Textile Bargain Pricing Harder to Find in India and China
August 27, 2008
MUMBAI, India - As commodity prices are hitting the roof, Indian furnishings exporters are reconciled to the fact that cheaper price points are over and have increased the prices up to 15 percent to safeguard profit margins. Now China cannot afford cheaper prices for its mass produced furnishings as inflation has hit and the currency is appreciating against the American dollar.
India's inflation is at 12 percent plus and exporters have no option but to revise prices and are finding new methods to stay on course. Europe and America are already under recession and with consumer spending capped, the exporters have limited options except to curtail all such expenses that increases the cost of the product. Eventually this would hurt demand in export markets as well as at home.
"It is not easy to control costs in these inflationary conditions. A skilled professional costs three times more, energy costs have doubled and raw material is [up] 25 percent," said Inderjeet and Mandeep Wadhwa, brothers of Seasons Furnishings Limited, New Delhi, India. Dye and chemical prices alone have gone up to 75 percent as many factories are closed due to pollution problems in China and spare parts for machinery are higher due to the strong euro. Seasons Furnishings did not predict such high energy costs a few months ago and conducting business under the circumstances is proving difficult.
"However, we are not particularly hit for lack of orders as we are not feeding the mass market segment, instead is well focused in luxury and design orientated collections and a new line of outdoor fabrics has been well received in the market place," the brothers added. Now the company is armed with a FR range that meets German, French and American standards and it has also reduced the delivery periods to four weeks.
"To select Asian and Middle East markets we offer ready stocks of a range of colors and styles, and small but regular repeats have encouraged us a lot," said Inderjeet S. Wadhwa. Seasons Furnishings is evolving to be a trusted vendor with quality supplies as quickly as possible to its customers reducing avoidable inventories at their warehouses, he added.
Dicitex Furnishings Limited, Mumbai, India is also adopting cost-cutting measures. The company has implemented measures to help curb the cost of production including using rain harvested water to feed boilers and retrofitting additional equipment to reduce and use less energy in their factories.
"We are seeking a price increase of 10 percent to cover the increased input costs and many of the customers have obliged as we are unable to absorb the increased manufacturing costs," said Rajnish Arora, the vice chairman for Dicitex Furnishings.
Margin-wise it is expected that most of the exporters will earn less profits as the full price increases even though is desired will not be granted by the importers since supply options are plenty but the earlier so called competitive, cheap price era is over. China and India are facing higher inflation so far in this decade. The three-month average of growth in Chinese exports to the U.S. has fallen to an annual rate of 3.5 percent in April, down sharply from 16.9 percent a year ago.
India's inflation is at 12 percent plus and exporters have no option but to revise prices and are finding new methods to stay on course. Europe and America are already under recession and with consumer spending capped, the exporters have limited options except to curtail all such expenses that increases the cost of the product. Eventually this would hurt demand in export markets as well as at home.
"It is not easy to control costs in these inflationary conditions. A skilled professional costs three times more, energy costs have doubled and raw material is [up] 25 percent," said Inderjeet and Mandeep Wadhwa, brothers of Seasons Furnishings Limited, New Delhi, India. Dye and chemical prices alone have gone up to 75 percent as many factories are closed due to pollution problems in China and spare parts for machinery are higher due to the strong euro. Seasons Furnishings did not predict such high energy costs a few months ago and conducting business under the circumstances is proving difficult.
"However, we are not particularly hit for lack of orders as we are not feeding the mass market segment, instead is well focused in luxury and design orientated collections and a new line of outdoor fabrics has been well received in the market place," the brothers added. Now the company is armed with a FR range that meets German, French and American standards and it has also reduced the delivery periods to four weeks.
"To select Asian and Middle East markets we offer ready stocks of a range of colors and styles, and small but regular repeats have encouraged us a lot," said Inderjeet S. Wadhwa. Seasons Furnishings is evolving to be a trusted vendor with quality supplies as quickly as possible to its customers reducing avoidable inventories at their warehouses, he added.
Dicitex Furnishings Limited, Mumbai, India is also adopting cost-cutting measures. The company has implemented measures to help curb the cost of production including using rain harvested water to feed boilers and retrofitting additional equipment to reduce and use less energy in their factories.
"We are seeking a price increase of 10 percent to cover the increased input costs and many of the customers have obliged as we are unable to absorb the increased manufacturing costs," said Rajnish Arora, the vice chairman for Dicitex Furnishings.
Margin-wise it is expected that most of the exporters will earn less profits as the full price increases even though is desired will not be granted by the importers since supply options are plenty but the earlier so called competitive, cheap price era is over. China and India are facing higher inflation so far in this decade. The three-month average of growth in Chinese exports to the U.S. has fallen to an annual rate of 3.5 percent in April, down sharply from 16.9 percent a year ago.
