Women's blouses

	Model E7525 from Tongxiang East Tower comes in 100 percent polyester satin. It has a ruffled collar and flounced cuffs.

China suppliers of women's blouses are cutting manpower and production shifts to maintain sufficient cash flow amid the challenging export climate.

Because of economic difficulties being experienced worldwide, overseas demand remains low. Compared with the fourth quarter of 2008, the volume of orders for the first three months of this year fell by an average 30 percent. At some companies, reductions were as high as 50 percent.

In addition, many of the orders were for low-end models, which bring in very little profit for companies.

While the cost of major materials such as polyester and cotton fell dramatically in the first few months of 2009, quotes are now fluctuating heavily. For instance, 1.4d/38mm PSF dropped 300 percent over a one week period after it gained 21 percent two months prior.

Unstable material costs, coupled with decreasing demand, are pushing many companies to lay off employees. In the past, only workers in the production line were affected. Now, even trading personnel are losing their jobs. Suppliers that did not reduce their workforce are cutting production shifts from the typical three to just two.

About 40 percent of companies are exploring alternative markets as well, including South America, Russia, Japan and the Middle East. A few of them are even considering targeting domestic retailers and consumers.

The majority, however, have no such plans because they do not see demand from those areas.

The difficult business climate has led makers to be more conservative about any form of investment. In fact, most companies have shelved ODM and OBM plans. In addition to cost concerns, suppliers are wary of buyer acceptance and do not think they will be able to recoup their investment within a reasonable period.

As a result, about 90 percent of exports still consist of OEM orders. Only a few of the very large makers have introduced ODM and OBM lines. These companies typically have export sales exceeding $18 million each. Despite the financial crunch, some of them are expecting ODM and OBM lines to grow by 5 to 6 percent this year.

Although most companies have placed their ODM and OBM plans on hold, they are implementing measures to improve sampling and QC capability.

Suppliers are fortifying the skills of their product development teams to enable them to produce a greater number of styles using the materials at hand. Doing so enables them to reduce their MOQ significantly. This is to accommodate clients who are more willing to purchase fewer pieces for a greater number of designs, rather than place a large order for just one model.

Many buyers are also becoming more discerning about their sourcing habits, often choosing to procure from companies with strong sampling and QC capability.

As such, several manufacturers are reassigning their skilled workers from the production line to the sampling team. They are also hiring additional experienced inspectors for their QC departments.
Rebates bring some relief
Supplier base contracts 10%
Releases come in various fabric, styles

	Lanogold offers model LS2, a button-down blouse with pin tucks. It is made of blended polyester and cotton.

Given the challenging export climate, suppliers are welcoming any form of aid, including the stimulus package enforced by the China government recently.

But the one measure that has started to impact companies is the higher export tax refund. In addition to raising the rebate to 16 percent, the government has made it faster for suppliers to get their money back. In the past, it took between three and four months before makers could receive their refund. In some cases, it took up to six months. But now, companies are reimbursed in just one month.

Combined, the higher rebate and the shorter wait have helped increase suppliers' cash flow, particularly now that the volume of orders has been falling.

Bigger businesses are feeling the positive effects even more than SMEs. Because they usually ship large quantities at a time, such companies can receive a higher refund per month. This in turn helps them remain liquid. Smaller suppliers, on the other hand, do not enjoy the benefits as much because of the lower volume of their exports.

But a number of these companies have chosen to remain optimistic about prospects for the year ahead. They recognize the efforts of their local governments, which help negotiate SME funding with banks.

Although bringing some relief, the higher rebates and the stimulus plan are not enough to keep businesses in the black. Several suppliers have indicated that such measures will not work in the long term if overseas demand continues to drop.

In fact, about half of companies in the line are not expecting exports to grow in the months ahead. They are hopeful that revenue will at least remain at current levels.

Other makers are not quite as positive. They believe exports of low-end to upscale blouses will continue to fall in the months ahead. Buyers of low-end and some midrange designs are shifting their purchasing to countries with lower production costs such as Bangladesh.

Clients looking for high-end versions, on the other hand, still do not see China as a potential source of such designs.

These companies are estimating exports to fall between 10 and 50 percent in the months ahead.

	Jiaxing Mengdi has released V-neck blouse model MDWB02, which is made of 100 percent cotton and has allover print.

There are about 5,000 suppliers of women's blouses in China, of which 1,500 are traders. An estimated 10 percent have closed down or ceased production of women's blouses since the second half of 2008.

The companies are located mostly in the provinces of Guangdong and Zhejiang, and in Shanghai.

Guangzhou, Shenzhen and Dongguan are the main production centers in Guangdong. Low-end and midrange designs are offered by most suppliers in these cities.

Private locally owned businesses constitute more than 85 percent of the province's supplier base. Hong Kong- and Taiwan-invested factories account for about 10 percent, and joint ventures and SOEs make up the rest.

Zhejiang suppliers are concentrated in Hangzhou. Because the city is one of the country's main hubs for silk, designs consist of midrange and high-end models made from the upscale fabric. More than 95 percent of companies are private locally owned.

Shanghai is home mostly to traders dealing in the export of midrange and high-end women's blouses. Companies there quote prices that are 2 to 3 percent higher than those offered in Zhejiang.

Private locally owned businesses constitute 90 percent of the supplier base.

Besides blouses, traders offer jackets, shirts, skirts, dresses, windbreakers, coats and bags.

Regardless of size and geographic location, most suppliers do not have in-house designers. Their R&D teams consist mostly of skilled sample and pattern makers. There are about five to 10 such specialists at a typical factory, but they produce prototypes and templates for all of the company's garment lines.

Small companies often source fabric and accessories locally. Most have just several sewing lines outfitted with China-made units. QC involves visual inspection for loose thread, uneven stitches, sizing and labeling.

Midsize businesses generally use an equal mix of locally sourced and imported sewing machines. Some knit or weave fabric in-house. QC includes colorfastness tests. In addition, fabric is checked for color differences using a light box.

Large enterprises usually have facilities for testing environment-friendly features of designs. Many of them offer third-party testing for colorfastness and toxicity.

Big factories typically use equipment from Japan or Taiwan. Some have embroidery facilities as well.

Suppliers employ a range of fabric in designs, including pure and blended versions of cotton, silk, polyester, linen, acrylic and viscose. Tencel is sometimes adopted as well. A few suppliers are also using GOTS-certified organic cotton in releases.

The blouses come in solids or feature allover printed patterns. They may be embroidered, belted, pleated or trimmed with sequins, beadwork, rhinestones, buttons or bowknots.

In general, low-end designs are made of 80 to 150gsm polyester, cotton, CVC or acrylic-cotton. They can be pleated or have ruffled trimmings. Prices are from $2 to $5 each.

Midrange versions adopt 150 to 180gsm polyester satin, chiffon or georgette. They may also be made of cotton blended with linen or viscose. The blouses may be adorned with sequins, beadwork, machine embroidery and buttons, or feature pleats or ruffles. These can reach $10.

High-end models are typically made from pure silk or high-grade cotton such as organic versions. Embroidery and beadwork are done by hand. Designs feature rhinestones, lace trimming, pin tucks and pleats. Prices start at $20 each.