Sun, May 08, 2011 - Page 11 News List

A taste for ‘soft gold’ cashmere grows in China

By Allison Jackson  /  AFP, ORDOS, CHINA

Factory worker Wu Suqing hunches over a machine knitting a green cashmere sweater bound for a department store in China where demand for the luxury wool is growing even as Western sales shrink.

Surrounded by towering piles of brightly colored pullovers, Wu and dozens of workers at a factory in northern China churn out more than 100,000 sweaters a year that retail in Beijing and Shanghai for hundreds of dollars each.

“At the beginning I was tired, but now I’m used to it,” Wu said above the clamor of knitting machines in a dingy building in Ordos in northern China’s Inner Mongolia, where she works 11 hours a day.

China is the world’s largest producer of cashmere, churning out 75 to 80 percent of the global supply — worth an estimated 5 billion to 6 billion yuan (US$770 million to US$924 million) per year.

This “soft gold” or “diamond fiber,” as highly prized cashmere is known in the industry, has traditionally been exported to affluent overseas markets, but China’s growing taste for luxury products is changing that.

High-altitude northern and western China are ideal for producing the cloud-like wool. Their cold, dry winters cause the long-haired goats scattered to grow rich coats to keep the animals warm.

The soft fiber is spun into yarn and then knitted into sweaters, scarves and shawls sold by luxury brands such as Hermes and Eric Bompard in Paris, New York and Sydney.

More than half of the country’s cashmere clothing and accessories are still exported, but are finding a growing market in increasingly affluent Chinese cities.

“It is easy for a Chinese person to buy a cashmere sweater now. People are much richer than before,” said Zhang Quanxiang, vice director of the China Livestock Marketing Association’s cashmere department.

The number of Chinese-made cashmere sweaters exported last year fell to 12 million, down 33 percent 2007, as the financial crisis hit US and European buyers, said Zhang, former vice president of China’s largest cashmere producer, Ordos Group.

However, he adds that the growing Chinese market has helped offset that.

Raw cashmere prices have nearly doubled in recent years because of the Chinese demand, fewer goats following recent bitterly cold winters and a ban on grazing the sharp-hooved animals on open land in Inner Mongolia to prevent soil erosion.

The rising prices have been life-changing for herders such as Meng Lounu, 77, whose family lives in a village on the edge of the Gobi, where they raise hundreds of goats in large earthen-floor pens.

The family earns one million yuan each year selling cashmere to factories in Ordos. Recently, they have been able to buy a new pick-up truck and build several block-shaped cement houses for family members.

“Our standard of living gets better and better,” Meng said, herding dozens of long-horned goats around a yard strewn with dung and straw. “Before, our life was bad, but now it’s great. We can eat as much as we want — we make more and more money.”

China is the world’s fastest-growing market for luxury goods and is forecast to be the biggest by 2015, according to consultancy PriceWaterhouseCoopers.

A woman shopper at a wholesale outlet in Ordos, where a 100 percent cashmere sweater sells for up to 2,000 yuan, said she liked the soft fiber because it was comfortable.

The picture is less rosy for China’s cashmere factories, whose profit margins have been eroded by the soaring wool prices and increasing competition from other Chinese manufacturers enticed by the growing market.

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