Leather Market in China - Trade Development Authority Of Pakistan

Leather Market in China
(August 2011)
Commercial Section, Consulate General of Pakistan
Chengdu, China
___________________________________________________________________
1. Introduction
This research report on leather market in China has been prepared to enhance understanding
of leather market in China. The report includes market review of the sector covering imports,
exports and local production with a view to identify possible avenues of entry of Pakistani
leather and leather products into Chinese market (mainly Western region). The leather import
market In Southwest is dominated by Europe and the US up to 90%. The report provides a
glimpse of the competitive environment in China while identifying local producers and
importers.
China imported leather and leather products worth US$ 8.7 billion during 2010 (calendar
year), equivalent to 2.50% of the domestic demand of US$ 347.50 billion. The import of
foreign leather and leather products registered a growth of 342.50% during 2010. This report
contains detailed statistical analysis of import of leather and leather products in China such as
leather processing, leather shoes and other leather goods.
Leather and leather products are also exported from China to many countries/regions of the
World and the export volume exceeds the imports. Chinese leather exports touched
US$ 56.48 billion in 2010, an increase of 30.96% over preceding year.
This report has been prepared to serve important purposes such as; to provide information
about the structure of leather market in China, the competitive environment for import of
leather, market trends and opportunities for Pakistani leather exports, and outline of the
regulatory framework for the leather market in China.
This report also provides recommendations for Pakistani exporters for marketing their leather
and leather products to China. Besides, this report high-lights Pakistan’s leather and leather
products potential to enter in China’s market.
2. Market Overview
The leather industry occupies a place of prominence in the Chinese economy in view of its
massive potential for employment, growth and exports. There has been an ever increasing
emphasis on its planned development, aimed at optimum utilization of available raw
materials and skilled labor for maximizing the returns, especially from exports and of course
innovation of the industry to meet global demands of high quality leather products.
China’s leather industry is one of the oldest industries which have modernized very fast
during last three decades especially during last decade. Leather industry has developed in
China for over 4600 years. The usage of leather in China can be traced back to Huang
Dynasty (BC 2697 to BC 2599), when the courtiers started using leather shoes. In Shang and
Zhou Dynasties (BC1700 to BC221), the use of leather became wide spread and developed as
important business as evidenced by wide scale manufacturing and use of leather shawls,
clothing, shoes etc. Leather shoes have remained the most important sector in China’s leather
market, the first pair of leather shoes was made in China, as reported in some history books.
China’s leather industry remains labor-intensive industry even after 30 years of continuous
development. It has become the world's largest producer of leather and leather goods and is a
low-cost, export driven industry with strong features of rapid development of independent
brands, product innovation, marketing and relatively facing less competition. At a time when
leather industries of Europe, America, Japan, Korea and other countries are shrinking the
Chinese leather industry is not only expanding but also modernizing while tackling the
environmental issues.
As evidenced by its industrial output of US$ 113.6 billion and over 6 million workforces
(2010), China is the largest producer, consumer and exporter of leather and leather products
2
in the World. The industry reports reveal that the annual production of leather in China is
around 7.7 billion square feet accounting for over 20% of total global output; annual footwear
output is about 14 billion pairs accounting for over 70% of global output; annual leather
garments output is around 70 million pieces accounting for over 35%; leather bags 980
million pieces accounting for 25% of the World output. Also, China is leader in the
production of other leather products as well.
In China’s leather industry there are about 26,520 enterprises of various levels of which 2,079
are leather processing enterprises, 10,206 shoe manufacturers, 7,416 make
handbags/suitcases, some 3,338 are leather garments enterprises and 3,020 are in the leather
bags/suitcases manufacturing with total workforce of over 6 million. In 2010, tanned leather
production amounted to over 1 billion square meters, shoes production over 14 billion pairs
and leather garments over 70 million pieces.
There are a several factors for the strong profile of China’s leather and leather market, and
the most significant ones are as followed:
Abundant resources
According to the statistics of Food Agriculture Organization (FAO) in 2009, the number of
pigs in China was 523 million about 50.9% of the total number of pigs in the world; the
number of sheep was 219 million (world’s highest), which accounted for 18.72% of global
sheep population; the number of goats reached 246 million about 25.14% of the world’s total
number; the number of cattle was 189 million (the 3rd highest in the world), which accounted
for 9.2%. This data clearly reveals that China is rich in leather resources.
High industrial output
In 2010, China’s above scaled enterprises of leather, fur and leather products reached
US$ 113.6 billion industrial output, with 26.9% increase as compared to 2009.
Consistent support of Governments
Since the policy of openness and liberalization in China, leather sector has been provided full
support by the central as well as provincial and local governments resulting in rapid growth
of this industry.
Outstanding imports and exports
China is the biggest exporter of leather goods and 15th largest importer of leather and leather
goods. The detailed analysis of the imports and exports data of China can be found in coming
paragraphs.
3
2.1 Imports, Exports and Local Production
2.1.1 Imports
While leather products constitute a major component in exports; China’s import of leather
goods is relatively insignificant. With growing demand in the domestic and overseas market
and transfer of the world leather production, China has emerged as a major leather processing
and trade center hence import of leather has now been increasing. In 2010, China’s imports of
leather and leather goods reached US$ 8.7 billion, up 35.93% as compared to 2009. Major
leather products imported included high-quality shoes, handbags and fur coats to meet the
needs of a small group of high income earners or raw hides and semi-finished and finished
leather to meet the needs of industrial units to manufacture shoes, leather garments, bags and
other leather goods which are subsequently exported. Main leather products imported in
China during last five years are tabulated below:
Table No.1
Main Leather Products imported to China
(Unit : US$1,000)
HS
Product
Import
Import
Import
Import
Import
Code Description
value
value
value
value
value
2006
2007
2008
2009
2010
4107 Leather of other 2,618,063 2,628,493 2,203,100 1,688,933 2,069,091
animals,
o/t
leather of HS
41.08/41.09
4101 Raw hides & 1,203,973 1,290,384 1,413,265 1,141,530 1,513,058
skins of bovine/
equine animals
4104 Leather
of 937,101
1,141,962 1,004,037 820,332
1,150,460
bovine/ equine
animal,
other
than leather of
HS 4108/4109
4102 Raw skins of 182,330
279,305
368,076
256,643
475,837
sheep or lambs
4202 Trunks,
234,837
353,920
545,067
569,939
915,988
suit-case,
camera cases,
handbags etc, of
leather, plastics,
textiles, etc
4
4203
4205
4301
4302
6403
6406
6404
6402
Articles
of
apparel
&
clothing access,
of leather or
composition
leather
Articles
of
leather
or
composition
leather
Raw fur skins &
pieces suitable
for furriers’ use
Tanned
or
dressed
fur
skins & pieces,
unassembled or
assembled
Footwear, upper
of leather
Part
of
footwear:
removable
in-soles,
heel
cushion
etc:
gaiter etc
Footwear, upper
of textile mat
Footwear, outer
soles and upper
of rubber or
plastics
49,854
75,507
105,319
103,404
154,939
81,683
91,966
63,061
49,685
67,587
166,542
201,395
219,759
260,659
982,516
167,041
172,507
219,477
191,727
235,773
206,902
306,515
506,119
429,529
570,421
328,366
299,048
284,847
247,225
272,389
31,340
54,610
127,098
114,819
143,615
39,446
63,380
91,692
83,523
122,995
(Source: China Customs)
The analysis of the above table reveals that leather imports in China mainly comprise of raw
materials (raw hides & skins, finished and semi finished leather) which accounts for 75% of
total leather imports of China and is primarily for use in the production of value-added
products of leather for export. The share of finished leather goods in the import of leather in
China is small to the extent of 25% which primarily comprise of leather bags/suit cases,
leather garments and shoes which are for high end customers. Tanned leather takes the lion’s
share of 85% of the imports, while raw hide ranges between 6 to 15%. Import of patent
leather is less than 2% respectively. Cattle leather accounts for about 80% of the import.
According to the statistics of the China Leather Industry Association; 80% of the leather used
in China is local while 20% is imported from overseas.
