Executive summary | Industry overview
Intense competition and higher raw material costs have made
it crucial for luggage suppliers in China to improve the
quality of new releases.
Speculations of US anti-dumping measures and a reduced
tax reimbursement rate early last year for textile luggage
in China were also among the reasons behind the move to
produce midrange and high-end designs. But higher production
costs and keen competition have driven most makers to cut
or stop manufacturing low-end designs.
The majority of materials used in making luggage are
petroleum-based and heavily affected by the fluctuation
in crude oil prices in the world market. The cost of ABS
for example, the main material used for the frames, increased
20 percent at the start of the year while that of PVC and
EVA grew 30 percent.
With the continuing increases in raw material costs,
makers have had no choice but to raise prices. However,
heightened competition is making it difficult for these
companies to offer the same product type and quality at
a higher price. As a result, many suppliers have started
producing more upscale luggage, which commands a higher
price. At present, an estimated 30 percent of the country's
luggage suppliers are already focusing on high-end production.
Many of those that have shifted production focus are
now reaping the benefits. Export sales at these companies
have been growing at a healthy pace, and many of them have
had to boost capacity to meet demand. Assembly lines at
some factories have already doubled in order to meet growing
The majority of companies that kept their focus on low-end
luggage production, however, are operating on razor-thin
profit margins and a few have already stopped operations.
China makers' move to upscale manufacture has considerably
raised export value. While the country's outbound shipments
in the line increased 7 percent in 2004, value grew by 18.5
percent with average prices increasing 16.7 percent.
Prices are expected to climb by 5 to 15 percent in the
coming months as makers continue to expand their upmarket
With export sales of 2.8 billion pieces worth US$3.8 billion
in 2004, China is the world's foremost producer of luggage,
providing 75 percent of global supply. Eighty-five percent
of the country's luggage exports is shipped to OEM/ ODM
buyers, with the balance sold under suppliers' own brands.
There are currently around 1,500 luggage suppliers in
the country, of which 70 percent export directly or through
trading companies. On average, makers export 85 percent
of output, mainly to the US, the EU, and Japan. Many of
these are shipped to major luggage brands Samsonite, Delsey,
Titan, Roncato, and High Sierra.
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|Production & Exports