Return of appetite for wool in China

Wool fabric production lifts as China's economy restores

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Wool yarn production increases as China's economy returns to health.

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Woolmark country manager, Jeff Ma.

Woolmark country manager, Jeff Ma.

As China continues its economic return to health, demand is predicted to reappear for wool as yarn production in Chinese mills increases.

After a tough time through March and April, Australia's biggest market for wool is recovering, with an increase of 21 per cent in the monthly production of wool yarn compared to May, according to Woolmark Country Manager, Jeff Ma.

"Production of wool fabrics is starting to recover. In May and June the production of wool fabric increased by 15pc," Mr Ma said.

"The sentiment rebounds across the board. We have been talking to a lot of textile mills and their main focus is to drive their domestic market demand."

He said they are also focussing on capitalising on the digital economy, which experienced a major boost during the pandemic.

"For the textile mills and the fashion brands in China it is really how to service the digital savvy customers with high quality, good value and quick turnaround," Mr Ma said.

He said digital retail online is accounting for 25pc of the total retail sales in China and believes that will develop at an even faster rate post the pandemic, predicting a growth of up to 40 or 50pc within three to five years.

"The pandemic disrupted the supply chain in the first two quarters of 2020," Mr Ma said.

"They are building stocks for the recovery from the key export destinations, but when you look at the domestic market the consumer sentiment rebounds quite quickly."

A recent survey suggested that 80pc of Chinese citizens are very positive about their income growth in the future indicating they are quite confident about the domestic economy's recovery.

"I think the swift rebound of the consumer confidence was partially due to China's effectiveness at getting the coronavirus outbreak under control," Mr Ma said.

"Consumers showed strong purchasing intention after the COVID outbreak.

"Sportswear has really seen some big consumption demands because of the increase health consciousness and the consumers participation in sports activities post the pandemic."

He said the apparel market is taking a 'V' shaped recovery and he expects to see some shot-term growth in the coming months.

"Demand from the domestic market is definitely very strong, but I think the challenge for many wool textile companies is when and how the export market will recover," he said.

The key to this, Mr Ma believes, is sustainability, and providing more information to the younger consumer generation about where the product originated from.

He said young Chinese consumers are becoming more cautious to the environment and more health oriented when they purchase apparel.

"They will definitely ask what is it made from, how is it made, what are the raw materials sourced from, where are they sourcing them from and how much impact they will make on the planet," he said.

"I see that this is a wise space for Australian Merino wool to occupy and to play us on a higher ground as a sustainable fashion country.

"To keep conveying the message of Merino wool being natural, renewable and biodegradable to Chinese consumers and giving them more reason to choose Merino."

According to Mr Ma, WoolQ, the digital platform, is being welcomed by trade partners and top makers as a new trading platform.

"Further down the road I think it is a great platform to educate the supply chain as well as the consumers about all the great benefits of the beauty and the versatility, sustainability and traceability of Merino wool to the end user," he said.

"Local trade circles and supply chain partners are really excited to see WoolQ happen for our industry in China."

The story Return of appetite for wool in China first appeared on Farm Online.

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