5
Most of the leather imports come from USA, Italy, Australia, Brazil, Taiwan, Korea, India,
Thailand and other countries. Finished leather products such as leather garments, bags and
footwear are imported from Italy, France, Spain, Turkey, Japan, South Korea, Japan, USA,
Vietnam, Indonesia and other countries. The share of different countries in import of leather
in China is depicted in the graph given below:
Graph No.1
Table No. 2
Country-wise import of raw hides& skins and leather in China
(Unit: US$ 1,000)
Exporters
Import
Import
Imported
Import
Import
value
value
value
value
value
2006
2007
2008
2009
2010
United
1,052,782
1,156,456
1,152,714
806,097
1,073,830
States
Italy
527,785
624,626
614,370
508,532
638,509
Australia
337,569
407,149
471,632
350,716
497,200
Brazil
520,247
624,223
521,835
374,479
489,186
Taiwan
518,939
492,456
450,002
356,013
428,263
South
502,692
486,833
437,607
356,124
394,840
Korea
India
151,869
196,834
206,284
166,152
256,861
Argentina
170,165
186,992
154,465
162,600
242,235
Thailand
120,771
151,587
183,763
137,126
190,971
South
22,309
45,317
49,628
74,404
128,971
Africa
UK
46,406
38,436
26,255
67,330
120,612
Canada
104,165
93,887
105,693
85,920
115,888
6
Germany
Spain
Pakistan
Viet Nam
50,170
34,791
61,836
10,138
60,712
50,468
70,781
52,836
79,104
55,118
74,898
90,096
75,880
107,484
61,573
96,786
64,730
93,468
49,907
86,452
(Source: China Customs)
Table No. 3
Country-wise import of articles of leather and travel goods in China
(Unit: US$ 1,000)
Exporters
Impo
Import
Import
Import
Import
rt
value
value
value
value
value
2007
2008
2009
2010
2006
Italy
66,14
119,246
204,797
197,829
355,046
5
France
59,77
100,165
142,898
188,200
276,951
0
Spain
3,647
6,998
22,720
38,282
63,601
South
59,91
65,976
42,522
32,582
44,916
Korea
0
Japan
9,820
10,503
14,878
14,621
21,091
Viet Nam
2,900
5,765
12,434
9,566
16,626
Turkey
8,233
8,509
9,896
8,317
15,553
Thailand
2,345
1,952
3,764
7,924
12,661
India
2,654
3,960
6,115
7,637
12,534
Germany
5,635
7,544
11,974
12,317
12,122
Switzerland
Exporters
Viet Nam
Italy
United
States
Indonesia
South Korea
Taiwan
Thailand
Japan
2,613
5,677
7,813
8,495
10,892
(Source: China Customs)
Table No. 4
Country-wise import of footwear and parts in China
(Unit: US$ 1,000)
Impor
Import
Import
Import
Import
t value
value
value
value
value
2006
2007
2008
2009
2010
60,839
92,720
153,496
138,727
216,620
66,480
89,197
154,290
150,929
216,172
94,293
71,894
65,378
68,516
86,219
22,788
110,15
9
46,681
17,672
21,229
44,836
101,663
77,944
86,365
57,285
69,834
71,693
68,067
40,545
21,068
21,432
43,938
32,406
22,346
33,369
30,433
19,087
34,573
28,901
22,773
7
Spain
Slovakia
Switzerland
India
Portugal
Hong Kong,
China
Brazil
Germany
Romania
France
5,866
6,029
4,952
1,532
4,216
14,893
9,768
9,816
7,625
3,103
5,622
11,806
15,910
13,789
11,127
9,302
8,268
12,781
16,320
12,343
11,789
6,883
7,791
11,286
4,304
4,436
2,779
5,548
5,384
7,114
3,979
4,403
9,539
10,298
2,877
4,460
6,674
7,654
2,895
3,380
22,269
18,183
14,384
11,213
10,655
9,922
8,457
5,928
5,400
4,919
(Source: China Customs)
It is obvious that most of the products exported to China are from developed countries. The
above tables also indicate that China do import small quantities of shoes from developing
countries such as, Vietnam, Indonesia, Thailand, India, etc. Developing countries play an
important role in this is because of the cheap cost of material and labor in these countries.
It is also observed from the above data that China is also the large importer to the mainland
for many years. This is known as re-import. Most of the importers do this in China because of
the Value Added Tax (VAT) which can be reduced or exempted if goods are imported and
re-entered from Hong Kong Port providing opportunity of VAT refund.
There are other import data which is worth reading. According to China Leather Industry
Association, in 2010, China’s imports of leather shoes reached to 328.6 million pairs (an
increase of 13.9% as compared to 2009), which is equivalent to US$ 0.85 billion (an increase
of 33.6% as compared to 2009). In 2010, the finished leather’s import achieved the record of
215,000 tons (17.7% increases as compared to 2009), equivalent to US$ 2.62 billion (23.9%
increase as compared to 2009).
Industry reports reveal that 74% of the leather imports into China are consumed in the
footwear industry for production of finished goods, while the remaining 26% is used in the
production of various leather goods.
The above import information reveals that despite good quality leather and leather products
produced in Pakistan and high demand in China for such products besides preferential tariff
for Pakistani leather and leather goods under FTA between two countries, Pakistan has a
negligible share in Chinese leather market.
2.1.2 Exports
In 2010, the exports of leather and leather goods from China reached US$ 56.48 billion, with
a rapid increase rate of 30.96% as compared to 2009. Since last many years China is the
largest exporter of leather and leather products in the world.
8
Major leather export products of China are footwear, leather bags, leather garments, other
leather goods and some finished leather. In 2010, footwear worth of US$ 34 billion were
exported from China which accounts for over 64% of China’s total export of all leather
products. USA, Japan and EU countries are the major importers of Chinese shoes and all
together make 65% of all footwear export from China. USA leads as it imports 31% of all
footwear from China followed by Russia 6.6%, Japan 6.4%, Germany 3.6%, UK 3.4%, Hong
Kong 3.2%, Kazakhstan 2.8% etc. Leather bags/suitcases are the second largest items of
leather export of China amounting to over US$ 18 billion accounting for 32% of China’s total
leather exports. In this category 60% of the goods are exported to USA, Japan and EU
countries. USA leads by importing 27%, followed by Japan 8%, Hong Kong 6%, Germany
5%, UK 4.5%, Italy 4% & Spain 4%. Leather garments are the third largest item of leather
export of China. In 2010, leather garments worth US$ 2 billion were exported from China
accounting for 3% of China’s total leather exports. In this category over 70% of the goods are
exported to USA, Russia, Japan and EU countries. USA imports 26% followed by Russia
14%, Japan 10%, Germany 8%, Hong Kong 7%, Canada 5%, UK 4%, Italy 3%, Spain 2%.
Other leather goods and finished leather are the fourth category of leather export of China
accounting for 1% of total leather exports.
Although, global export of leather products, especially leather shoes and bags is dominated
by China but industry experts believe that labor costs are increasing, on a yearly basis, and
according to China’s “12th Five Year Plan” the salaries will keep increasing by 13% annually
in order to stimulate domestic purchasing power, therefore, Chinese leather industry become
less competitive. Besides, China will now focus on developing its manufacturing of medium
and high valued goods as is laid down in its “12th Five Year Plan” so prospects of leather
industry of China will not be as good as before. With a view to facilitate analysis, main
categories of leather exports of China are tabulated below:
Table No. 5
Main Leather Products Exported from China
(Unit: US$ 1, 000)
Export
Product Description value
2006
Export
value
2007
Export
value
2008
Export
value
2009
Export
value 2010
Leather
39,527,480
46,494,799
43,132,264
56,481,094
6402.9920
Other footwear with
outer soles/uppers of 0
plastics,
0
0
8,496,369
11,486,411
4202.1290
Briefcases, satchels,
etc, of plastic or 4,226,091
textiles outer surface
5,118,663
6,418,184
5,953,630
8,397,584
6403.9900
Footwear
with
rubber... soles, leather 5,642,838
uppers, not covering
6,312,861
6,712,539
5,914,490
7,426,270
HS Code
34,218,807
9
the ankle
6404.1900
Other footwear, with
rubber or plastic soles 1,866,512
& textile uppers
2,514,119
2,847,534
3,359,413
4,958,900
4202.2200
Handbags of plastic
sheeting/textile
1,554,277
materials
outer
surface
1,978,686
2,658,767
2,403,292
3,230,735
4202.9200
Cases & containers,
with outer surface of 709,979
plastic or textiles
963,163
1,264,301
1,263,585
2,062,919
6405.9010
Other footwear with
outer soles of rubber,
0
plastics
or
composition leather
0
0
1,981,094
1,976,988
4202.2100
Handbags
of
leather/composition
520,082
or patent leather outer
surface
633,404
1,164,246
1,022,300
1,339,366
6402.2000
Footwear with thongs
plugged into soles, of 674,126
rubber or plastics
802,258
912,916
907,333
1,218,882
4202.3200
Articles
normally
carried
in
380,063
pocket/handbag, of
plastics or textiles
495,626
684,461
745,322
1,196,871
(Source: China Customs)
Table No. 6
Country-wise import of leather exported from China
(Unit: US$ 1,000)
Importers
World
United States
Japan
Russian Federation
Hong Kong, China
Germany
United Kingdom
France
Export
value
2006
34,218,807
11,238,215
2,733,139
2,183,433
2,359,129
1,198,101
990,214
676,644
Export
value
2007
39,678,333
12,264,313
3,132,465
2,508,090
2,398,938
1,456,393
1,259,025
832,003
Export
value
2008
46,710,888
13,570,503
3,564,996
2,477,882
2,250,288
1,774,796
1,490,182
1,013,161
10
Export value Export value 2010
2009
43,133,020
12,633,448
3,552,108
1,869,564
1,929,672
1,707,597
1,463,809
1,025,162
56,481,094
16,565,969
3,925,544
3,078,231
2,379,856
2,334,718
2,068,698
1,391,157
Spain
Italy
Kazakhstan
670,085
735,490
579,606
820,458
867,722
638,059
927,786
1,045,828
770,841
910,724
1,245,588
972,348
1,223,324
781,159
1,153,697
(Source: China Customs)
2.1.3 Local Production
a) Overview of local production of China’s leather industry
According to China Leather Industry Association, on average China produces 7.7 billion sq.
ft. of leather each year and accounts for over 20% of the world’s total. It can also
manufacture 14 billion pairs of footwear, 70 million pieces of leather garments, and over 980
million leather bags. Half of China’s leather products are exported. In this fast growing
industry, Wenzhou (Zhejiang province), Guangzhou (Guangdong province), Quanzhou
(Fujian) and Chengdu (Sichuan province) represent shoe making centers. Over 90% of
Chinese leather shoes are produced in these four provinces: Zhejiang accounting for 37.1%,
Guangdong 27.9%, Fujian 15.0 %, and Sichuan 10%. Haining (Zhejiang province), Xinji
(Hebei) are major produce leather garments. Hebei and Guangdong provinces are main
centers for leather bags. Sanpo in Mengzhou of Henan and Suning of Changzhou of Hebei
are home to fur skin production. Henan is the largest goat leather producer in China.
