Request for Uniforms Could Assist China's Slowing Wool Industry
July 1, 2016

Although there has been a definite slowdown in China's wool industry due to an extremely competitive market and luke-warm demand from Europe and the United States, it remains upbeat about the future, partly due to the rolling out of major tenders (requisitions) for government uniforms.

After an abeyance of more than four years, the first such government tender has been announced for railway personnel uniforms. This tender is expected to be followed by a navy tender and comes on the heels of other smaller tenders for employees in banking, customs, etc.

To put this in perspective, many millions of meters of fabric will be required - 12 million just for the railways - mostly utilizing 19.5 micron wool. It is expected by Chinese manufacturing companies that demand for coarser wools will diminish. In part, as a reflection of an oversupply of double sided fabric, that according to some analysts in China dominated textile production in the last couple of years. It is estimated that huge stocks of this double sided fabric and garments made from it have still not entirely shifted from retail shelves, although demand has now in-large part subsided.

These enormous tenders will put additional upward pressure on Australian and South African wool prices as much of the wool needed is best sourced from these countries. But to comply with these government tenders will not be easy. The government has very specific requirements for the fabric specifications and, with rising demand and rising wool prices, this will be a challenge for some Chinese manufacturers. As one top manufacturer in China said, government is pushing prices so low that it barely leaves any margins for us. But because the quantity is so big, every manufacturer will tender even if they do not make any money.

In previous cycles, government uniform tenders were quite general allowing manufacturers to use 21 - 24 micron wool but this time around, it is expected that the government tenders will be more precise, specifying better quality fabric at 19.5 - 21 microns. In addition, with the anti-corruption drive in full swing, it is expected that government officials will enforce tender requirements.

Reprinted in part from R