Manufacturing News

Chinese sock makers change tactics to survive

Gu Bosheng was delighted to win an order for 4,000 pairs of high-end socks at a price of 1,000 euros each from Saudi Arabia late last month.

The socks, to be made with mink fur, would give Gu, a sock maker in Datang Township of east China's Zhejiang Province, a 10-percent profit margin, almost twice that of an ordinary pair of cotton socks.

Gu is among many Chinese hosiers that are trying to put an end to the cheap made-in-China reputation.

Thirty machines, including a Komet Knitter made in 1825 in Leicester, England, are producing the socks, which Gu claimed are "culturally comfortable."

Datang, better known as China's "Sock City," accounts for almost a third of the world's sock output, but most of the producers only earn meagre profits from orders of big foreign brands.

"We earn no more than 3 yuan (44 U.S. cents) from 100 pairs of low-end cotton socks for big clients," says Zhang Meifeng, whose plant employs 50 workers.

"The rising labor and materials costs and appreciating Chinese currency are jointly squeezing profit margins, forcing Chinese manufacturers to seek new ways to survive," said Gu.

Unlike Gu's unique "cultural concept" of luxury socks, other Chinese sock giants are taking more concrete steps such as upgrading technologies and exploring the domestic market.

Langsha Group, China's biggest sock producer, is operating 5,000 sets of advanced sock machines. The listed company plans to buy another 4,000 machines worth about 100 million yuan from Italy this year to make its products more competitive, said general manager Weng Rongdi.

Being the contractor for world-famous brands such as Nike, Adidas, Puma and Walmart, Langsha is trying to promote its own brand Lanswe in the world market.

Langsha exports about 50 million U.S. dollars worth of socks and underwear to Asia, America, Europe and the Middle East each year.

Although it would take at least five years for Lanswe to earn a profit, Weng ceaselessly promotes the brand, saying mass quantity with poor profits will never satisfy a company aiming at long-term development.

MengNa Hosiery, another sock giant based in Zhejiang, has successfully expanded in the domestic market and its 40 billion yuan in annual trade volume.

MengNa paid 5 million U.S. dollars to obtain exclusive supplier status for the 2008 Beijing Olympic Games, which helped to increase its popularity among Chinese consumers.

While maintaining business relations with big foreign clients, MengNa began to promote high-end products to consumers such as diplomats, and cheap but durable socks to the countryside.

The company sold almost 79 percent of its output abroad in 2007, but the figure dropped to 51 percent in 2009, says chairman Zong Guyin.

"We must pay more attention to the domestic market with a greater range of products," says Zong.

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