At present, China has become leading leather producing country. Chinese leather industry has
three main characteristics. First, it ranks on the top in raw material resources, product yield
and import and export trade in the world. Second, the output is large as it ranks first in
production in billions of squares meters of leather, pairs of shoes and pieces garments. Third,
it earns a large amount of foreign exchange from exports.
China’s leather industry is made up of five main sectors: (i) hide manufacture (ii) shoe
making (iii) leather ware (iv) leather garments (v) fur and fur products together with
the complimentary sectors of leather chemical engineering, leather machinery, and
leather hardware and shoe materials. Through continuous construction and
development, it has formed a complete system ranging from production, management
and scientific research to personnel training.
Further, Chinese Government has encouraged industrial upgrading and shifting in the last
decade, which motivated the rapid growth of leather industry in select regions of China. In
2011, Shandong, Jiangxi, Henan Province and Chongqing City have made contribution of
3.9%, 2.5%, 1.7% and 1% respectively in leather shoes production.
b) Role of Foreign Invested Enterprises (FIEs) in Chinese leather industry
As an outcome of the reform and open policy, foreign-funded enterprises form the most
dynamic group of the leather industry. From non-existence, they have grown rapidly and
reached a considerable number and scale today. State statistics show that there are around
6,000 foreign-invested enterprises of various types and account for about 25% of the total
11
number of enterprises in China. They specialize in tanning, shoemaking, leather garments,
leather suitcases, leather goods, fur and other related products.
Of the 61.8% of the foreign-invested enterprises are either solely or partly owned by
companies based in Hong Kong, Macao or Taiwan. In terms of number, foreign enterprises
make up a quarter of the industry. In terms of assets, they rank the first of all types of
enterprises by representing 52% of the total assets of enterprises, with 31.2% owned by
private enterprises, and only 12% owned by the State. In terms of sales and export,
foreign-invested enterprises account for 41.5% of leather industry and 37% of the foreign
exchange revenues of the country. Their export of leather shoes alone accounts for 87% of the
total leather shoe export and is seen as the pillar of the industry.
c) Brief Introduction of Leather Market in Sichuan Province
Leather Industry of Sichuan is a traditional industry with a history of over 70 years. Leather
industry is now a priority industry in Sichuan Province of China with advantages of
supporting industries, technical personnel and scientific research capabilities. The pig leather
industry has the prominent advantages in scale, technology and quality. The sand skin leather,
automobile cushion leather has taken the leading position in the country. The leather
garments are very popular in Europe, Canada and Russia. Leather shoes industry has been
ranked fifth in China. Chengdu has been declared as “Women’s Shoes Capital” of China and
is famous in other countries and also has a high reputation in domestic market.
Over the past 20 years, the leather industry in Sichuan province has made considerable
progress, showing a trend of typical cluster development. In cities of Chengdu, Leshan,
Yan’an, industrial chain is formed for leather production with extension industries of leather
garments, shoes, and leather chemicals. Sichuan also has the state-of-the-art leather
technology personnel in the country. As the top research center in Asia, the Leather Research
and Development Department of the Sichuan University has the advanced customized shoe
equipment and measurement instruments. The Leather Engineering Department of Sichuan
University, the Leather Chemical and Engineering Key Lab of the Ministry of Education and
Chengdu Institute of Organic Chemistry of the Chinese Academy of Sciences are the leading
leather research institutions in the country and there are a large number of experts in leather
industry well-known at home and overseas as well.
Raw materials for leather are largely produced in Sichuan Province. It has rich resources in
pig leather. The cow and sheep skin leather industries are relatively weak. For a long time,
the pig skin garments and sofa leather products have earned high reputation at home and
abroad. According to the development plan of the Chengdu footwear industry, the program of
“One City Two Bases” is being implemented in Chengdu city. The Wuhou region of Chengdu
city will become the main centre of the industry with two manufacturing bases constructed in
Chongzhou and Jintang counties. From September of year 2008, thousands of shoe-making
enterprises have shifted to industrial zones in Chongzhou and Jintang counties, and some
enterprises have settled and started production. In districts of Jinhua and Cuqiao of Wuhou
region, around 1300 factories with over 100,000 workers, produce millions of pairs of leather
12
shoes each year worth US$ 1 billion. However, in the program, except around 50 enterprises
that are large scale and with good brand will be kept in Wuhou region, most shoe factories
will move to Chongzhou and Jintang counties. There are rich leather resources available in
Chongzhou, while Jintang is a source of labor. The shifting and relocation of footwear
enterprises to these two places will benefit the development and expansion of the
shoe-making industry in Chengdu.
According to the plan, the “Chinese Women Shoes Capital” will be built up in Wuhou region,
Chengdu city with an area of 3.8 million sq. m. It will become headquarter and logistic center
in Western China for footwear industry displaying industrial information, brand exhibition,
research and purchasing, mainly to attract shoe enterprises well-known domestically and
overseas. The Chongzhou manufacturing base will become the leading market for shoe
materials, leather and related accessories, and also be the training bases for workers of the
footwear industry. On the other hand, the Jintang industrial park will be developed as shoe
and related accessories manufacturing zone, and also the training base for skilled workers. In
2010, the production value of the shoe-making bases reached US$ 1.56 billion.
Chengdu has developed into one of the major footwear hubs in China. Chengdu, together
with Guangzhou, Wenzhen and Quanzhou, is one of the major production bases in China’s
footwear industry. The footwear industry in Chengdu has its center in the Wuhou District,
which was awarded by the China Light Industry Association and the China Leather Industry
Association “the Capital of Women’s Shoes in China” in December, 2005.
There are more than 1,700 footwear enterprises and over 3,000 footwear related firms in
Chengdu, with around 300,000 employees. The number of independent shoes brands has
surpassed 300, of which two were awarded “China Famous Leather Shoes”, 17 won the
“Leather” marks and two are exempted from the state’s quality examination.
d) Brief Introduction of Leather Industry in Chongqing Municipality
With over 80 years of history of leather shoe making, Chongqing is one of five major shoe
production bases in China. Many famous Chinese brands like Aokang, Red Dragon Fly and
Double Star are from Chongqing. Up till now, there are over 5,000 shoe manufacturers in
Chongqing, employing more than 1.7 million people and there are over 1,800 in Bishan
District - Western China Shoes Capital. Nowadays, Chongqing’s annual output of shoe
making has reached 100 million pairs, which is equivalent to US$ 1.56 billion. Because of
rich labor resource and Chongqing Cuntan bonded port, many prestigious leather enterprises
from coastal regions have opened their factories in Chongqing.
2.2 Market Structure and Distribution Channels of Leather Industry
2.2.1 Market Structure
China’s leather industry has significantly shifted from state-owned to private owned. With the
country’s macro-adjustment of economy, the number of leather enterprises has decreased in
13
order to maintain the high standard of the leather production. Up until the end of 2010, there
were 26,520 enterprises in China, proving that approximately 4,000 out-of-date small leather
enterprises had closed down since 2005.
The leather industry is spread in different segments which can be broadly divided in the
following main areas:
- Lather processing- tanning and finishing (2,079 units)
- Footwear and footwear components (10,206 units)
- Leather garments/gloves (3,020 units)
- Leather bags and accessories (7,416 units)
- Fur (3,338 units)
- Leather chemistry (157 units)
- Leather machinery (303 units)
The chart below shows the structure of the leather manufacturing industry and the number of
enterprises for each section in 2010. It is demonstrated that leather shoes and leather shoes &
accessories have the greatest market share in this industry.
