Luggage Report — Industry Overview — Sample Pages: Sourcing Luggage from China

Industry Overview: Luggage

Intense competition and higher raw material costs have made it crucial for luggage suppliers in China to improve the quality of new releases, and speculation about US anti-dumping measures and a reduced tax reimbursement rate for textile luggage pushed the same way. Most materials used in luggage are petroleum-based and exposed to crude oil prices: the cost of ABS, the main frame material, rose 20 percent at the start of the year, while PVC and EVA grew 30 percent. Makers had no choice but to raise prices — yet heightened competition makes the same product at a higher price hard to sell, so many suppliers have moved into upscale luggage that commands a higher price on its merits. An estimated 30 percent of the country's luggage suppliers were already focusing on high-end production, and many of those companies were growing export sales fast enough to double assembly lines, while most makers that stayed at the low end operated on razor-thin margins and a few stopped operations.

The industry composition behind those moves is large: export sales of 2.8 billion pieces worth US$3.8 billion in 2004 made China the world's foremost luggage producer, providing 75 percent of global supply. About 1,500 suppliers operate in the country, 70 percent of them exporting directly or through trading companies; makers export 85 percent of output on average, mainly to the United States, the European Union and Japan, and 85 percent of exports go to OEM and ODM buyers, with much production shipped to major luggage brands. The upmarket shift is visible in the trade figures: outbound shipments rose 7 percent in volume in 2004 while value grew 18.5 percent and average prices increased 16.7 percent, with prices expected to climb a further 5 to 15 percent as upmarket lines expand.

How to Read This Overview as a Buyer

Read the overview for decisions, not background. The cost figures tell you how much room a supplier has to negotiate: a maker absorbing most of a cost increase will either raise prices soon or cut somewhere you cannot see, and both possibilities belong in your order planning. The competition analysis tells you where your enquiry has leverage — crowded, standardised segments compete on price, while design-led segments compete on capability — and the supplier survey turns the industry's own expectations about prices, sales, research focus and capacity into a planning horizon for the year ahead. In this report, Pinghu is profiled as the production hub, and a Taiwan industry overview places the China supply base in regional context, a fact the full overview develops with production and survey detail.

The overview also frames the 66 profiles that follow it. A profile's prices mean little until they are set against the overview's price trends; a factory's expansion plan means more when two-thirds of its competitors are expanding too. Buyers who read the overview first consistently shortlist better, because they know which claims to test when they reach the profiles and the product gallery.

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