China’s Leather Industry Reports $44.92 Billion Turnover with $1.9 Billion Net Profit in First Half of 2024

PTA Chairman Calls for Immediate Government Action to Save Pakistan’s Leather Industry

Author

Arshad Leathernews.org
September 08, 2024

Good Morning & Welcome to our weekly newsletter! Here, we bring you the entire week's global news, insights, market research & analysis, expert insights and facts from the "leather, footwear, and leather goods" industry.

In a simplified and easy-to-understand manner, saving you time while keeping you informed and updated.

In case you missed it, here’s a look at what happened in the Global Leather & Footwear Industry last week.

LEATHER NEWS

Despite global economic challenges, including the lingering effects of the pandemic, geopolitical conflicts, and trade tensions, China’s leather industry has shown resilience and significant growth in 2024.

China’s GDP grew by 5.0% in the first half of the year, driven by strong performances in key sectors like automotive and furniture. The automotive sector sold over 30 million units in 2023 and manufactured 13.8 million units in the first half of 2024, boosting demand for leather seating.

China's leather industry revenue rose by 5.2% year-on-year, totaling US$44.92 billion, with net profits of US$1.9 billion in the first half of 2024.

Key takeaways include:

  • 747,000 tons of raw hides imported (US$690 million) – up 6.8%.

  • 310,000 tons of semi-finished leather imported (US$520 million) – up 23.3%.

  • Finished leather imports valued at US$350 million, up 8.9%.

The Pakistan Tanners Association (PTA) has raised concerns over the sharp decline in the country’s leather exports, urging immediate government action to address the industry's growing crisis.

PTA Chairman Muhammad Mehr Ali highlighted key challenges, including the removal of the Health Quarantine Certificate requirement for finished leather exports and the elimination of the 2% Additional Customs Duty (ACD) on cow and buffalo raw hides, which is not imposed on sheep and goat leather.

The PTA also called for finalizing the long-delayed duty drawback rates and the release of pending rebates, sales tax, and income tax claims, particularly deferred sales tax refunds totaling Rs. 2.17 billion (Pakistan Rupee).

Additionally, the restoration of concessional tariffs on electricity and gas for export-oriented industries is vital to reducing production costs. Mehr Ali emphasized that failure to resolve these issues could further devastate the sector, which is already experiencing a significant drop in exports.

Key Takeaways:

  • Rs. 2.17 billion in deferred sales tax claims pending.

  • Urgent removal of the 2% ACD on cow and buffalo raw hides.

  • Call for restoring concessional tariffs on electricity and gas.

  • Immediate action needed to avoid further export decline..

Dr. K.J. Sreeram and Dr. Luis A. Zugno Launch Book titled ‘Emerging Trends in Leather Science and Technology’

Kalarical Janardhanan Sreeram, Director of CSIR-CLRI, and Dr. Luis A. Zugno, Secretary of IULTCS, have announced their new book, “Emerging Trends in Leather Science and Technology,” now available for order on Amazon and Springer.

The book addresses the pressing challenges and opportunities in the leather industry, focusing on sustainability, environmental impact, and labor conditions.

With contributions from experts across more than 10 countries, it emphasizes the importance of revamping leather processing methods to meet future compliance standards.

Covering 17 chapters, the book provides insights into sustainable practices and includes case studies from India, Ethiopia, Kenya, and other countries.

Key Takeaways:

  • The leather industry is globally traded but faces environmental criticism.

  • The book offers insights into sustainable leather manufacturing practices.

  • Contributions from over 10 countries highlight global perspectives.

  • Key case studies focus on improving labor and export standards in developing nations.

Pakistan’s leather industry, the third-largest export sector contributing 4% to the GDP and supporting over a million jobs, is facing environmental scrutiny due to hazardous chemical emissions and waste management issues.

With growing global demand for sustainably sourced products, the sector must adopt cleaner production practices and enhance transparency. In response, WWF-Pakistan, along with partners like PAMCO, PCSIR, ITU, and Leather Field Pvt Ltd., has launched an initiative to address these challenges.

The project focuses on:

  • Digital Traceability Toolkit: Tracking leather from farms to factories to increase transparency.

  • Waste Recycling: Converting leather waste into water-resistant surfactants to promote circularity.

  • Cleaner Production: Using lipase enzymes to reduce pollution in wastewater and phase out toxic solvents.

This initiative, currently in its early stages, aims to align with global environmental standards, positioning Pakistan’s leather industry as a leader in responsible sourcing.

