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Green Issues and Production Shifts Weigh Heavy on China Leather Expo

With the leather industry under pressure to clean up its act in environmental terms and many of China's leather-heavy sectors facing increasing competition from across Asia, this year's All China Leather Exhibition was a muted affair.

Photo: Footwear: A key driver of China’s demand for leather, but a sector facing increasing competition.
Footwear: A key driver of China's demand for leather, but a sector facing increasing competition.
Photo: Footwear: A key driver of China’s demand for leather, but a sector facing increasing competition.
Footwear: A key driver of China's demand for leather, but a sector facing increasing competition.

As well as being one of the world's first traded commodities, leather is a sector where China has long dominated global demand. As well as being a leading importer of hides and skins, the country also has a huge requirement for the chemicals and machinery necessary for producing this versatile material. As a result, the All China Leather Exhibition (ACLE) always draws a substantial number of companies from around the world, all keen to service this huge market.

China's demand for leather stems largely from its extensive interests in the automotive and footwear sectors, with the country producing 40% of the world's shoes and 30% of the world's cars, with the latter primarily destined for its domestic market. At this year's show, though, it was clear that mainland companies were facing increasing competition from other Southeast Asian countries in both industries, while environmental concerns are bringing about fundamental changes to the sourcing and production of leather.

At present, China is far from self-sufficient in terms of the number of hides required by its leather industry, something that has long created opportunities for many overseas tanneries. One of the more unusual companies looking to help meet this need was AI Topper, a family-run Sydney-based tannery offering kangaroo hides in addition to the more conventional varieties.

Outlining the appeal of this uniquely Australian leather variant, Darren Topper, the company's Senior Executive Manager, said: "While kangaroo makes up less than 10% of our overall output, it does produce great high-end leather. It's light and it has the strongest fibre structure you can find, largely because the grain runs horizontally.

"As a result, the leather produced is ideal for heavy-duty use. It's commonly found in football boots, as well in any products likely to come under extreme stress."

Overall, China is one of the company's largest markets, with much of its output destined for the automotive sector. This year, however, Topper expressed some disappointment at the show's comparatively poor attendance, blaming the downturn on the tighter environmental controls now in place across China.

Historically, leather tanning has never been one of the most environmentally friendly of businesses, an attribute that one particular exhibitor – Germany's Heller-Leder – clearly saw as a business opportunity. Expanding on the family-owned company's thinking, Marketing Manager Marvin Fielder said: "Recognising that the leather industry is one of the world's worst polluters, we have made a considerable investment in reducing our environmental footprint."

Overall, the company has adopted several different approaches in its bid to boost its green credentials, with the success of many of these seeing it accorded the title of Global Tannery of the Year in 2011. One of its most effective initiatives has been the installation of a water treatment processing system, which leaves the one million litres of water it uses every day cleaner than when it was first pumped in.

In other moves, it has switched to a solvent-free leather-production process, resulting in a lower level of emissions from finished products. Similarly, the company also uses a tanning agent made from unwanted olive leaves, another innovation that has significantly reduced its negative impact on the local environment.

Another company keen to burnish its green credentials was Taiwan's Great Eastern Resins Industrial Co (GRECO), a specialist producer of adhesives for the footwear industry. This year, the company was in Shanghai to promote its range of water-based adhesives, said to be particularly suitable for attaching shoe soles to leather uppers, while being far more environmentally friendly than any of the solvent-based alternatives on the market.

Photo: Quality: A contentious issue for leather exports.
Quality: A contentious issue for leather exports.
Photo: Quality: A contentious issue for leather exports.
Quality: A contentious issue for leather exports.
Photo: The leather experts decide: Real or synthetic?
The leather experts decide: Real or synthetic?
Photo: The leather experts decide: Real or synthetic?
The leather experts decide: Real or synthetic?

