Challenges and Opportunities of Chinese Silk
Mr. Din Yu Well Lam
Vice chairman of International Silk Union
Executive director of High Fashion International Limited
High Fashion International Limited is a silk and fashion vertically integrated company listed in Hong Kong Stock Exchange. Established in 1978 in Hong Kong during the time of China reforming and opening up, High Fashion was benefited from manufacturing silk in China and exporting to the States. Ever since then, we have our success by building the bridge between China silk to the world.
Today the situation has changed and I’m sharing from our perspective from Hong Kong of how we see this silk industry. This includes our view of the trade war, our key actions in the silk industry and our call for collaboration initiatives.
The trade war is affecting us a lot. We are right in the middle of this war, literally that Hong Kong is exactly in between China and the States. This war we see is inevitable. China has been growing so rapidly that in anyway, some actions has to be done to slow down the momentum of the growth. If not President Trump, other president would still do some actions to slow down the growth. President Trump just happens to choose the bold and loud approach to tackle the challenge.
At this moment, the first and second tariff do only affect the fabric import to the States. But we all know that US do not make garments at all so tariffing on fabric has minor impact on us. However, the third tariff, if President Trump does really make the call, will heavily affect the industry.
The exchange rate of RMB and USD has been fluctuating a lot. Since March, RMB has devaluated for almost 10%. It is peaking very closely to 7, but yet the Chinese economy internally looks stable and such devaluation has benefited the export business. In a way, this is one of the action that fight against the trade war.
The second solution of the trade war that what most of our HK manufacturers are doing is to diversify our garment production to ASEAN countries. We have established a small factories in Cambodia, partnered with factories in Vietnam and been exploring more collaboration in India and Bangladesh. The advantages of these possibilities give us more varieties of products to fit different customers needs in terms of price, but with a slight disadvantage of longer lead time. A proper fit of order quantity and complication of garment style to the skillset of the labor and the labor cost will maximize the benefit of cross country collaboration. In the longer term, we foresee that China will leverage the experience and skillset and be the center of providing services like merchandising and sampling, research and development, product design and innovation, while collaborating with nearby countries to provide very competitive goods to the customers. Does it sound quite familiar? Because I think this is happening in Europe too.
Moving from the trade war to the inside of our silk industry, the second challenge that we are facing is the instability of the silk price. As we should know, since the 90s, the silk price has been steady increasing and during 2008 it has gone up so quickly that positioned silk to no longer a commodity but luxury goods. Unfortunately High Fashion has not involved much in the raw material side, so what we can do is to invest in technology and innovation in the industrial side.
Creating new silk products are in our DNA. High Fashion was known for creating the sandwash finishing inspired from the jeans stonewash. Second was the creation of crepe the chine. Third we created spun silk knit and jersey. Those creation brought us momentum for success. And for us, it is a fulfilling the mission of innovating and bringing the Chinese silk to the world, so that we can have more people enjoy silk, learn more about the silk heritage, our culture and the beauty of them. That’s our company mission and we constantly looking for new possibilities.
In the 21 centuries we faced another sharp increase of silk price and the constantly increase of labor cost, thus the traditional silk demand has been decreasing. What we meant for traditional silk is that silk is traditionally known for couture, designer labels, higher fashion, scarves and accessories for the people in the middle of 30s and up. In order to create a new demand of silk like what have done in the 90s, we have invented the silk jeans.
Silk jeans aims to capture a new market and spread a new message to the consumers. We aim to sell silk to younger customers and also make the jeans complete washable and easy care. We spun the yarn with silk and elastant, and finished the fabric with lots of colors. We would like this silk jeans can be a commodity and everyone shall have a pair in their closet or more pairs of different colors to match with different outfit.
One more product that we are creating is again not a traditional silk product. Carrying the same principle of aiming for new market, spreading the messages, and we have added a new elements which we called sustainability. When we talk about sustainability, we aim for creating something that’s truly sustainable and renewable and preferably from the nature. To combine with the three elements into a product, we have created the yoga wear with fabrics mixed with silk lyocell and Lycra.
Yogis they are believer in nature, spiritual enlightenment and health. Their belief matches with the heritage of silk, the wisdom from ancient one, and the renewable nature of silk. On top of that, they are a consumer group that silk has not yet stepped into. Therefore we have created a yoga wear collection aiming to connect silk with with one who cares about their body, mind and soul.
Yet creating this product, we have faced lots of challenges and involved lots of R&D and time. We are still aiming to make them into perfection. Should you have any idea for making them better with more interesting material or application, we are very happy to work together.
We will be displaying the products during the Lyon silk exhibition. Should you have any questions. Please let me know or you can contact our boss in Italy Mr. Furlan.
I mentioned about sustainability. As an entrepreneur, I do very much care about the sustainability of this silk industry. We have invested a lot in the past to reduce our carbon footprint, emission to air and discharging to water. Unfortunately silk industry is such a small industry that there is rarely investment made to improve the supply side. High Fashion has spinning weaving, degumming, printing and dyeing and garment making in the supply side. We have installed newer machines, water recycle system, solar power to lower our footprint. We have been certified by oekotex Step and made in green as well. We would like to be as sustainable as possible, yet we still feel that the silk industry has lots of inefficient in the process that can be improved. We are looking for ideas and implementation that can make the supply chain more efficient and delivering more value to the customers.
On top of this, I always believe that silk is one of the most sustainable product chain. It starts from planting mulberry trees, feeding leaves to larvae to become cocoons and cocoon into silk. The mulberry tree produces mulberry fruits and also leaves for tea. The larvae from cocoon after reeling can be used to feed ducklings and the sericin can be used as cosmetic ingredients. From what I see it is much versatile than all other natural fibers. Do you think so? I think we can join together to create a consortium to promote silk as one of the most sustainable material for textile and everyone should know and love it, like cotton USA or wool etc.
To summarize the key points, first tradewar has big impact to China and this create a need of better collaboration with the ASEAN country and China. Second silk needs new market, so we have created the silk jeans and silk yoga wear to tap into the more casual, younger and yogis markets. And we are open for collaboration in production innovation and market development. Third, calling upon for better sustainability initiatives like creating more awareness for silk or collaboration in new ideas to make the silk industry more efficient.
Last but not least, I’m very happy to share our experience. I’m equally excited to learn yours as well. Thank you all for this opportunity and wish everyone has a prosperous business.