Graph No.2
303
157
2079
L eather P roc es s ing
3338
F ur
10206
3020
L eather garments &
gloves
L eather bag &
ac c es s ories
L eather F ootwear
L eather C hemis try
7416
L eather Mac hinery
Besides, there are 12 leather industrial bases/cities located in different parts of China:

Wenzhou City, Zhejiang Province - Shoes Capital of China

Haining, Zhejiang Province- Leather Capital of China

Xinji, Shijiangzhuang City, Hebei Province - Leather and Leather Garments
Capital of China

Huadu, Guangzhou City, Guangdong Province, - Leather Goods Capital of China

Chongfu, Jiangxing City, Zhejiang Province- Fur Production Town of China
14

Suning, Cangzhou City, Hebei Province - Fur Capital of China

Wuhou District, Chengdu City, Sichuan Province - Women's Shoes Capital of
China

Bishan District, Chongqing City- Shoes Capital of Western China

Huidong County, Guangdong Province - Women's Shoes Production Base of
China

Tongerpu, Shenyang City, Liaoning Province - Fur and Leather Garments

Baigou Town, Gaobeidian City, Hebei Province- Suitcase & Bag Market

Jinjiang City, Fujian Province - Shoes Production Zone
2.2.2 Distribution
The marketing channels for leather goods in China are characterized by an enormous
diversity. However, the most important distribution channel for leather goods is the wholesale
channel. Wholesale markets and hypermarkets are popular retailing channels for low-priced
leather goods, many of which are with poor brand recognition or unbranded. In the past few
years, discount stores and outlets have also emerged as another important distribution channel
for low-priced leather products. Another important distribution channel is formed by the
domestic manufacturers who open their own retail stores in various cities (direct sales) thus
integrating manufacturing and retailing. Lately, large chain stores such as Metro, Ito Yokado,
Carrefour, Trust Mart, Aushan, etc are also becoming important in the marketing and sale of
leather goods in China. However, consumers with higher spending power in China prefer to
shop in department stores and shopping malls. Nowadays, department stores and specialty
stores are major distribution channels for branded products specially leather garments, bags,
footwear in China. To attract more buyers or to increase numbers of customers many
department stores and shopping malls have embarked on upgrading plans in recent years and
they now frequently review their offerings, etc. Weaker brands now face increasing
difficulties to enter these channels. Online sale of leather goods is also becoming important. A
large number of customers in China increasingly prefer online shopping of leather goods
which offer huge variety and cheaper goods. Taobao and other online marketing companies
are playing major role these days. Although online retailing has matured a bit in China yet
online shoppers are concerned about product quality, efficient delivery and transactions safety.
Luxury leather goods are also founding their way through shopping malls of luxury goods.
Trade fairs or trade associations are the best starting points to get into contact with different
companies in the distribution channel that could be interested in new suppliers.
According to a survey, the distribution channels of leather goods including footwear in China
are as under:
-Footwear Stores
51%
-Departmental Stores
11.6%
-Specialty Stores
9%
-Stores in Shopping Malls 10.4%
15
-Street Markets
-Sports Stores
-Others
8%
4%
6%
3. Competitive Environment
In China the market of locally produced leather is quite competitive. Most companies are
classified as small and sell their production to a large number of local leather goods
manufacturers at the same prices. On the other hand, big companies, number of which are
growing and include many Foreign Invested Enterprises (FIEs) target their production for
exports, where they fetch higher prices and greater profit margins.
About 80% of the hides are used by the China’s leather industry are locally produced, while
20% are imported from various countries. The future outlook of the leather and leather goods
industry in China is robust. As the Chinese industry expands, so will the imports of leather.
This will provide greater opportunities for manufacturers and exporters from Pakistan.
The situation in the market of locally produced leather goods where competition is very tough,
FIEs also play an important role in the manufacture, local sale and export of leather goods.
Only in case of shoes FIEs play a very dominant role.
3.1 Imports
China itself is the leading producer of leather and leather products yet it imports leather and
leather products from the world. The main imports of China in leather sector are: Raw hides
and Skins, semi finished and finished leather; articles of leather including leather bags and
suit cases and leather garments and leather shoes. China is the largest importers of raw hide
and skins; semi finished and finished leather in the world.
China’s share in the global import of these items is 23% and since last five years its growth
rate is increasing and has reached 38% in 2010. Main imports are: raw hides and skins of
bovine animals, sheep and lambs. In 2010, the import of these products reached to US$ 5.9
billion and share of different countries in this import was: USA 18%, Italy 10%, Australia
8.4%, Brazil 8.3%, India 4.3% and Pakistan 1.6%. Pakistan’s share in import of these
products in China is increasing but at slower rate. This should pick considerable pace owing
to FTA between the two countries.
The import of articles of leather in China from the world is growing at a rate of around 30%
but share of these products in China is only 2.2% in their global import. Leather suit cases
and bags account for 65% and leather garments account for 10% of all the articles of leather
imported by China. Remaining 25% are other articles of leather or composition leather.
Leather hand bags or suit cases or trunks etc are mostly imported from Europe and share of
different countries in import of these products of around US$ 1 billion in China is; Italy 31%,
France 28%, Spain 5%, Vietnam 1.8%, Thailand 1.3%, India 0.6% and share of Pakistan is
16
almost zero as in 2010 these goods of worth US$ 132,000 were imported in China from
Pakistan. The leather garments imports in China show an annual growth of 35% since last
five years but their share is only 1.9% in world imports. However, growth in 2009-2010 is
51%. The leather garments are mainly imported from Europe and share of different countries
is: Italy 44%, Spain 8.9%, France 8.2%, Turkey 8.1%, India 4.9% and Pakistan 0.9%.
Pakistan’s exports of US$ 1.1 million of leather garments to China are only 0.1% of
Pakistan’s global exports, where Pakistan is the 4th largest exporter after China, Italy and
India. Pakistan has great potential of exporting leather garments as it has significant
advantage of zero tariffs as against 10% under Pakistan-China FTA.
The import of footwear in China has an annual growth rate of 6% only and its share in world
imports is only 1.1% and ranks 17 globally. In this category, mostly parts of footwear or
accessories are imported for processing trade in shoes manufacture for export. Main imports
of these products are from: Vietnam 19.4%, Italy 19.3%, USA 7.7%, Indonesia 6.4%, South
Korea 6.1%, Taiwan 3.1%, India 1% and Pakistan 0%. Pakistan’s exports of these products is
almost US$ 100 million to various countries such as Germany, USA, Italy, France, UK, Saudi
Arabia, Spain and other European countries whereas its export to China in 2010 stood at only
US$ 18,000. It is evident from the leather import profile of China that larger share of import
is of raw materials for processing trade which are subsequently re-exported. The small part of
leather imports is leather handbags, suit cases, trunks and leather garments which are
high-end and end up in luxury stores now mushrooming in China at very fast speed.
3.2 Local Production
Since the global financial crisis in 2008, China’s domestic leather market has been badly
affected, which has only recovered in 2010.With appreciation of Renminbi (RMB), the
increase of prices of raw materials, temporary shortage in skilled labor, the prestigious coastal
leather bases like Guangdong, Fujian Province have been confronted with vast difficulties.
China’s macro adjustment on economy has pushed industrial upgrade and shifting, which has
strengthened the competitiveness of leather industry of other regions in China, for example,
Sichuan Province and Chongqing Municipality. Sichuan is famous for its rich resources of
pigskins and cheaper labor costs, which is why Sichuan has now become one of the five most
important leather bases in China. However, there is less quantity of sheep and cow skin in
Sichuan so manufacturers have to purchase these materials from other regions in China which
adds cost to production; on the other hand, Sichuan’s focus on pig skin products makes a
narrow product range. In China, coastal regions like Guangdong, Zhejiang Province are well
known producers of good quality of leather goods, whereas leather products from Sichuan are
less developed, and the quality and price are not competitive as compared to other regions.
4. State Policies/Incentives for leather industry in China
To help develop its economy, China’s policies on hides, leather and related products reflects
its needs at different points. At the very beginning, the country did not impose any
restrictions on importing hides or exporting leather products. After many years of high
development in various parts of China, it has started to re-examine its policies. Tanning of
17
raw hides is considered a high polluting and high energy consumption industry. Therefore,
State policy discourages expansion of this sector. However, it is also a labor intensive
production line, which can provide ample job opportunities for less developed regions.
Effective January 1, 2006, China prohibited importing raw hides for the processing trade,
because the government didn’t want low value added processing in China, leaving a damaged
environment as a consequence of it. As a result, many factories shut down, as they had relied
on importing raw hides, than processing into wet blue or other forms of leather for export. In
addition, the government also abolished export tax rebates for leather, dry or wet.
In September 2006, the government continued to ban importing and skins hides for
processing. But it allowed processing of raw hides imported hides for exporting finished
products that were made of leather. Therefore, factories could import raw materials and
process them into finished leather products for overseas markets. It may be noted that there is
quota restriction imposed on the import of raw hides and skins imported for processing trade.
The processing trade is allowed in Export Processing Zones spread all over the country and is
under strict supervision and control of Customs Administration in China.
