without the risk of losing potential orders.

The prospects of higher profits have also encouraged some suppliers to shift from plastic to genuine leather slipper production, especially since overseas demand for the latter is growing, particularly in the European Union.

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  Industry snapshot      
 
No. of exporters
 
875
 
  Exports (2004)   US$5.14bn  
  Export sales growth   22%  
  Export output (2004)   3.6bn pairs  
  OEM/ODM share of business   90%  
 
Based on supplier data and industry estimates
     
 
 
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China Sourcing Report

 

Slippers

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China exported 3.6 billion pairs of slippers worth US$5.14 billion in 2004, a robust increase of 22 percent from 2003. Prices held steady, in spite of higher costs for materials and labor.

Will manufacturers raise prices? If so, how soon and by how much? What types of slipper are going to be most in demand? Which region of China is emerging as a new supply center?

Get the answers to these questions and many others with the profiles of key producers in this report. Then use that information to shortlist manufacturers that best meet your needs

Plus, you'll receive a complete industry overview, at-a-glance product comparisons and other essential information to help you develop more efficient, cost-effective sourcing strategies.



  Suppliers: 69 Products: 116 Pages: 106 Published: Jul 05 Price: US$395


All information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.    Apparel Search is working in association with Global Sources to help promote this sourcing report to the international fashion community.  If you have questions about the report or status of your orders, please e-mail Xue Mei for further assistance.

The Slippers China Sourcing report has been developed and maintained by Global Sources.  Apparel Search is working in association with Global Sources to help promote this sourcing report to the international fashion community.

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