By Zhang Yan

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Chinese Home Textiles Enter American Market

By Zhang Yan

Chinatex Corporation was established in 1951. It is a large-scale group corporation under direct administration of the State-Owned Assets Supervision and the Administration Commission of the State Council and one of the 500 largest enterprises of China. There are more than 30 subsidiaries and overseas affiliates and more than 40 manufacturing plants of various types in Chinatex， engaging in the trade and production of textile raw materials， textiles， grains，oil seeds and oils.

Chinatex Oriental （USA） Co. Ltd.， an overseas affiliate of Chinatex Corporation and a large scale enterprise group engaged mainly in international trade and production of textiles， has seen a huge boost in international sales in recent years following its decision to partner up with foreign firms，particularly Walmart.

Chinese garments and textiles saw a decline in exports following the global financial crisis in 2008 and 2009. Sales volumes in Europe and America were hit particularly hard as consumers bought fewer clothes. In light of a drop in demand， Chinatex Oriental opted to look for niche markets overseas to improve sales， changing its business model in the process.

‘Fabric Is Back！'

In 2013， Chinatex Oriental and the Chinatex International Apparel Corporation，two Chinatex subsidiaries， implemented a big client strategy， exploring ways to increase international sales by cooperating with local brands in the United States. Equipped with long term research of the United States market and local consumption habits， Chinatex signed deals with American textile brands， becoming a key supplier to Walmart， the world's largest retailer. Chinatex's research saw it push into a particular market—home textiles.

“During our research， we found that there is plenty of demand for home textiles in the United States because Americans like to replace home textiles quite often，” said Duan Tao， General Manager of the Chinatex International Apparel Corporation. “But labor costs are fairly high. Many Americans choose to buy cloth and make curtains， bed covers， sofa covers and the like by themselves. Another reason for us to put our home textiles in the supermarket is that people tend to buy them along with other supermarket products. People like to buy cloth when doing their regular grocery shopping.”

In the second half of 2014， Chinatex's sales volume of home fabric textiles in Walmart stores across the United States reached 12 million yards （one yard is equivalent to 0.9144 meters）. In 2015， that figure exceeded 25 million yards. The swtft increase in sales led Walmart to increase its stock of fabric at most stores. A promotion campaign called “Fabric Is Back！” was introduced to further boost sales. In 2015， the home fabric textiles from Chinatex occupied 51 percent of the same kind of products Walmart purchased across the world.

Whole Supply Chain Model

Cooperation between Chinatex and Walmart created a brand new “whole industry chain model”， providing whole supply chain services related to home textile fabric including planning， design， proofing，production， customs clearance and logistics. Facing a global economic slowdown，Chinatex's strategic model has proven hugely successful.

“As a large state-owned enterprise （SOE），Chinatex has a particular advantage—a massive and integrated industry chain，” Duan said. “Our business scope ranges from spinning to weaving. Our branches can be seen at home and abroad. We have a presence in all production chains， including raw materials purchasing， end product manufacturing，overseas sales， transportation， warehousing and logistics.”

The “one stop” model championed by Chinatex has been vital to cooperation with Walmart， Duan said.

In the past， if a brand wanted to enter the United States market， numerous links were involved， including the manufacturer， a dealer and an overseas agent， with each making a profit. This leads to cost increases， Duan said.

Chinatex printed fabric at the 2015 Houston International Quilt Festival

Home fabric textiles from Chinatex is advertised at a Walmart store in the United States

“Our cooperation model is characterized by the entirety of the supply chain， which means that from domestic production to overseas sales， all links involved are completed by Chinatex，” Duan added. “When our products arrive in the United States， we can handle customs clearance， warehousing and logistics. From receiving an order from Walmart to delivering goods to a specific store， we can provide one stop service which not only brings great convenience to customers， but also simplifies the process. Both sides have clear responsibilities and problems are solved quickly. It's a win-win.”

Chinatex can easily control costs at each link in the process， increasing profit margins. In 2015， Chinatex's exports of home fabric textiles to the United States reached US$31.13 million， growth of 87 percent yearon-year.

With intermediary links reduced，Chinatex has decided to cut its prices so long as profits can be achieved， according to Duan.

“As our product cost is under control and the design， color and texture of our cloth products are all very popular among local consumers，our fabrics have become popular among common American families，” Duan said.

Currently， Chinatex is expanding its business on the basis of this model， hoping to establish partnerships with more United States brands and introduce the “whole supply chain” model to more products.

Collaboration Creates Opportunities

Earlier this year， Chinatex received a request from Walmart—develop the textiles component of its online store.

“In the past， we used to prepare products according to orders and deliver goods on time，” Duan said. “Now， our customer has asked us to help build its online store. This is a rare opportunity for a company like ours. It shows that Walmart is satisfied not only with our product quality but also our sales and distribution models.”

In the United States， online retailing is usually a complement to a physical store. Customers of online stores do much of their shopping offiine. Because of this， many customers are already aware of Chinatex's fabric textiles due to frequent visits to Walmart's physical stores. If they want to buy another fabric， customers simply need to select the design and color they prefer online.

An additional reason for Walmart's desire to work with Chinatex on its e-commerce platform is down to China's highly developed e-commerce industry.

“Few countries in the world can compete with China in e-commerce，” Duan said. “That gives us unique insight into how the industry works.”

Since last year， Chinatex has been promoting the concept of “collaboration” in its textiles division. The cooperation between Chinatex Oriental and Walmart is actually a result of the efforts that Chinatex Corporation made， under new normal and supply-side reform， in facilitating the continuous improvement of its overall value and further expanding the international operation， said Cai Wenxiang， Spokesman and Director of President's Office of Chinatex.

“Amid globalization， competition has become even fiercer， but cooperation is still in the mainstream，” Cai said. “Chinatex will continue to follow its win-win principles of cooperation， work hard to expand its overseas market share and seek more opportunities for cooperation by keeping in touch with potential partners.”