<b>Demand remains high, despite ongoing challenges</b> The message at SPINEXPO Hong Kong (July 28-29) was clear: Business is rebounding. Not just ‘better than last year’, which wouldn’t be much of an achievement considering that sales were at unprecedented lows. Suppliers said that orders were now starting to return to <em>pre-pandemic levels</em>. “We’re very optimistic. The interest and enthusiasm from buyers is booming. We’re more optimistic than even before the pandemic,” said Boco Wong, sales executive at E. Miroglio (Italy). “Business is coming back to life. It’s back to normal, but with wearing masks.” “Business is much better than expected,” said Alex Wong, managing director at Lanificio dell’Olivio (Italy). “Buyers are looking for yarns that have a non-China certificate of origin. That’s helped Italian yarn spinners.” “Buyers were really looking forward to this SPINEXPO fair. Our appointments were fully booked two weeks before the fair,” said Jasmine Lam, sales manager at Xinao (China). “Business has been very good since after Chinese New Year. Our European and American customers are placing orders. The China domestic market is booming - in fact it’s much better than we expected.” “The export markets have bounced back...the China domestic market is surging. Things are definitely much better than last,” said Susan Kwong from M. Oro (China). <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/07/Susan-Kwong-from-M.-Oro-China-2-1024x633.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/07/Susan-Kwong-from-M.-Oro-China-2-1024x633.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/07/Susan-Kwong-from-M.-Oro-China-2-300x185.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/07/Susan-Kwong-from-M.-Oro-China-2-768x475.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/07/Susan-Kwong-from-M.-Oro-China-2-750x464.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/07/Susan-Kwong-from-M.-Oro-China-2.jpg 1139w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="633"><figcaption>Susan Kwong from M. Oro (China)</figcaption></figure> <h3><b>New Season, New Challenges</b></h3> While suppliers were rejoicing that orders were growing at a strong pace, they said they were facing a host of new problems. Topping the list was, not surprisingly, logistics. Close on its heels is rising materials prices, and then labor costs and currency exchange rates. “Buyers need to make decisions earlier to deliver on time. To save on time, some brands are shifting production to the EU. The CMT in Europe is more expensive but you save on the logistics and duty,” said Andrea Pisani of Filivi (Italy). Creating a European-based supply chain was an increasingly popular alternative for European brands who are facing crushing freight rates (+695% year-on-year) out of China. “We’re seeing big demand for our stock service for faster delivery,” said Jasmine Lam. “Buyers are being forced to compete for scarce freight forwarding services. Shipping prices have surged this year. For example, from Vietnam to the US now costs $13,000. Last year it was $3,000,” said Raymond Lai. Despite rising materials costs, buyers are not trading down or substituting cheaper fibers. <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/07/Andrea-Pisani-and-Yammie-Lam-from-Filivivi-Italy-1024x635.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/07/Andrea-Pisani-and-Yammie-Lam-from-Filivivi-Italy-1024x635.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/07/Andrea-Pisani-and-Yammie-Lam-from-Filivivi-Italy-300x186.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/07/Andrea-Pisani-and-Yammie-Lam-from-Filivivi-Italy-768x476.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/07/Andrea-Pisani-and-Yammie-Lam-from-Filivivi-Italy-750x465.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/07/Andrea-Pisani-and-Yammie-Lam-from-Filivivi-Italy.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="635"> <figcaption>Andrea Pisani and Yammie Lam from Filivivi (Italy)</figcaption></figure> <h3><b>Prices Reach a Breaking Point</b></h3> Despite efforts by both buyers and suppliers to control prices, now there is nowhere for them to go but up. “In the next few months prices must go up. The new waves of COVID in Southeast Asia are creating labor shortages and driving up wages. That, plus shipping costs, materials costs and a stronger Chinese yuan - ultimately prices must go up,” said Raymond Lai from GTIG (China). “Customers must accept price increases. That’s the reality. For now, some customers are cost averaging between what they bought earlier in the season and what they are buying now,” said Alex Wong. However, by next season higher prices will be the ‘new normal’. <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/07/Alex-Wong-from-Lanificio-dell-Olivo-Italy-1024x560.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/07/Alex-Wong-from-Lanificio-dell-Olivo-Italy-1024x560.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/07/Alex-Wong-from-Lanificio-dell-Olivo-Italy-300x164.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/07/Alex-Wong-from-Lanificio-dell-Olivo-Italy-768x420.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/07/Alex-Wong-from-Lanificio-dell-Olivo-Italy-750x410.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/07/Alex-Wong-from-Lanificio-dell-Olivo-Italy.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="560"> <figcaption>Alex Wong from Lanificio dell'Olivo (Italy)</figcaption></figure> <h3><b>Sustainability Demands Bring New Challenges</b></h3> Almost every supplier said that buyers were seeking yarns with a sustainability story. In response, mills were offering more products that featured recycled and environmentally friendly fibers. “Buyers want products that are recycled, sustainable and traceable,” said Susan Kwong. "Our most popular sustainable products are the ones that feature recycled fibers. Buyers like it because the price is lower and the 'story' is simpler," said Jasimine Lam. However, alongside the products, buyers are requesting third party confirmation that the products they buy meet sustainable standards. This has opened up a floodgate (at least 15 that we counted) of organizations that provide certifications. Brands choose which certifications suppliers must provide. Suppliers are then left to pay the cost for the certification. “Each buyer wants something different. Social, environmental, compliance for factories - we must follow up on one. It’s not that easy. Certificates, compliance, and testing are getting more complicated. It’s very expensive and time consuming. Now you need an entire department just for this,” said Andrea Pisani. <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/07/Raymond-Lai-from-GTIG-China-1024x605.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/07/Raymond-Lai-from-GTIG-China-1024x605.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/07/Raymond-Lai-from-GTIG-China-300x177.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/07/Raymond-Lai-from-GTIG-China-768x454.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/07/Raymond-Lai-from-GTIG-China-750x443.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/07/Raymond-Lai-from-GTIG-China.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="605"> <figcaption>Raymond Lai from GTIG/Guotai (China)</figcaption></figure> <h3><b>Optimistic Outlook</b></h3> Despite the challenges brands and suppliers are facing, most are buoyant about the return of business. “We have been very busy at SPINEXPO with many successful meetings. In fact, we met more people than I expected - about 50 percent more. I think this is because the location is very convenient for buyers,” said Boco Wong. “It’s very difficult to sell our products online. People need to touch and feel the products.” <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/07/Boco-Wong-from-E.-Miroglio-Italy-1024x637.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/07/Boco-Wong-from-E.-Miroglio-Italy-1024x637.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/07/Boco-Wong-from-E.-Miroglio-Italy-300x187.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/07/Boco-Wong-from-E.-Miroglio-Italy-768x478.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/07/Boco-Wong-from-E.-Miroglio-Italy-750x466.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/07/Boco-Wong-from-E.-Miroglio-Italy.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="637"> <figcaption>Boco Wong from E. Miroglio (Italy)</figcaption></figure> “SPINEXPO is even better than before. Even after the pandemic ends, we would still support this fair. Buyers like a local fair,” said Susan Kwong. “We are on track. Business is still in transition, but we are still here,” said Andrea Pisani. “SPINEXPO keeps getting more buyers. We need to be here. Even when travel becomes possible, there’s still value in having a fair that is so convenient for buyers.”