Highlighting the product's benefits, Wang Yuang, a Researcher in GRECO's R&D Centre, said: "Over the past couple of years, many Chinese producers have had to switch to our product on account of increasing environmental pressures. While solvent-based adhesives are still in common use by many footwear manufacturers in India and Vietnam, they will also be obliged to upgrade within the next 10 years."

For companies wishing to export leather products, compliance with international safety standards is a key issue, particularly for those targeting the more developed markets, such as the EU or the US. Intertek, a London-based testing company and a stalwart of the ACLE, has been helping Chinese companies meet these required standards for more than 30 years and now operates laboratories in a number of cities across the mainland.

Explaining its role within the overall production process, Ann Li, a Business Development Executive within the company's dedicated China operation, said: "We test the physical characteristics of leather, including its colour fastness and its resistance to abrasions and peeling. We also check for the use of any restricted chemicals.

"Of late, though, we've found that leather and shoe manufacturing is in decline across China, partly on account of the slowdown in the global economy and partly because of the higher level of local labour costs. With many production facilities now having been relocated to Thailand, Indonesia or India, we have opened new offices in each of these countries in order to maintain our level of service."

Among the more niche companies at the event were businesses focusing on ironing/embossing, the manufacture of specialist sandpaper for sanding leather, steering wheels and the production of synthetic leather. Leading the way on the embossing/ironing front was Korea-based Yurim Machinery, with its Rotopia brand widely in use across the world.

Outlining the company's current sales priorities, Sales and Marketing Director Choi Yongseog said: "Right now, India is our best market, with China in the number-two slot and Bangladesh of growing importance. Five years ago, though, the market was far more vibrant, but growing concerns over pollution have changed things considerably."

The sandpaper contingent was headed by Germany's Awuko Abrasives, which has been supplying the product for sanding leather since 1900 and now sells to more than 100 countries. In addition to its long-established premium line, the company has introduced an economy equivalent specifically targeted at producers in developing countries with tighter budgets.

Assessing the current state of the industry, Lars Arndt, the company's Export Manager, said: "While China is a big market for us, Italy remains our biggest customer, largely on account of the high quality of its leather. At present, we are finding the high-end market is relatively stable and we are also seeing China gradually gravitate to the premium end of the business."

Given the automotive focus of many buyers and exhibitors, it was perhaps no surprise to see Shijiazhuang Xinzhongtian Leather Products, a steering-wheel manufacturer, in attendance at this year's event. Outlining its own market positioning, Sales Representative Zhao Ruishen said: "We mainly supply Chinese companies, although we also have some clients in the US. Overall, it's a tough market and we have a lot of competitors, but we believe we offer good quality at a good price."

On the synthetic-leather front, Japan's Lintec specialises in providing synthetic leather finishes. Its core product is PVU or PU-coated release paper, which can be peeled off to deliver a leather-look surface effect. The company offers more than 100 designs, all of which it produces in-house in either its Japanese or Chinese manufacturing plants.

Optimistic about the future prospects in its particular niche, Jun Kato, one of the company's Section Chiefs, said: "Currently, we are the world's third-largest producer of release paper, with demand particularly strong in the footwear, bags and furniture sectors.

"Demand is also starting to pick up in the automotive sector, an industry that is very strict when it comes to quality control, which is something that synthetic leather can help deliver. It is also lighter than real leather, which is important to car manufacturers."

Photo: The 2017 All Chinese Leather Exhibition: The showcase for a sector contemplating rapid...
The 2017 All Chinese Leather Exhibition: The showcase for a sector contemplating rapid changes.
Photo: The 2017 All Chinese Leather Exhibition: The showcase for a sector contemplating rapid...
The 2017 All Chinese Leather Exhibition: The showcase for a sector contemplating rapid changes.

The 2017 All Chinese Leather Exhibition (ACLE) took place from 30 August-1 September at the Shanghai New International Expo Centre.

Chen Rong, Special Correspondent, Shanghai

Content provided by Picture: HKTDC Research
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