Diverse measures aim to boost gains

	This floral-print hat from Yangzhou Safings comes in pure cotton.

Manufacturers of children’s hats and caps in China are taking various steps to widen profi t margins as production outlay escalates.

The cost of major materials used in headwear has been rising since the latter part of 2009. Cotton, in particular, is about 10 percent more expensive now compared with six months ago at $2,300 per ton. Rates for polyester went up between 29 and 40 percent.

Labor expenses are increasing as well. Recently, fewer migrants are willing to take jobs in the coastal hubs because positions with competitive wages are available in their hometowns. As a result, makers are offering better compensation packages to attract and retain skilled workers. The average monthly salary at some plants reaches $300, 10 to 15 percent higher than usual levels.

Suppliers are responding to these challenges by employing cost-saving strategies. For instance, they procure fabrics and accessories in bulk for bigger discounts. Many are also providing more personnel training to improve efficiency and reduce product defects.

Larger companies, meanwhile, are investing in advanced machinery. This helps reduce outlay in the long run because the equipment can replace manual labor.

Further, a number of enterprises are moving or setting up additional facilities at inland locations since overhead expenses there are lower.

Shanghai-based Gavin International Co. Ltd, one of the interviewees for this report, established a plant in the industrial zone of Jinhu, a county in Huai’an, Jiangsu province. Shanghai Feishun Handicraft Co. Ltd has a workshop in Suqian, Jiangsu, in addition to its main factory. Several businesses situated in coastal areas are also relocating to Anhui and Zhejiang provinces’ interior cities.

Some makers are strengthening OBM capability so they can market in-house brands abroad. Others have been decreasing output of low-end models and shifting to upscale manufacture to generate higher sales.

China suppliers offer children’s sports caps, bucket hats, beanies and berets in various designs and colors, with the first accounting for 30 percent of export volume. Baby bonnets and visors are also available.

About $600 million worth of products were sent abroad in 2009. Due to the economic slowdown, orders from North America and Europe declined 10 to 30 percent in many companies.

Releases under OEM contracts make up more than 80 percent of foreign shipments, while ODM orders comprise 10 percent. The rest consists of OBM designs. The US, the EU, Japan and Australia are the main overseas destinations.

Like most garments and textile-based accessories for 2 to 12-year-olds, headwear pieces are often in pure cotton or cotton-polyester. The former is a popular choice owing to its softness, breathability and comfort. Fabrics are procured in Jiangsu, Shandong and Zhejiang provinces, and can have a jersey, twill, poplin, canvas or denim construction.

Models for younger children usually come in white, and pastel shades of pink, yellow and blue. On the other hand, those designed for boys and girls above 10 years old feature vivid colors such as rose red.

Prints, applique and embroidery are common trimming options. Many releases sport a checkered, polka-dot, striped or animal-skin pattern.

Low-end hats and caps are typically made of canvas, T/C, polyester, viscose and acrylic. Quoted at $0.70 to $1, they can have a plastic buckle, hook-and-loop or snap button closure. Decorations are in the form of a small embroidered motif or a single-color print.

Priced between $1.10 and $3, midrange designs come in pure cotton twill, corduroy and canvas. Cotton-acrylic blends are adopted in some products. Wool, wool-acrylic, bamboo charcoal, Coolmax and organic cotton are preferred for high-end headwear, which goes for $3.10 to $6.

Releases in these segments emphasize larger and more intricate embellishments in multiple shades. A number of models even have sequin, bead and rhinestone trimming. Metal buckles, hook-and-loop tape and snap buttons are employed as closure.

Manufacturing & QC
Industry demographics

	Yangzhou Topshow is offering model TSGS100301, a sports cap decorated with an embroidered motif.

The procedures for making children’s hats and caps are similar to those used in fabricating adult styles. Regardless of size, a typical factory in mainland China has separate areas for each process. Cutting the fabric is the first step. Small companies utilize handheld electric scissors, while bigger plants are outfi tted with automatic machinery.

The crown is sewn and the bill or brim topstitched before being joined together. Lockstitch, overlock and zigzag, and industrial single- and double-needle sewing machines are employed. Eyelet- and snap button-fastening equipment are adopted as well. Large operations usually have units from Taiwan, Japan, South Korea and Italy.

Embroidery and printing come next. Small makers often subcontract these procedures to local specialists. Others are equipped with 20-head embroidery machines with speeds reaching 780 stitches per second, allowing them to perform the task in-house. Additional embellishments are attached prior to inspection and packing.

All suppliers carry out visual and tactile examinations on incoming materials and fi nished items based on the standards provided by the buyer. To ensure safety, they prefer sourcing textiles and trimming from longtime providers.

Some factories have machines that evaluate fabric width, weight, yarn count and colorfastness. Big plants also utilize color-comparison booths and wear-resistance testers.

Companies can send textile and accessory samples to SGS, Intertek and other third-party institutes for physical and chemical checks on request. Lead, azo, chlorine and formaldehyde content are often measured.

QC personnel look for surface defects such as skipped stitches, and color and print differences on the output.

Products also go through needle detectors to make certain that there are no leftover metal pieces. Pull tests are performed to ensure decorations are securely fastened.

Many exporters comply with EN and REACH directives. Under the latter, headwear should be free from all the 15 listed substances of very high concern. These chemicals include diaminodiphenyl-methane and anthracene, both of which are used in fabric dyes. Manufacturers provide documents such as safety data sheets from material sources and testing reports to verify the absence of SVHC in their releases.

China is home to about 1,000 suppliers of children’s hats and caps. Most are involved in mixed production, offering headwear for adults or other accessories, including gloves and scarves. Ninety percent of makers are privately owned.

The majority of the industry base is composed of small and midsize companies. With annual sales below $3 million, the former has fewer than 200 workers and one to three designers.

Midsize operations are handled by 200 to 500 employees.

Yearly revenue is between $3 million and $10 million. Factories that have more staff members and generate higher income are considered large.

Businesses under these categories often utilize branded equipment to ensure manufacturing quality and efficiency. Further, they have at least 10 people involved in design efforts, allowing up to 30 new styles to be released each month.

R&D in such enterprises is also more comprehensive. In Gavin, for instance, there are two separate teams handling product development and sample making. Workers belonging to the former obtain the concepts and requirements from buyers, and give advice on fabric, style, function and construction.

The other group then takes charge of pattern fabrication. Designers from the first unit communicate with the client to check if the sample meets preset conditions. Adjustments are done when necessary.