EXPERT COLUMN

13 Strategies for the Indian Leather Industry to Achieve $50 Billion Target by 2030

Can the Indian Leather Industry Reach $50 Billion by 2030? Here’s What Vasan Sai Has to Say, Along with His 13 Strategies to Make It Happen.

As you might know, the Indian leather industry has set an ambitious goal of achieving a $50 billion turnover by 2030.

While this target may seem daunting, it presents a significant opportunity for growth and development.

These are the compound annual growth rates (CAGR) required to meet $50 billion by 2030:

In FY 23 the Indian leather Industry did a turnover of $5.26 Billion

▪ $5.26 – $10 Billion in 7 years ~ 10.46% CAGR

▪ $5.26 – $13 Billion in 7 years ~ 13.80% CAGR

▪ $5.26 – $47 Billion in 7 years ~ 36.73% CAGR

▪ $5.26 – $50 Billion in 7 years ~ 37.95% CAGR

Many dismiss this goal as unrealistic.

Why not give it a try?

Whenever we take up a challenge, it opens up many opportunities.

We may also achieve the target which we set out to achieve & that will be phenomenal growth.

But, even if we don’t achieve the target in full, making significant progress, let’s say up to 50% that would be about $25 billion will also represent a substantial leap forward from where we are today.

Moreover, any effort made will yield valuable insights & lessons, regardless of whether we reach the full 100%.

Rejecting the challenge outright would mean remaining stagnant at where we are today.

By making a concerted effort, we can explore untapped areas, new markets, and emerging opportunities.

Sector-Wise Strategies:

1] Avoid low-value leather sales:

Stop selling cheap leather or low value just for personal turnover

2] Optimize buffalo leather:

Buffalo is our strength and 60% of it is better grade promote as Shoe Leather emphasizing thickness and durability and 40% is lower grade

3] Focus on Upholstery for Furniture

4] Develop automotive leather

5] Revive Goat Leather articles:

reintroducing glazed and polished kid leather

6] Click here to read more

LEATHER GOODS NEWS

Bernard Arnault, Chairman and CEO of LVMH, has acquired a minority stake in Polène, a fast-growing Parisian leather goods brand known for its minimalist design and luxury craftsmanship.

Founded in 2016, Polène has quickly gained recognition among fashion enthusiasts and celebrities, including Kelly Rutherford. This investment not only strengthens Arnault's vast luxury portfolio but also underscores Paris's position as a global luxury hub.

While Polène will maintain its independence, the partnership with LVMH offers access to vast expertise and resources, accelerating the brand's growth and expanding its global presence. The collaboration signals opportunities for new product lines and market expansion, positioning Polène to challenge established luxury brands.

LVMH and Delphine Arnault, Chairman and Chief Executive Officer of Christian Dior Couture, are pleased to announce the appointment of Benedetta Petruzzo to the Executive Committee as Managing Director, effective October 15, 2024, and will report to her.

In this key role, Benedetta will be responsible for leading all the Maison’s Product teams.

At the heart of Christian Dior Couture’s transformation, she will also oversee the Supply Chain teams, as well as the Information Systems & Data Department.

She will additionally contribute to the development and implementation of the Strategy.

INDUSTRY INSIGHTS

This is How Much it Costs "DIOR" to Make a Handbag that's Sold for Over $2400 (Rs 2 lakh)

Ever wondered exactly how much it costs a luxury brand to make a handbag which it sells you for thousands of dollars?

An investigation by Italian prosecutors in Milan has revealed that Dior,

A subsidiary of French conglomerate LVMH paid a supplier merely $57 (Rs 4700) to produce bags that retailed for about $2,780 (Rs 2.33 lakh).

The costs, however, do not include raw materials such as leather.

According to a report by Business Insider,

The revelations have come to light during an investigation into the alleged exploitation of workers by a Chinese-owned leather bag supplier of luxury brand Dior.

The prosecutors, after investigating Dior's use of third-party suppliers in recent months, said that

These companies exploited workers to pump out bags for a miniscule cost as compared to their store price.

News agency Reuters reported, after reviewing the prosecution documents, that the Dior unit in question failed to implement

"appropriate measures to verify the actual working conditions or the technical capabilities of the contracting companies."

The report further mentioned the pathetic conditions under which the workers were reportedly forced to meet the deadlines.

During investigations, the investigators found evidences that the workers were sleeping in the facility, working during holidays and nights to produce bags round the clock, it said.

Another shocking revelation in the report said that safety devices on gluing and brushing machines were removed so workers could operate them faster.

The prosecution said that violation of labour laws has become a common practice in the industry as the luxury giants rely on them for higher profits.

Units of both the companies have been put under judicial administration for a year by the Milan judges.

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