Chinese processors happy with WA wool

08 Aug, 2017 04:00 AM

A MARKET for Western Australian wool is assured well into the future if Chinese investment in its processing and garment manufacture is anything to go by.

That was the message 38 woolgrowers – all but two from WA – came away with after an 18-day tour of China last month organised by Peter Scanlan Wools.

The proposed expansion, the innovation and the commitment to wool exhibited by Chinese and multi-national companies based in China gave growers “a lot of heart” and was reassuring for the future, Mr Scanlan said.

He and wife Margaret, wool buyer Steve Noa and wool broker Trevor Smith led the tour.

Mr Scanlan was one of the first Australian businessmen allowed into China in 1980 when it was opened up to the West after the 1949 communist revolution and he has been a regular visitor since, as China buys 80 per cent of Australia’s wool clip.

Mr Noa has made even more visits to China but over a shorter period so both know the country very well.

But for the woolgrowers, including four who were on the first Scanlan wool tour to China last year, the trip was “unbelievable”, he said.

“Everywhere we went the progress was unbelievable, and the message coming through clearly was they like our WA wool, the 19.5-21 micron wool that we grow in WA – not all that fine stuff – is what they want.

“We went to the AWI (Australian Wool Innovation) office in Shanghai and the two staff there showed us all the latest collections coming in, mostly with sports wool, and they look fantastic.

“We got a good insight into what’s going to happen in wool with the wool jeans, baby wear and jackets and the developments in sports wool.

“It’s very exciting for the future, but all the innovations they showed us at AWI are with 19.5-21 micron wools.”

The other clear message was shorter, machine-washable wool was the future.

“If you’re going to grow longer wools, it’s only for the suit market and the uniform market that are only just hanging in there,” he said.

“The mills we went to all said that the future for suits is probably a little bit negative, that market is on the decline.

“But the big market that’s increasing is the market for washable wool – the wools for that are the shorter type – the type you get shearing three times in two years.

“The 50-70 millimetre type wools that produce machine washable sports wool and things like that, that’s the other message we came away with, machine-washable wool is the future.

“Another interesting thing the wool processors said is when they buy their wool they have to pay a weekly price which goes up and down, but when they spin it and sell their yarn, it’s one price for the year, they’ve got to average.

“They said the (2016-17) yarn was 20pc more (in price) than the previous year and their customers were happy to pay it, so that was a good sign.

“They were happy, so that was a good thing to hear and we’ve all come back very positive about wool.”

Mr Scanlan said the size and scale of existing wool processors and the planned expansions impressed growers.

The Jiangsu or Sunshine mill, which has a close relationship with Peter Scanlan Wools, was part of the tour.

“Sunshine make 21 million suits a year and while we were there we saw the cutting room where they cut the material, just a massive room, as far as you could see in any direction, making suits,” he said.

“That was one room and there’s half a dozen of those rooms because they employ 15,000 people.

“They’ve run out of room and are expanding and building a 24-storey office block.”

“We went to the Yangste spinning mill which was set up by German company Sudwolle which is probably the best in China.

“They are doubling the capacity that they’ve got in China, but in Vietnam, they’ve got the latest German technology.

“At another big woollen mill we went to they are planning a massive expansion and the boss had a model of what the new factory is going to look like – I’d say it’s going to be five-storeys at least.

“We went to his restaurant, he said ‘Peter and Margaret you come with me in my new car’.

“It was a Bentley, is had cost him $900,000, and his mate had a McLaren only a couple of weeks old, it cost $1.1 million.

“He’s building a building that big, he’s driving a new Bentley and his mate’s got a McLaren, so things look pretty good in the wool industry.

“I told everyone on the last night that from what we’ve seen all you growers should be buying another farm and filling it up with sheep.”

A visit to Tianyu Wool, the biggest raw wool processor in the world, also revealed an interesting anecdote, Mr Scanlan said.

Tianyu was established in 1999 by Chinese businessman Wen Qingnan who in 2014 bought and restored the historic Lal Lal Estate property in Victoria where he runs 12,000 Merinos.

“He had a 150 bale clip this year but because they didn’t have a very good season in Victoria, the lady at Tianyu was telling us they were trying to lose the boss’s wool amongst all the better stuff by feeding it in (to the mills) slowly.

“This guy understands the problems of trying to grow quality wool, he’s learned quickly from his staff that it’s not as easy as you think it is.”

Another reassuring aspect, particularly for stud breeders on the tour, was a rare visit to a sheep farm in the far north-west of the country to see Alpine Merinos being shorn.

“We’d been to the university (in Lanzhou) the day before where we were told about these Alpine Merinos and how good they were,” Mr Scanlan said.

“They were like pet sheep, the shearers would pull them out by the back leg and squat on them to shear them on the ground.

“Some of our guys showed them how we shear and helped them set up their combs and cutters properly.

“The interesting thing was when they were pressing the wool it was actually a wool dump (compressing a number of bales together).

“It was a big pile of wool in a shed they were dumping.

“The wool from these Alpine Merinos that they were pretty proud of was dusty, thin and tender.

“We all looked at it and the farmers all thought we’ve got no worries for 10 years with their breeding program because we’re that far in front of them.”

The tour was not all work with visits to historical and tourist sites along the way and included a three-day boat trip down the Yangtze River to visit the massive Three Gorges Dam, the world’s biggest hydroelectricity dam.

It also included a visit to the Terracotta Warriors which Mr Scanlan said was one of the tour highlights.

“They told us at the Terracotta Warriors that a million people a day go through – it’s mind blowing – and at $30 a head, that’s $30m a day,’’ Mr Scanlan said.

“A lot of Australian tourist destinations would be envious of that sort or cash flow.”

Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly


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