In order to ease increasing trade conflicts, Chinese government revised its exports rebate
policies in July 1, 2007. Rebate for leather apparel was lowered from 13% to 5%. For
footwear, the tax rebate was slashed from 13% to 9%. Many leather businesses complained
that profit margins were only around 4% and had to rely on the tax rebate for survival. They
said the new policy drove them into bankruptcy.
During 2008 there was the overwhelming world recession. The government was faced with
waves of shutdowns in manufacturing. To rescue its GDP, in October and November of 2008,
the government raised tax rebates for leather apparel up to 11% and resumed the 13% rebate
for footwear, luggage and leather seating device.
On April 1, 2009, the export tax rebate on leather apparel (except for wild animal leather) was
raised from 11% to 13%. So after two years of lowering, the rebate returned to pre-July 2007
levels.
5. Industry Outlook
Under the shadow of the global financial crisis, demands in shoes, cars, furniture or leather
apparel dropped significantly during 2009. Many manufacturers in China were not getting
enough overseas purchase orders, or they did not want to receive international orders as unit
prices were too low. After suffering losses in 2009 for the first time in 10 years, Chinese
leather industry started recovering in 2010 and full recovery is expected in 2011. CLIA has
estimated that there would still be some 20 years of high development for the industry in
China. The most distinctive characteristics of the China leather market is it lack of supply of
raw hides. Many tanneries in China had to “battle” with each other to secure full supplies.
Despite being a major hide and leather producing country, China has large demands for
imported raw materials and high-end leather mainly in goat and bovine leather. Although it
18
has many tanneries in different parts of the country, industry experts say they cannot produce
or tan high-end hides yet.
Just like other manufacturing sectors, the leather production industry faces serious challenges
in China. Rising production costs (up 40-50%), revaluation of the RMB, climbing labor costs
(wages, benefits, training costs was up 20%) and narrowing profit margins pressed the
industry to find innovative solutions for survival.
Before the world recession, raw materials were high priced. However, a big drop was seen in
international raw hide supplies last year. Most of the declines for various materials were over
50%. As a result, Chinese importers suffered from leather trading. The loss was then
transferred to their buyers or wholesalers. Many shutdowns were reported in the 2008-2009.
When prices of raw materials decreased by half, some factories chose to ignore purchase
orders and chose instead to relinquish deposits rather than receive shipments from the
exporting countries.
On the other hand, the Chinese government has repeatedly emphasized eliminating high
pollutant and high energy consumption businesses. In many provinces, costs for water and
waste water treatment increased. Since the leather industry is big on water consumption and
water treatment costs are high many provincial governments on coastal line directed the
leather manufacturers to move to designated industrial parks to centralize waste water
treatment facilities and supervision. Large footwear manufacturers have already set up
factories in interior China, but some of them are of the view that, from a long term point of
view, it is better to move Southeast Asia or Central America. In that, scenario, China can ship
its half processed products over and assemble in overseas factories for export, avoiding rising
trade barriers.
6. Regulatory Framework/ Entry Business/ Tariff for leather industry in China
The tariff for products classified under various headings of Chapter 41 of the harmonized
system ranges from 5 to 14 ad val, for Chapter 42 tariff rates are 10 to 20 ad val and for
Chapter 64 tariff rates are 10-24 ad val for countries that do not have FTAs with China or do
have MFN status. On the other hand, China has FTAs with many countries such as Pakistan,
Peru, Chili, New Zealand, ASEAN etc. These countries enjoy substantial tariff concessions.
Pakistan is in this category and enjoys tariff concessions including zero tariffs on various
leather products. Pakistan and all those countries having FTAs with China enjoy competitive
advantage in terms of zero or low tariff.
Pakistan and China signed Free Trade Agreement in 2007 and this has created enormous
opportunities for Pakistan traders to export their goods to China with preferential rates of
customs tariffs, which are much lower than those given to Most Favored Nations (MFN).
The revised tariffs of imports and exports have been announced in China taking effect from
January 1, 2011. The changes in leather sector are summarized as under:
19
-
-
China has completed the adjustment of most-favored-nation import tariffs in leather
sector as per the rules of WTO.
The import tariffs on semi-finished leather for two HS codes dropped slightly
compared with that in 2010.
The average MFN import tariff on leather sector is 12.06%.
China imposes the conventional tariffs on FTA areas.
The import tariffs on leather and leather goods continue to be cut for Pakistan, New
Zealand and Peru.
The tariffs on certain leather goods from Taiwan further reduced as the Economic
Cooperation Framework Agreement has been singed between both sides.
In addition to cutting of import tariffs on eight HS codes of semi-finished leather, the
cow semi-finished leather with HS codes of 41041111 and 41041911 also further
reduced by 2%.
The Preferential tariffs to 36 least developed countries in Africa will continue to be
imposed on certain leather goods in 2011.
20% tariff will continue to be levied on export of goat raw skins in 2011.
The details of the latest tariff rates on leather and related items for China’s imports
under Pak-China FTA can be seen in Annex-I, II and III.
Further, all products irrespective of their origin attract levy of VAT at the rate of 17% at the
time of import into China. Following are the major costs for leather or leather products
originating from Pakistan and entering to China:
(i)
Tariff: 0% to 12% ad val for Chapter 41, 0% to 16.8% ad val for Chapter 42 and
5.8% to 12.6% ad val for Chapter 64 depending on HS classification of the
product. There are zero tariffs on Pakistan origin goods such as: bovine leather wet
state other than wet-blue not further prepared, tanned leather, articles of apparel of
leather, gloves, and belts of leather or composition leather.
(ii) VAT: 17% VAT is applicable on all imported goods in China including leather.
(iii) Customs Agents Charges: All import declarations in China are required to be filed
through the Customs Agent. The custom agents fee ranges between RMB 500 to
RMB 1000 per declaration depending upon the nature of goods and technical
expertise required.
Following documentation is required for import of leather or leather goods in China:
-
Import license and quota confirmation in case of processing trade, no such
requirement in case of leather imports other than for processing trade
Commercial Invoice in English and Chinese
Phyto-sanitary Certificate
Fumigation Certificate
Bill of Lading
Packing List
Documents Demonstrating compliance with Chinese standards, etc. Requirements for
import: labeling, quality control regulations, packaging.
20
-
Certificate of Origin
Inspection and Quarantine Permit from Quarantine Bureau
Filing of GD
Quality Inspection by Quality Inspection Bureau
7. New Trends in Leather Industry
7.1 Technological innovation and environment friendly leather industry
In order to improve the quality of leather products and to achieve “Ecological Production”,
China’s 12th Five Year Plan has compelled leather enterprises to carry out an energy saving
method of production and to reduce the contamination. 183 leather enterprises were shut
down in 2011 because their businesses were well below the scale, and their products are
extremely low valued and generated high contaminations. This fact helps existing
manufacturers to maintain sound production standards and upgrade their products with
environmental friendly materials and technologies. This also helps the enterprises gain their
competitiveness in leather market. During five year period, all industrial sectors will look into
upgrading their technologies and products. This trend will also help foreign leather providers
expand their exports to China as better and more expensive raw materials and products will
be needed for Chinese manufacturers to produce better products.
The new technologies which have already been adopted in China’s leather industry are
Ultrasound, Microwave and high pressure, etc.
7.2 E-Commerce in leather industry
The concept of E-Commerce was brought to China in 2003. With a quick expansion, the
annual trade amount of E-Commerce touched over US$ 151.98 billion in 2006, including
B2B, B2C and C2C types. According to “Monitoring Report of Data of E-Commerce Market
in China 2010” issued by China E-Commerce Research Center, the amount of E-Commerce
in China has reached US$ 683.90 billion in 2010 (an increase of 22% as compared to 2009),
with 25,000 enterprises engaged in E-Commerce.
Led by leading E-Commerce platforms like Taobao, Alibaba, Huicong etc, China’s leather
enterprises are also engaged in E-Commerce. However, it is obvious that the E-Commerce
market for leather shoes, bags and luggage is more complete and standardized than the
E-Commerce for raw materials and leather garments, etc. Besides, large scale leather
enterprises, Belle and Aokang, for instance, have already opened their own official websites
where customers can shop and make payments online directly. The requirements for market
access are quite low for enterprises who want to engage in E-Commerce market. Enterprises
of any sizes and backgrounds can enter this market easily. This has created unevenness of the
qualities and competiveness among those leather enterprises. Nowadays the quality of
produced goods plays the dominant role in leather market in China.
7.3 New standards for leather industry
21
In order to construct a standardized system for all industrial sectors in China, on 21st January,
2011, Ministry of Industry and Information Technology of China introduced a group of
newly approved standards for 359 industrial sectors, including 20 standards for leather
industry in China. There are 4 for leather shoes, 9 for leather bags and luggage, 4 for leather
processing, 2 for leather markets, and 1 for leather accessories. These new standards are
introduced for the purpose of industrial contamination control and reassurance of products’
quality. This action will play a great reminder to those who export leather raw materials and
products to China. These standards have already been applied since 1st April, 2011.
