After nearly a year without physical trade fairs, the knitwear industry enthusiastically came to <a href="http://www.spinexpo.com" target="_blank" rel="noopener">Spinexpo</a> Hong Kong (January 27-28). This boutique version of the Spinexpo’s Shanghai fair offered the same well edited selection of high quality yarns and knitwear, but on a smaller scale. However, as we’ve found in a growing number of instances, size no longer matters. Bigger is not necessarily better. And ‘more’ can end up being ‘less’ beneficial. For buyers, Spinexpo Hong Kong was an easy-to-work fair. Located in Lai Chi Kok, a few minutes away from many brands’ offices, and with an open floor plan that allowed you to spot interesting new products, the fair demonstrated the benefits of smaller ‘satellite' exhibitions. “Spinexpo has been really good. We’ve had non-stop visitors to our booth. It’s been very busy,” said Nicole Mak at <a href="https://insidefashionlive.net/10-top-product-innovations-from-ispo/" target="_blank" rel="noopener">Xinao</a>. “It’s been really busy between the meetings we pre-booked and many unexpected customers as well,” said Julie Wilkens, head of sales and marketing, at Novetex. “This has been very worthwhile.” “The traffic has been good. I like this fair. It’s more direct to customers and more focused. It’s also stylish and less commercial,” said Clara Ho at Shanghai Yiwagoe Textile Ltd. <figure><img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Nicole-Mak-at-Xinao.jpg" alt="Nicole Mak at Xinao"><figcaption>Nicole Mak at Xinao</figcaption></figure> <figure><img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Mimi-Kam-at-Hangzhou-Pashing-Woolens.jpg" alt="Mimi Kam at Hangzhou Pashing Woolen"> <figcaption>Mimi Kam at Hangzhou Pashing Woolen</figcaption></figure> <figure><img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Geni-Ng-at-Fu-Wa-Trading.jpg" alt="Geni Ng at Fu Wa Trading"> <figcaption>Geni Ng at Fu Wa Trading</figcaption></figure> <figure><img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Cherry-Chan-at-Suedwolle.jpg" alt="Cherry Chan at Suedwolle"> <figcaption>Cherry Chan at Suedwolle</figcaption></figure> Previous Next <h3><b>Increased Pressure on Price</b></h3> Price pressure remains constant and many spinners said that buyers were switching to cotton blends as an alternative to pricier wool yarns. “Our cotton/cashmere and cotton/wool blend yarns are about 50 percent less than for our 100 percent wool yarns,” said Mimi Kam at Hangzhou Pashing Woolen. Her blended yarns had 60-95 percent cotton. In addition, she was showing cotton yarns blended with heatgen polyester (at $6.8/kg) and blended with antibacterial polyester (at $4.9/kg). “Business is quite good at Spinexpo,” she said. With a steady flow of buyers and the right products, even in this tough market there are opportunities for business. Price pressure was being felt by GTIG, and not just from buyers requesting lower prices. The cost of business has rocketed in the past year, especially for Chinese mills who face a stronger Chinese yuan, as well as surging logistics costs. “Business is very difficult right now. The RMB (yuan) has continued to strengthen. Many orders were placed when the yuan to dollar exchange rate was lower. By the time the payment was due the RMB was higher so we ended up losing money,” said Raymond Lai. Logistics are also making a bad situation even worse. <a href="https://insidefashionlive.net/logistics-faces-worsening-conditions/" target="_blank" rel="noopener">Exports from Asia have far outpaced imports</a> resulting in a critical shortage of containers. Travel bans have <a href="http://www.freightos.com" target="_blank" rel="noopener">limited the amount of air cargo capacity</a>, and now you can hardly get a booking on the Eurasia rail. “We end up having to hold the goods because we can’t get containers. Then the season passes and buyers ask for discounts or refuse the order,” said Mr. Lai. And now materials prices are rising, with everything from cotton, polyester, crude oil and wool increasing. <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Raymond-Lai-and-Philip-Fu-from-GTIG-1024x681.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/01/Raymond-Lai-and-Philip-Fu-from-GTIG-1024x681.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/01/Raymond-Lai-and-Philip-Fu-from-GTIG-300x199.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/01/Raymond-Lai-and-Philip-Fu-from-GTIG-768x511.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/01/Raymond-Lai-and-Philip-Fu-from-GTIG-750x499.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/01/Raymond-Lai-and-Philip-Fu-from-GTIG.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="681"> <figcaption>Raymond Lai and Philip Fu from GTIG.</figcaption></figure> <h3><b>Domestic Market: Bonus or Big Challenge?</b></h3> For many Chinese mills there’s the lure of the <a href="https://insidefashionlive.net/how-china-is-revving-up-retail-sales/" target="_blank" rel="noopener">nation’s fast growing domestic market</a> - a market that quickly rebounded after severe lockdowns stemmed the pandemic last spring. As export markets went into a tailspin last year, the China government encouraged exporters to seek opportunities to sell to the country’s massive domestic market, and even provided support to help them get started. However market size is only one part of the equation. Another, equally as important part is the degree of competition. And in China’s domestic market it’s fierce. With a huge and skillful domestic supply chain, it is easy for both large and small brands to start up and sell into their home market. China’s well established e-commerce channels further facilitate this. For newcomers as well as established brands, business at home is not easy to win. As exporters are turning their focus to the domestic market, the nation’s domestic brands are facing more intense pressure. <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Clara-Ho-at-Shanghai-Yiwagoe-Textile-1024x683.