Avian flu leaves down product companies "without a grain of rice to cook with"
Release date:
2013/05/23
In May, when down product companies typically enter their peak production season, reporters yesterday observed in Yangjialong Village, Qixian Town—a hub for down-processing enterprises—that businesses once bustling with customers are now eerily quiet. Some down-processing workshops have even locked their doors completely, vividly highlighting the challenges faced by the down product industry.
Walking into Hongda Down Products Factory, located in Yangjialong Village, you’ll notice that there aren’t many production workers bustling around the vast厂区. "May marks the start of down apparel production, but right now, the situation is truly unpredictable." Yuan Liuwu, the factory’s operator, has been involved in down processing for over 20 years and began manufacturing down clothing in 2008. Yet this year, the sudden outbreak of H7N9 avian influenza has left him deeply concerned about the future of the down-processing industry.
"Affected by the H7N9 avian flu, many regions across China have banned the trade of live poultry, including ducks, leading to a sharp surge in down prices. At our down processing plant, we simply can't afford it anymore." In Hongda Down's down separation workshop, three down-sorting machines have already been left idle. Yuan Liuwu told reporters that previously, down raw material prices hovered around 200,000 to 300,000 yuan per ton—but now they’ve skyrocketed to over 500,000 yuan, doubling in just a short period. On top of that, supplies are running dangerously low. As a result, he’s now forced to implement production cuts or even temporary shutdowns to cope with the current crisis.
In this recent surge in down prices, Yangjialong Down Factory—Qixian's largest down processing enterprise—has been hit even harder. Consuming over 600 tons of down raw materials annually, Yangjialong primarily processes water-washed down and other down products, and has long-term supply contracts with several renowned domestic apparel brands. "At the beginning of the year, we secured prices below 400,000 yuan per ton. Now, however, down raw material costs have soared above 500,000 yuan per ton. Even without factoring in any additional expenses, we’re already losing more than 100,000 yuan per ton." To safeguard the company’s brand and reputation, Cheng Haiming, the "helmsman" of Yangjialong Down Factory, has been working tirelessly to secure reliable supply sources while ensuring timely order fulfillment. At the same time, he’s made multiple visits to key clients, engaging in constructive negotiations to discuss price adjustments. "After all, these are partners we’ve worked with for years—so they understand the challenges our business is facing," Cheng explained. Cheng expressed deep gratitude toward a listed apparel company whose CEO personally traveled to Shaoxing to assess the situation firsthand. The company ultimately agreed to revise its procurement plan, reducing its annual order volume from 800,000 tons of down products to 350,000 tons.
Besides down processing companies, the rising prices and supply shortages of down raw materials are also impacting upstream down apparel businesses. "We’ve already secured garment orders, but if we can’t procure the raw materials on time, the factories will suffer significant losses," lamented a Qianqing-based down apparel company owner yesterday. "Lately, I’ve been utterly stressed out by the constant issues of soaring down prices and dwindling supplies." This is because the down raw material supplier he’s worked with for years has refused to deliver goods at the contract price agreed upon earlier this year. As a result, while actively trying to negotiate with the supplier, he’s also been forced to politely decline orders from long-standing overseas clients who have already placed their requests.
"This year, the price increase for down jackets is already set in stone—otherwise, companies simply wouldn’t be able to cope." According to industry insiders, down raw materials account for 20-30% of the cost of down apparel. As a result, due to rising raw material prices, down clothing prices are expected to rise by at least 10-15% this year.
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