7.4 Genuine Leather Mark Eco-leather
“Genuine leather Mark Eco-leather” is the extension trademark of “Genuine Leather mark”
8. Opportunities for Pakistan
Pakistan-China Free Trade Agreement has opened many opportunities for Pakistan to
increase its leather and leather related exports to China. There are three major categories of
leather exports of Pakistan to China: i) Finished and semi finished leather (Chapter 41), ii)
Articles of leather (Chapter 42) and iii) Footwear (Chapter 64). At present finished and semi
finished leather exports occupies 4th position on the list of major exports of Pakistan to China
in 2010.
In 2010 Pakistan exported finished and semi finished leather of US$ 93 million to China
showing a growth rate of over 45% in the year surpassing consistent growth rate of 12-15%
during last five years. But if we look at China’s import of leather of Chapter 41 at US$ 5.9
billion then Pakistan’s share stands at a meager 1.5%. Obviously in China’s import of
Chapter 41 includes large portion of raw hides and skins export of which is zero from
Pakistan as these can only be exported as part of processing trade for subsequent export of
finished leather products manufactured out of them in China. Pakistan can explore this area
as under Pak-China FTA some of categories hides and skins attract zero tariffs on import in
China from Pakistan. Pakistan may also work on further increasing share of its exports of
finished and semi finished leather to China as it does have potential to do that.
If we look at Pakistan’s exports of articles of leather including articles of apparel and leather
bags, etc to China during 2010 it is just US$ 1.4 million showing growth of over 40% during
the year whereas in previous year growth was 122%. This becomes 0.08% share in China’s
global imports in 2010 which was US$ 1.124 billion while Pakistan’s global exports were
US$ 618 million. There exists huge potential for export of these products to China because of
increasing appetite (demand) of Chinese consumers for leather products due to ever
increasing prosperity. Also because Pakistan has strong supply side of these products besides
preferential tariff advantage Pakistani goods enjoy under Pak-China FTA. A look at China
Customs Tariff 2011 for Pakistan clearly reveals that articles of leather apparel, leather
gloves of various kinds, belts etc attract zero tariff whereas leather bags/ suitcases/ hand bags
and other articles of leather enjoy tariff concession between 20 to 40% or even more. This is
an area where Pakistani exporters of leather articles can make a difference. If a little
22
innovation and modernization is carried out by Pakistani companies then China’s luxury
leather goods market worth billions of dollars may offer them huge profits because of zero
tariffs and assured huge sales. Similarly, if we look at the import of footwear, etc., and parts
thereof, we notice that in 2010 China imported footwear/parts thereof worth over US$1.1
billion from various countries such as Italy, USA, Vietnam, Indonesia, Thailand, South Korea,
Taiwan, etc. Whereas import from Pakistan stands at only US$18,000 which is dismal if we
look at Pakistan’s export of these products to other countries which totals to US$93 million.
Pakistan has substantial tariff concession up to 50% under Pak-China FTA on import of
footwear/parts in China. Pakistan’s footwear companies should focus on these products as
well where there is potential to increase its market share.
China is, and has always been a large country for leather and leather products, with huge
annual industrial output. As the 1st largest exporter and the 15th largest importer of leather and
leather products in 2010, China has proven to be “the Nation of Leather”.
However, with increasing labor costs, appreciation of Chinese currency RMB, lack of
medium and high quality leather materials, numerous international protectionist policies on
China’s leather in last decade, China now is facing some difficulties on increasing its export
of leather and leather products to the world. In this scenario, there should be emphasis on
joint ventures (JVs) with Chinese companies utilizing their expertise, technological
innovation, designs, marketing, etc., and producing high end leather products for Chinese as
well as other overseas markets. Government to government level efforts will be required to
develop this sector through JVs.
In China’s “12th Five Year Plan”, the increase of domestic purchasing power and up gradation
of industry are emphasized heavily; on the other hand, export is planned to be kept at a steady
level of increase in these five years, whereas import is also to be increased strongly. At
present per capita annual consumption of leather products especially shoes in China is less
than two pairs, which is increasing very fast. Therefore, China is a market of over 2 billion
pairs of shoes, millions of pieces of leather garments, bags and other articles. This is,
therefore, an opportunity for Pakistan’s businessmen of leather products to bring in more
leather goods to China’s market, where prosperity of Chinese consumers is increasing in
volumes every year. China is famous for low price/cheap leather goods which are
manufactured in huge quantities/numbers. But since last few years demand for high end
luxury leather goods is increasing in enormous proportions in China and import of these
products is steadily increasing. Pakistan’s leather companies may focus on these high end
leather goods and capture some of the market share in China.
10. Trade Events
China Leather Industry Association (CLIA), the country’s official organization of leather
industry has been organizing All China Leather Exhibition, China International Footwear Fair
& Moda Fair for over the last decade. This is known and treated as the national fair for
leather industry. Moreover, there are 12 leather industrial bases in China, and fairs for leather
23
industry are always held throughout the year in these leather industrial zones, few important
ones are listed below.
 All China Leather Exhibition (ACLE)
 China International Footwear Fair (CIFF)
 Moda Shanghai
 China (Wenzhou) International Leather, Shoe Material & Shoe Machinery Fair
 China (Chongqing) International Leather Shoes and Shoe Machinery Exhibition
11. Key Contacts
The most important and relevant associations and chambers of commerce and industry of
leather and leather goods in south western region of China are listed below:
 China Leather Industry Association
 Chengdu Leather Industry Association
 Sichuan Chengdu Wuhou Leather Industry Association
 Chengdu Wuhou District Western China Shoes City Industrial Zone Administration
Committee
 Chongqing Leather Shoes Industry Association
 Guizhou Leather Industry Association
 Various Chambers
12. Conclusion/Recommendations
China leather industry is world leader. Given this huge size of Chinese leather industry and its
volume of imports and the fact that China’s processing trade on large scale in leather goods
including shoes as well, we need to realize the importance of this market. Although it is very
difficult to compete with China in its own home market yet Pakistan may make efforts to find
a niche in the Chinese market of leather goods specially finished/semi-finished leather,
footwear, leather garments and leather bags. At the moment, Pakistan does not have marked
presence in the Chinese leather and leather goods market.
At present, the development of Pakistan’s leather industry has been uneven and many
essential steps are needed to improve its supply side for full utilization of abundant resources.
Pakistan’s exports to China are concentrated in finished/semi-finished/ tanned leather due to
natural advantage of abundant resources. Whereas other segments of leather products are
ignored as far as Chinese leather market is concerned. There is some improvement in export
of leather garments from Pakistan to China in recent years although not impressive as
compared to European market but performance of footwear industry is dismal for all markets
specially China which has been declining for other markets as well since last few years.
