| Knitting is one of the core economic pillars of the 32-square-kilometer Xiangshan (象山) county, which is located in the city of Ningbo (寧波) in Zhejiang (浙江) province, East China. Xiang literally means elephant in Chinese language, whereas Shan refers to mountain.Xiangshan knitting industry, as a strong industrial cluster, is well-known in China for its knitwear exports, mainly of OEM (original equipment manufacturing) products. These exports represent one-tenth of the total knitted products exported from the entire country in 2008. |
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| Some Xiangshan knitters expand vertically for higher product quality and profitability |
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In 2008, Xiangshan had over 1,000 knitting enterprises, including 280 sizable enterprises (with an annual operating revenue of at least RMB5 million). Sixteen of them achieved an annual sales revenue exceeding RMB100 million. Moreover, Giant Eagle (巨鷹), Yongnan (甬南), Dongfeng (東風) and other seven enterprises in the county, were listed in the top 50 knitting enterprises in China in the year.
Despite the global economic downturn, the Xiangshan knitting industry sold 97.7% of products they manufactured and attained a total industrial output value at RMB 8.323 billion in 2009, up 4.7% from a year ago. Meanwhile, the industry earned a sales income of RMB 8.073 billion (+4.6%) during the year, but the knitwear export diminished 1.94% to US$655 million.
Knits exports to Asia, Europe and North America reached US$279 million (+14.77%), US$167 million (-7.96%) and US$114 million (+14.85%) respectively in 2009.
Tapping local market with own brands
The global economic downturn that hurt exports, however, encouraged knitters in Xiangshan to innovate and establish their own brands to tap domestic market opportunities. For example, Dongfeng introduced its first line of womenswear in China in 2009, named Fashion Maxxy (范旬．麥克斯), which was positioned as a European-style brand under fashion directions of established local and overseas designers. It was also the first women wear brand established in Xiangshan, according to Dongfeng. The company announced its plan to take the brand to the country renowned department stores in Shanghai and welcomed the establishment of franchised stores in major and medium cities across China.
Overall, knitwear of local, proprietary brands in Xiangshan accounted for 11.48% of the total industrial output of the county's knitting industry in 2009. The authorities in Xiangshan noticed that it is costly and relatively risky to build up brands by small and mid-size knitters (SMEs) themselves, which were often refrained by the financing and management capabilities. Hence, the Xiangshan Knitting Industry Association registered a collective trademark called Xiangzhilian (象之戀). As the association Secretary General, Gan Guo-hua (幹國華), put it: "This is a regional brand name for apparel products and accessories manufactured in Xiangshan, including apparel for men, women, children, and intimate wear and hats. Apparel and accessories meeting the required quality standard can apply for the use of this name, which is free of charge in the first two years. At the moment, three enterprises including Mingjia (名佳) and Huayi (華益) have marketed their products under this regional brand name.
Vertical integration enhances internal operations
In addition to the efforts of brand-building, knitters in Xiangshan have improved their internal operations through vertical integration.
Vertical integration of a textile enterprise facilitates monitoring and control of quality from materials down to finished products, according to Xu Xiang-jun (徐向均), Manager of Chairman's office at Giant Eagle. He further explained that the enterprise invested nearly RMB 500 million to build up its own production facility, Giant Eagle Knitting Park, covering 800 mu of land area. This park integrates an array of manufacturing activities from weaving, printing/dyeing, garment making, accessory production to testing and quality control.
Further, the enterprise acquired a cotton manufacturer, formerly Xinjiang Tuofeng Cotton Industry (新疆托峰棉業), and set up a cotton yarn combing and spinning facility in Xinjiang province in Northwest China. It invested RMB 150 million for technical renovation. The enterprise now secures cotton plantation on a land area of 20,000 mu and a production capacity of 80,000-spindle cotton yarn. "This project not only provides us an assurance of quality cotton for our knitting activities, but also guards the enterprise from price fluctuations of the materials," said Mr Xu, adding that the enterprise also improved its wastewater treatment facility.
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