The Leather Industry Is Suddenly Warm.

In the second half of 2008, the international financial crisis which kept fermenting 70% of the small leather enterprises closed down, and the shrinking of processing capacity led to a rebound in the price of leather which had plunged sharply.

Zhu Zhang Jin

The light industry adjustment and revitalization plan promulgated yesterday (hereinafter referred to as "plan") stipulates that the leather industry should focus on eliminating the annual production line below 30 thousand mark.

Zhu Zhangjin, chairman of China's largest leather product manufacturer, Carson international [0.543.85%] (00496.HK), told reporters at CBN: "the leather enterprises with less than 30 thousand sheets of paper per year are all small businesses and big polluters, because building a production line with 30 thousand marked sheets will only need to invest hundreds of millions of yuan. The establishment of matching pollution treatment facilities will have to invest tens of millions of yuan. Small businesses have no ability or willingness to launch environmental protection facilities, so eliminating these enterprises is very necessary."

Zhu Zhangjin also believes that the threshold of the 30 thousand mark is too low. He said: "the enterprises with only 30 thousand sheets of processing capacity in Zhejiang are almost extinct. If we want to further eliminate backward production capacity, we can set the threshold to 100 thousand sheets, so that we can make resources more concentrated in the hands of high-quality enterprises."

Zhu Zhangjin said, in fact, before the publication of the plan, leather processing small businesses estimated that 70%~80% had been closed.

After the international financial crisis, the market demand declined sharply. Taking Carson international as an example, its leather products were mainly sold to the US market. In 2008, the company exported 802 million yuan to the US, which was 60.7% lower than the same period last year.

The weakness of the market has led to a sharp fall in the price of leather. Zhu Zhangjin said that last December to March this year, the price of leather dropped to 60%~70%.

In such a market situation, a large number of small businesses have closed down, and empty orders have been pferred to the hands of large enterprises. At present, the production and operation situation of large enterprises is not bad, and the price of leather has also risen by 10%~15%. However, the complete recovery needs to wait for the market demand of the United States to pick up.