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/01/Clara-Ho-at-Shanghai-Yiwagoe-Textile-1024x683.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/01/Clara-Ho-at-Shanghai-Yiwagoe-Textile-300x200.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/01/Clara-Ho-at-Shanghai-Yiwagoe-Textile-768x512.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/01/Clara-Ho-at-Shanghai-Yiwagoe-Textile-750x500.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/01/Clara-Ho-at-Shanghai-Yiwagoe-Textile.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="683"> <figcaption>Clara Ho from Shanghai Yiwagoe Textile.</figcaption></figure> <h3><b>One More Time</b></h3> When asked what buyers were looking for mills all said “recycled”. When we reminded them that we had been hearing that for many seasons, they said that this time buyers were not only ‘asking’ they were actually ‘buying’. Recycled anything was an important selling point - including all fibers - cotton, wool, polyester and nylon, as well as yarns made from recycled garments. Novetex has been a pioneer with their R&D into recycling apparel into yarn. The yarn ends up having a color and in many cases a multi-tone tweed-like effect. “Previously there was little real interest in recycled products. But this season we’ve seen a big change in interest,” said Mr. Wilkens at Novetex. On the heels of ‘recycled’ is ‘sustainable’. From organic to sustainable man-made fibers, and eco-certified fibers, everyone is looking to fiber content as a way to bring a sustainability story into their collections. The challenge is to find high quality fiber that is also sustainable. Here, organic cotton is increasingly failing to meet mill standards. “We source organic cotton mainly from India and Turkey but the quality is going down. China has high quality cotton, but there is a big issue surrounding Xinjiang cotton so we need to avoid using that. We are using some Supima cotton and also sourcing cotton from the U.S. and Brazil,” said Mr. Wilkens. For spring/summer ‘22 buyers want more sustainable yarns, said Ms. Mak at Xinao. “Mainly they are looking at yarns with recycled polyester, nylon and cashmere. We want to ensure that our products don’t contain Xinjiang cotton, so we’ve switched to U.S. cotton.” Another sustainable option is ‘sea wool.’ “There is now big request for our ‘sea wool’, which is made from recycled polyester and oyster shells,” said Geri Ng, marketing manager at Fu Wa Trading (Yarns) Company Ltd. “In general, people are asking for things that are cozy, soft and warm. There’s a continued demand for apparel that can be worn indoors and outdoors,” she said. “We’re seeing requests for chunky gauge yarns with unusual characteristics,” said Ms. Ho at Yiwagoe Textiles. Linen is popular, as are cotton/silk blends and cotton/linen blends for spring ‘22.” “Cotton yarn is selling well. We’re focused on high-end, long staple fibers like Sea Island cotton in fine counts with a clean look. So you could say that we are offering ‘luxury cotton yarn’ since our prices range from $50-70/kg up to $100/kg,” said Cherry Chan, representing Emil Cotoni. “The buyer reaction has been very good.” For Suedwolle, classic merino wool yarns remain a stable, bestseller. “For the customer who wants a good quality wool garment, the price is less of a problem. They see it as an investment.” <figure> <img src="https://insidefashionlive.net/wp-content/uploads/2021/01/Kirby-Yu-and-Julie-Wilkens-at-Novetex-1024x683.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2021/01/Kirby-Yu-and-Julie-Wilkens-at-Novetex-1024x683.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2021/01/Kirby-Yu-and-Julie-Wilkens-at-Novetex-300x200.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2021/01/Kirby-Yu-and-Julie-Wilkens-at-Novetex-768x512.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2021/01/Kirby-Yu-and-Julie-Wilkens-at-Novetex-750x500.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2021/01/Kirby-Yu-and-Julie-Wilkens-at-Novetex.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="683"> <figcaption>Kirby Yu and Julie Wilkens from Novetex.</figcaption></figure> <h3><b>Business Outlook </b></h3> While no one said that business was booming, most mills were fairly optimistic about spring ‘22. Autumn/winter ‘21 is expected to remain difficult though, mainly due to market uncertainty. “I’m not sure about how business will be in 2021. We’re waiting to see if the vaccine will be effective,” said Ms. Ng. at Fu Wa Trading. At Novetex, Kirby Yu said that business for autumn/winter ‘21 was about the same as last year. At Yiwagoe, Ms. Ho said that the China domestic market was very good. Europe was rebounding now, led by the German market, which had remained strong. “The China domestic market has been quite good during the past few months. The US market is now showing some improvement,” said Ms. Chan. Looking ahead, most mills are more ‘hopeful’ than ‘certain’. “We are seeing an improvement from last year. Customers are more open to consider new products. We expect a little improvement, but are still cautious,” said Ms. Mak at Xinao. “Business is improving and customers are ordering more. They’re cautious and staying close to the season. They are now looking for new developments, whereas last year they just ran the old products. It’s a small change, but it’s positive,” said Ms. Ho at Yiwagoe Textile.