13.References
 A report on Development of Textile, Clothing and Leather Industries in China 2009-2010
CCID Consulting
 Trade Map
24








www.trademap.org
China Leather Industry Association
http://www.chinaleather.org/eng/
MOFCOM
www.mofcom.gov.cn
Sichuan Provincial Department of Commerce
www.sccom.gov.cn
Huicong Leather Network
www.leather.hc360.com
China Light Industry Internet
www.clii.com.cn
West Leather Magazine
www.westleather.com.cn
< Monitoring Report of Data of E-Commerce Market in China 2010> issued by China
E-Commerce Research Center
China Leather Industry Yearbook
25
Annex I
Conventional Duty and Duty Rates for Import 2011
Chapter 41 Raw hides and skins (other than furskins) and leather
Rate for
HS Code
4101.2011
4101.2019
4101.2020
4101.5011
4101.5019
4101.5020
4101.9011
4101.9019
4101.9020
Discription of Goods
MFN
Rate
English
Whole hides and skins, of bovine animals of a weight
per skin not exceeding 8kg when simply dried, 10kg
when dry-salted, or 16kg when fresh, wet-salted or
otherwise preserved, have undergone a reversible
tanning process, whether or not dehaired or split
Whole hides and skins of bovine animals, of a weight
per skin not exceeding 8kg when simply dried, 10kg
when dry-salted, or 16kg when fresh, wet-salted or
otherwise preserved, not have undergone reversible
tanning process, whether or not dehaired or split
Whole hides and skins of equine animals, of a weight
per skin not exceeding 8kg when simply dried, 10kg
when dry-salted, or 16kg when fresh, wet-salted or
otherwise preserved, not tanned, parchment-dressed or
further prepared, whether or not dehaired or split
Whole hides and skins of bovine animals, of a weight
exceeding 16 kg, not tanned, parchment-dressed or
further prepared, whether or not dehaired or split, have
undergone a tanning which is reversible
Whole hides and skins of bovine animals, of a weight
exceeding 16 kg, not tanned, parchment-dressed or
further prepared, whether or not dehaired or split,
excluding those which have undergone a reversible
tanning
Whole hides and skins of equine animals, of a weight
exceeding 16 kg, not tanned, parchment-dressed or
further prepared, whether or not dehaired or split
Butts, bends and bellies and the other hides and skins
of bovine animals, not tanned, parchment-dressed or
further prepared, whether or not dehaired or split, have
undergone a tanning which is reversible
Butts, bends and bellies and the other hides and skins
of bovine animals, not tanned, parchment-dressed or
further prepared, whether or not dehaired or split,
excluding have undergone a tanning which is reversible
Butts, bends and bellies and the other hides and skins
of equine animals, not tanned, parchment-dressed or
26
Chinese
Pakistan
under
FTA
2011
规定重量范围内的整张
生牛皮，经逆鞣处理的
8
5.5
规定重量范围内的整张
生牛皮，经逆鞣处理的除
外
5
0
规定重量范围内的整张
生马皮
5
0
经逆鞣处理的重量＞16
公斤的整张生牛皮
8.4
5.6
重量＞16 公斤的整张生
牛皮，经逆鞣处理的除外
5
0
重量＞16 公斤的整张生
马皮
5
0
其他（包括整张或半张的
背皮及腹皮），经逆鞣处
理的生牛皮
8.4
5.6
5
0
5
0
其他（包括整张或半张的
背皮及腹皮）生牛皮，经
逆鞣处理的除外
其他（包括整张或半张的
背皮及腹皮）生马皮
further prepared, whether or not dehaired or split
4102.1000
4102.2110
4102.2190
4102.2910
4102.2990
4103.2000
4103.3000
4103.9011
4103.9019
4103.9021
4103.9029
4103.9090
4104.1111
4104.1119
4104.1120
4104.1911
4104.1919
4104.1920
Raw skins of sheep or lambs with wool on
Raw skins of sheep or lambs, pickled, but not tanned,
parchment-dressed or further prepared, without wool
on, have undergone a tanning which is reversible
Raw skins of sheep or lambs, pickled, but not tanned,
parchment-dressed or further prepared, without wool
on, excluding have undergone a tanning which is
reversible
Raw skins of sheep or lambs, fresh, or salted, dried,
limed or otherwise preserved (excluding pickled),
without wool on, have undergone a tanning which is
reversible
Raw skins of sheep or lambs, fresh, or salted, dried,
limed or otherwise preserved (excluding pickled),
without wool on, excluding have undergone a tanning
which is reversible
Hides and skins of reptiles, fresh, or salted, dried,
limed, pickled or otherwise preserved, but not tanned,
parchment-dressed or further prepared, whether or not
dehaired or split
Hides and skins of swine, fresh, or salted, dried, limed,
pickled or otherwise preserved, but not tanned,
parchment-dressed or further prepared, whether or not
dehaired or split
Dried hides and skins of goats have undergone a
reversible tanning process
Other dried hides and skins of goats have not
undergone a reversible tanning process
Other hides and skins of goats or of kids have
undergone a reversible tanning process
Other hides and skins of goats or of kids have not
undergone a reversible tanning process
Other raw hides and skins
Chrome-tanned bovine leather (wet blue skin leather),
full grains, unsplit, or grain splits, not further prepared
Bovine leather, wet state other than wet-blue, full
grains, unsplit, or grain splits, not further prepared
Equine leather, wet state, full grains, unsplit, or grain
splits, not further prepared
带毛的绵羊或羔羊生皮
7
5.3
浸酸的不带毛绵羊或羔
羊生皮，经逆鞣处理的
14
11.8
浸酸的不带毛绵羊或羔
羊生皮，经逆鞣处理的除
外
9
5.7
其他不带毛的绵羊或羔
羊生皮，经逆鞣处理的
14
8.3
其他不带毛的绵羊或羔
羊生皮，经逆鞣处理的除
外
7
5.3
爬行动物的生皮
9
5.7
生猪皮
9
5.7
14
8.3
9
5.7
14
8.3
9
9
5.7
5.7
7
0
8
0
5
0
7
3
7
7
0
0
经逆鞣处理的山羊板皮
山羊板皮，经逆鞣处理的
除外
经逆鞣处理的其他山羊
或小山羊皮
其他山羊或小山羊皮，经
逆鞣处理的除外
其他生皮
全粒面未剖层或粒面剖
层蓝湿牛皮
其他全粒面未剖层或粒
面剖层蓝湿牛皮
全粒面未剖层或粒面剖
层马皮革
Other wet blue bovine leather, not further prepared
其他蓝湿牛皮
Bovine leather, wet state other than wet-blue, nes, not
further prepared
其他湿牛皮革
Other equine leather, wet state, not further prepared
其他湿马皮革
27
4104.4100
4104.4910
4104.4990
4105.1010
4105.1090
4105.3000
4106.2100
4106.2200
4106.3110
4106.3190
4106.3200
4106.4000
4106.9100
4106.9200
4107.1120
4107.1220
Bovine or equine leather, without hair on, dry
state(crust), full grains, unsplit, or grain splits, not
further prepared
Bovine or equine leather, without hair on, dry
state(crust) , not further prepared, for machinery
belting
Other bovine or equine leather, without hair on, dry
state(crust) , not further prepared
Wet-blue sheep or lamb skin leather, without wool on,
but not further prepared, whether or not split
Sheep or lamb skin leather, in the wet state other than
wet-blue, without wool on, but not further prepared,
whether or not split
Sheep or lamb skin leather, in the dry state(crust),
without wool on, but not further prepared, whether or
not split
Goat or kid skin leather, in the wet state(including
wet-blue), without hair on, but not further prepared,
whether or not split
Goat or kid skin leather, in the dry state(crust), without
hair on, but not further prepared, whether or not split
Wet-blue swine leather, without hair on, but not further
prepared, whether or not split
Swine leather, wet state other than wet-blue, without
hair on, but not further prepared, whether or not split
Swine leather, dry state(crust), without hair on, but not
further prepared, whether or not split
Leather of reptiles, tanned or crust, without hair on, but
not further prepared, whether or not split
Leather of other animals, in the wet state(including
wet-blue),without hair on, but not further prepared,
whether or not split
Leather of other animals, in the dry state(crust),
without hair on, but not further prepared, whether or
not split
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of equine
animals, without hair on, other than leather of
heading 41.14, whole hides and skins, full grains,
unsplit
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of equine
animals, without hair on, other than leather of
heading 41.14, whole hides and skins, grain splits
28
全粒面未剖层或粒面剖
层干革（坯革）
5
0
其他机器带用干革（坯
革）
5
0
其他干革（坯革）
7
4.9
蓝湿绵羊或羔羊皮
14
6.5
其他绵羊或羔羊湿皮革
10
5
绵羊或羔羊干革（坯革）
8
5.6
山羊或小山羊皮湿革
山羊或小山羊干革（坯
革）
14
12
14
9.8
蓝湿猪皮
14
11.8
其他猪湿皮革
14
8.3
猪皮干革（坯革）
14
11.8
爬行动物皮革
14
8.3
其他未列名动物皮湿革
（包括蓝湿皮革）
14
11.4
其他未列名动物皮干革
（坯革）
14
11.4
已鞣全粒面未剖层整张
马皮革
5
0
已鞣粒面剖层整张马皮
革
5
0
4107.1910
4107.9100
4107.9910
4112.0000
4113.1000
4113.3000
4114.2000
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of bovine
(including buffalo) or equine animals, without hair on,
whether or not split, other than leather of
heading 41.14, whole hides and skins, for machinery
belt
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of bovine
(including buffalo) or equine animals, without hair on,
whether or not split, other than leather of
