Growing with the flow in swimsuit business

By Yao Jing and Liu Ce (China Daily) Updated: 2012-07-21 11:23

A swimsuit workshop in Huludao, Liaoning province. Swimsuits from the city enjoy a 38.5 percent market share in China and nearly 20 percent globally. [Photo/China Daily]

Huludao swimsuit makers establish industry alliance to fuel innovation

Li Haifeng hardly has any time to rest after a recent business trip to Brazil. The 40-year-old owner of Huludao Derong (Group) Garment Co Ltd, a swimsuit company in Huludao city, Liaoning province, knows that rest is the one luxury he cannot afford as "change is constant" in his line of business.

Though he is busy sewing up a deal to take over a Brazilian company, Li knows that he also needs to come up with new designs for the China International Swimwear Exhibition in Huludao scheduled for Aug 17, if he is to stay ahead of the competition.

But change is not new for Li, considering that was the very reason that prompted him to enter the business in 1998 with 40,000 yuan ($6,271). It was also a time of hardship for Li as the currency crisis in Russia had dwelt a killer blow to his leather export business.

Though his entry into the swimsuit business was purely a gamble, Li has not looked back. His business has grown and he is also a leading luminary in Huludao's swimsuit industry.

Though the margins in the swimsuit business are just about adequate, Li feels that the industry has really not evolved. The wholesale price for a swimsuit made by most of the factories in the coastal city has remained stagnant at around 30 yuan to 40 yuan for the past 15 years, Li said.

Though the actual sale price in the European and the US markets is nearly 10 times the cost, the Chinese industry still does not have a name of its own, he said. "No brand, low price and no design is the impression about our industry even now. It is a different matter that we have evolved from the 40-odd factories that used to make mass-produced swimsuits, for places like Yabaolu, a Beijing market that caters mostly to Russian customers. Very few realize that we now have multiple sales channels and serve diverse markets in different countries."

Though family workshops still dominate swimsuit manufacturing in Huludao, Li said there is now more than ever a growing desire among companies to grow market share and move up the value chain with mergers and acquisitions in overseas markets. "The focus now is more on creating a solid brand image for swimsuit products from Huludao," Li said.

Li's company reported a turnover of 86 million yuan last year, the best among all swimsuit makers in the city.

Swimsuits from Huludao enjoy a 38.5 percent share of the domestic market and nearly 20 percent of the global market. The products are exported to more than 25 countries and regions, including the United States, France, Germany, Italy, Russia and Southeast Asia. The city has 70 registered swimsuit brands, and out of this nearly 30 are fully export-oriented brands, said Du Benwei, mayor of Huludao.

In 2010, the city was named China's Famous Swimsuit City by the China National Garment Association and China National Textile and Apparel Council.

That was indeed a big achievement for a region that got prefecture-level city status only in 1989. Huludao, earlier known as Jinxi county, formally changed to its present name in 1994.

The city is home to more than 400 swimsuit makers and 30 supplementary materials producers. There are around 50,000 people engaged in the swimsuit business in the city. The city's annual swimsuit output reached 150 million units last year with a total value of about 5 billion yuan. Nearly 637 million yuan of the revenue came from exports, Du said.

According to Du, the local government is keen to broaden the city's industrial structure and wants it to move away from its traditional strengths in nonferrous metals, shipbuilding, oil and energy. "The swimsuit industry is the logical choice for development."

During the First China International Swimsuit Festival held in 2011, 24 supply and sales agreements valued at $170 million and 23 investment agreements worth $3.18 billion were inked. Local government officials are hopeful that more deals will be signed during the second exhibition that will commence on Aug 17.