Prices for fabric from China likely to increase
Price changes could vary widely
Susan M. Andrews -- Furniture Today, October 16, 2006
HIGH POINT — Prices for some upholstery fabric from China will increase before the next Showtime fabric show here in December, although some fabric sources say they may be able to hold prices through the coming season.
Most upholstery fabric suppliers bring some goods from China, whether commodity fabrics like plain body cloths or upscale silks.Several suppliers say they expect prices to increase from 2% to 10% based on three main factors — the recent reduction in China's value-added-tax rebate from 13% to 11%; a recent shift of about 5% in the value of China's currency; and rising raw material costs for oil-based synthetics like polyester staple as well as raw silk.Whether it's this month or early in 2007, many fabric vendors say they likely will be forced to raise their prices for imported Chinese fabrics after several years of steady or even dropping prices."It's a terrible thing to have to raise prices, especially when retail conditions are so bad, but we don't control the market. It controls us," said David Young, vice president of sales and marketing for Morgan Fabrics.Jack Cobb, president of Chinese-owned American Decorative Fabrics, said his company instituted its first-ever price increase earlier this year. "We had a 25-cent price increase per yard. In fairness, it really wasn't enough, but the market is very competitive so it's all I felt the market would allow us," he said.Cobb added the company's December line will reflect price changes related to the strengthening Chinese currency, but did not specify the amount or percentage of the increase.The volatile Chinese fabric situation — with its ever-changing stew of tariffs, taxes, quotas, currency issues and materials costs — won't affect all fabric sources in a consistent way. Some already are paying enough to their Chinese fabric suppliers, or charging enough themselves already, to be able to absorb some future cost increases without raising prices.The textile landscape is complex and reports from the industry about price increases vary widely. While some companies were scrambling to redo their price sheets before this week's furniture market here, some said the China-related pricing issue hasn't even surfaced."We haven't heard a peep about price increases," said Burt Kaplan, president of Portfolio Textiles. "Just the opposite, in fact. Prices were lower at the recent Shanghai fabric show and minimums were smaller than ever.
"All our suppliers are holding the line on prices," Kaplan said. "The last currency revaluation last year didn't affect prices, so I don't expect this one will either. Also, the VAT export rebate change is so small it probably won't cause a ripple."The rebate rate reduction is part of China's efforts to shift its foreign trade away from low value-added industries like textiles, leather tanning, furniture, steel and iron.According to a recent story in China Business Times, the country's textile industry expects to lose about $1 billion (U.S.) annually as a result of the export rebate reduction. The story said textile companies in China have profit margins of less than 5% and some have said their customers will not accept a 2% price increase.Most likely, those customers are apparel producers, who will simply shift their manufacturing to Vietnam or Malaysia or wherever production is cheaper. Upholstery manufacturers have fewer options, however, and since China has captured so much of the upholstery fabric market, most U.S. importers would have to accept any price hikes, particularly for higher-value decorative goods, if not for plain, commodity-type body cloths.George Kerr, president of Chinese-owned upholstery fabric supplier JLA Home Fabrics, told Furniture|Today, "We are holding the line so far on prices, but this is the third thing to come along, following the currency revaluation and increases in raw material costs, so we're evaluating the situation right now."Culp is sending price increase notices to its customers this week, noting that prices will increase on all its China-sourced fabrics — by 10 cents per yard for fabrics selling for $5 or less, and by 15 cents per yard for fabrics selling for over $5.
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Prices for fabric from China likely to increase
Oct 29, 2006 -
China moves affect some fabric pricing
Oct 9, 2006
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