heading 41.14, other than whole hides and skins, full
grains, unsplit
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of bovine
(including buffalo) or equine animals, without hair on,
whether or not split, other than leather of
heading 41.14, other than whole hides and skins, for
machinery belting
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of sheep or lamb,
without wool on, whether or not split, other than
leather of heading 41.14
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of goats or kids,
without wool or hair on, whether or not split, other than
leather of heading 41.14
Leather further prepared after tanning or crusting,
including parchment-dressed leather, of reptiles,
without wool or hair on, whether or not split, other than
leather of heading 41.14
Patent leather and patent laminated leather; metallized
leather
29
已鞣机器带用整张牛马
皮革
5
0
已鞣全粒面未剖层非整
张牛马皮革
5
0
已鞣机器带用非整张牛
马皮革
5
0
已鞣进一步加工的不带
毛绵羊或羔羊皮革
8
5.6
14
9.8
14
11.8
10
9
已鞣进一步加工的不带
毛爬行动物皮革
漆皮及层压漆皮；镀金属
皮革
Annex II
Conventional Duty and Duty Rates for Import 2011
Chapter 42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers;
articles of animal gut(other than silk-worm gut)
Rate
for
HS Code
Pakista
Discription of Goods
MFN
Rate
n
under
FTA
4201.0000
4202.1110
4202.1190
4202.1210
4202.1290
4202.2100
4202.2200
4202.2900
4202.3100
4202.3200
4202.3900
English
Saddlery and harness for any animal (including
traces, leads, knees pads, muzzles, saddle cloths,
saddle bags, dog coats and the like), of any material
Trunks and suitcases with outer surface of leather,
of composition leather or of patent leather
Vanity-cases, executive-cases, brief-cases, school
satchels and similar containers, with outer surface
of leather, of composition leather or of patent
leather
Trunks and suitcases with outer surface of plastics
or textile materials
Vanity-cases, executive-cases, brief-cases, school
satchels and similar containers nes, with outer
surface of plastics or of textile materials
Handbags, whether or not with shoulder strap,
including those without handle, with outer surface
of leather, of composition leather or of patent
leather
Handbags, whether or not with shoulder strap,
including those without handle, with outer surface
of plastic sheeting or of textile materials
Other Handbags, whether or not with shoulder
strap, including those without handle, (for example,
with outer surface of vulcanized fibre or of
paperboard)
Articles of a kind normally carried in the pocket or
handbag, with outer surface of leather, of
composition leather or of patent leather
Articles of a kind normally carried in the pocket or
handbag, with outer surface of plastic sheeting or of
textile materials
Other articles of a kind normally carried in the
pocket or handbag, (for example, with outer surface
of vulcanized fibre or of paperboard)
30
Chinese
各种材料制成的鞍具及挽
具，适合各种动物用
以皮革、再生皮革或漆皮作
面的衣箱
2011
20
11.8
15
12.6
10
5.8
20
16.8
塑料或纺织材料作面的其他
箱包
20
16.8
以皮革、再生皮革、漆皮作
面的手提包
10
5.8
以塑料片或纺织材料作面的
手提包
10
5.8
以钢纸或纸板作面的手提包
20
14
以皮革、再生皮革作面的钱
包等物品
10
5.8
以塑料或纺织品作面的钱包
等物品
20
14
以钢纸或纸板作面的钱包等
物品
20
14
以皮革、再生皮革或漆皮作
面的箱包
以塑料或纺织材料作面的衣
箱
4202.9100
4202.9200
4203.1000
4203.2100
4203.2910
4203.2990
4203.3010
4203.3020
4203.4000
4205.0010
4205.0020
4205.0090
Tool bags, cutlery cases and containers, with outer
surface of leather, of composition leather or of
patent leather
Tool bags, cutlery cases and containers, with outer
surface of plastic sheeting or of textile materials
Articles of apparel of leather, of leather or of
composition leather
Gloves, mittens and mitts, specially designed for
use in sports, of leather or of composition leather
Working gloves, of leather or of composition
leather
Other gloves, mittens and mitts, of leather or of
composition leather
Belts of lether or composition leather
皮革、再生皮革或漆皮作面
的其他容器
以塑料或纺织材料作面的其
他容器
皮革或再生皮革制的衣服
皮革或再生皮革制专供运动
用手套
皮革或再生皮革制的劳保手
套
皮革或再生皮革制的其他手
套
皮革或再生皮革制腰带
皮革或再生皮革制的腰带及
Bandoliers of lether or composition leather
子弹带
Other clothing accessories, of leather or of 皮革或再生皮革制的其他衣
composition leather
着附件
Cover of seat of lether or composition leather
皮革或再生皮革制坐具套
Other articles of leather or of composition leather 机器、机械器具或其他专门
of a kind used in machinery or mechanical 技术用途的皮革或再生皮革
appliances or for other technical uses
制品
Other articles of lether or composition leather
皮革或再生皮革的其他制品
31
10
5.8
10
5.8
10
0
20
0
20
0
20
10
0
0
10
0
20
12
0
7.1
8
12
5.5
7.1
Annex III
Conventional Duty and Duty Rates for Import 2011
Chapter 64 Footwear, gaiters and the like; parts of such articles
Rate for
HS Code
6401.1010
6401.1090
6401.9210
6401.9290
6401.9900
6402.1200
6402.1900
6402.2000
6402.9100
6402.9910
6402.9920
6403.1900
6403.5111
6403.5119
6403.5191
6403.5199
Pakista
Discription of Goods
MFN
Rate
English
Chinese
Footwear incorportating a protective metal toe-cap
with upper of rubbers
Footwear incorportating a protective metal toe-cap
with upper of plastics
Other footwear covering the anckle but covering
the knee with upper soft rubbers
Other footwear covering the anckle but covering
the knee with upper soft plastics
橡胶制鞋面的装金属护头
的塑料、橡胶制防水鞋靴
塑料制鞋面的装金属护头
的塑料、橡胶制防水鞋靴
橡胶制鞋面的橡胶、塑料底
及面得中、短统防水靴
塑料制鞋面的橡胶、塑料底
及面得中、短统防水靴
其他橡胶、塑料制外底及鞋
面防水靴
Waterproof footwear (not covering the ankle)
Ski-boots & cross-country ski footwear of rubber
橡胶、塑料底及面得滑雪靴
or plastics
橡胶、塑料制底及面得其他
Sport footwear, nes, of rubber or plastics
运动靴
Footwear with thongs plugged into soles, of rubber 橡胶、塑料的将鞋面条带栓
or plastics
塞在鞋底上的鞋
Footwear, nes, covering the ankle of rubber or 其他橡胶、塑料短统靴（过
plastics
踝）
橡胶制鞋面的其他橡胶、塑
Other footwear with upper soft rubbers
料鞋靴
塑料制鞋面的其他橡胶、塑
Other footwear with upper soft plastics
料鞋靴
Sports footwear, with rubber/plastics/leather..soles, 皮革制鞋面的其他运动鞋
leather uppers
靴
Other footwear with outer soles of leather covering 低 于 小 腿 的 内 底 长 度 ＜
the ankle,no part of the calf, with insoles of a 24cm 的皮革制外底皮革面
length of less than 24cm
的短统靴（过踝）
Other footwear with outer soles of leather covering 低于小腿的内底长度≥24cm
the ankle,no part of the calf, with insoles of a 的皮革制外底皮革面的短
length more than 24cm
统靴（过踝）
Other footwear with outter soles of leather 其他内底长度＜24cm 的皮
covering the ankle ,with insoles of length of less 革制外底的皮革面短统靴
than 24cm
（过踝）
Other footwear with outter soles of leather 其他内底长度≥24cm 的皮革
covering the ankle ,with insoles of length of more 制外底的皮革面短统靴（过
than 24cm
踝）
32
n under
FTA
2011
24
12
24
12
24
12
24
12
24
12
10
5
24
12
24
12
24
12
24
12
24
12
15
12.6
10
5.8
10
5.8
10
5.8
10
5.8
6403.5900
6403.9111
6403.9119
6403.9191
6403.9199
6403.9900
6404.1100
6404.1900
6404.2000
6405.1010
6405.1090
6405.2000
6405.9010
6405.9090
6406.1000
6406.2010
6406.2020
6406.9100
6406.9900
Footwear with leather soles & uppers, not covering 皮革制外底的皮革面其他
the ankle
鞋靴
其他低于小腿的内底长度
Other footwear covering the ankle with insoles of
＜24cm 的皮革面的短统靴
length of less than 24cm
（过踝）
其他低于小腿的内底长度
Other footwear covering the ankle more part of the
≥24cm 的皮革面的短统靴
calf with insoles of a length of more than 24cm
（过踝）
Other footwear covering the ankle with insoles of 其他内底长度＜24cm 的皮
length of less than 24cm
革面短统靴（过踝）
Other footwear covering the ankle with insoles of 其他内底长度≥24cm 的皮革
length more than 24cm
面短统靴（过踝）
Footwear with rubber... soles, leather uppers, not
皮革制面得其他鞋靴
coverng the ankle
Sports footwear,with rubber or plastic soles & 纺织材料制鞋面的运动鞋
textile uppers
靴
Other footwear,with rubber or plastic soles & 纺织材料制鞋面胶底的其
textile uppers
他鞋靴
Footwear with leather or composition leather soles 纺织材料制鞋面皮革底的
& textile uppers
鞋靴
橡胶、塑料、皮革及再生皮
Other
footwear
with
outter
soles
of
革制外底的皮革或再生皮
rubbers,plastics,leathers,or composition leathers
革制面的其他鞋靴
其他材料制外底的皮革或
Other footwear with outter soles of other materials
再生皮革制面的其他鞋靴
橡胶、塑料、皮革及再生皮
Other footwear with uppers of textile materials
革制外底的纺织材料制面
的其他鞋靴
橡胶、塑料、皮革及再生皮
Other
footwear
with
outter
soles
of
革制外底的其他材料制面
rubbers,plastics,leathers,or composition leathers
的鞋靴
其他材料制外底的其他材
Other footwear without a soles of other materials
料制面的鞋靴
Uppers & parts thereof (excl. stiffeners)
鞋面及其零件，硬衬除外
Upppers&parts of rubbers
橡胶制的外底及鞋跟
Upppers&parts of plstics
塑料制的外底及鞋跟
Other of wood
其他木制
parts of footwear of other materials (excl. uppers, 木制鞋靴零件，活动式鞋内
outer soles & heels)
底等
***********************************************************************
33
10
5.8
10
5.8
10
5.8
10
5.8
10
5.8
10
5.8
24
12
24
12
24
12
24
12
24
12
22
11
15
8.8
15
8.8
15
15
15
15
8.8
12.6
12.6
8.8
15
8.8