Changing Times
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When the Chinese authorities announced plans to reduce the impact of environmental degradation caused by the leather making process the news was received with some scepticism. Good intentions apart there was the matter of enforcement-or lack thereof. On top of this were changes in the import and export taxation of leather materials and finished products. A few even predicted that this all signalled the end of China’s domination of the global leather industry. Such fears have proved exaggerated, to say the least, but the problems caused were real enough. How did companies handle things? |
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Hong Kong-based O’Laughlin Chemical Co has been selling chemicals into China for some 15 years. Initially, to the textile industry, but more recently into the leather making process as well. They attended the All China Leather Exhibition (ACLE) for the first time in 2007. Vijay Thind, the company’s Technical Manager, offers some thoughts on the subject. |
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"In the recent times the Chinese Government has strictly reinforced the rules and regulations for environmental protection on leather and other industries." |
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"It has also withdrawn the tax rebate on imported raw hides into China - the country depends heavily on imported raw hides. And, reduced export benefits for the leather, leather shoes and leathergoods industries." |
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"No doubt the government has the good intention to better protect the environment and consolidate the industry. This will definitely push tanneries to better use the resources and become more competitive in the outside world. But the industry is struggling badly in reply to these sudden policy changes. Many small tanneries have closed and others are working on shrinking profit margins."
"Some other factors have added to these problems. For example, the Government has raised the cash reserve ratio several times last year." |
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"So the China leather industry has been hit very hard, in many ways. These things have affected the leather chemical industry. Chemical suppliers are short on their sales targets and facing bad debt problems with the tanneries. One main reason for this could be the increased cash reserve ratio and less finance available to tanneries from the government controlled Banks." |
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Many chemical suppliers are reorganising their resources, cutting expenses, laying off technical staff and looking outside China for business. Overall unemployment is on the rise in the tanning and chemical industries.
Our company is quite flexible to meet this challenge and is expanding in other emerging Asian countries like India, Bangladesh, Pakistan etc. We manage to keep our business stable in China but collecting money is an issue even for us.
I do think the Chinese Government could have made a better approach by relocating the industry to underdeveloped provinces. They could have provided Common Effluent Treatment Plants (CETP) on selected leather industrial zones, similar to the one in Xinji (Hebei). Then (they could have) provided a deadline for the industry to relocate to these zones. This is what government is doing in India, building leather complexes in Kolkata and Kanpur, Chennai. |
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For further information on O’Laughlin Chemical Co. go to:
http://www.olchem.com.hk/eng/
We thank Mr. Thind for sharing his thoughts with us for the APLF News. |
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If you wish to contribute to the APLF News, with your experiences in the industry, your observations, or general thoughts on the direction the industry is going, we would like to hear from you. Email: sales@aplf.com | |
