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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.

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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

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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.

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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

Code

Product

Description

Import

value

2006

Import

value

2007

Import

value

2008

Import

value

2009

Import

value

2010

4107 Leather of other

animals, o/t

leather of HS

41.08/41.09

2,618,063 2,628,493 2,203,100 1,688,933 2,069,091

4101 Raw hides &

skins of bovine/

equine animals

1,203,973 1,290,384 1,413,265 1,141,530 1,513,058

4104 Leather of

bovine/ equine

animal, other

than leather of

HS 4108/4109

937,101 1,141,962 1,004,037 820,332 1,150,460

4102 Raw skins of

sheep or lambs

182,330 279,305 368,076 256,643 475,837

4202 Trunks,

suit-case,

camera cases,

handbags etc, of

leather, plastics,

textiles, etc

234,837 353,920 545,067 569,939 915,988

5

4203 Articles of

apparel &

clothing access,

of leather or

composition

leather

49,854 75,507 105,319 103,404 154,939

4205 Articles of

leather or

composition

leather

81,683 91,966 63,061 49,685 67,587

4301 Raw fur skins &

pieces suitable

for furriers’ use

166,542 201,395 219,759 260,659 982,516

4302 Tanned or

dressed fur

skins & pieces,

unassembled or

assembled

167,041 172,507 219,477 191,727 235,773

6403 Footwear, upper

of leather

206,902 306,515 506,119 429,529 570,421

6406 Part of

footwear:

removable

in-soles, heel

cushion etc:

gaiter etc

328,366 299,048 284,847 247,225 272,389

6404 Footwear, upper

of textile mat

31,340 54,610 127,098 114,819 143,615

6402 Footwear, outer

soles and upper

of rubber or

plastics

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.

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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

value

2006

Import

value

2007

Imported

value

2008

Import

value

2009

Import

value

2010

United

States

1,052,782 1,156,456 1,152,714 806,097 1,073,830

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

Korea

502,692 486,833 437,607 356,124 394,840

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

Africa

22,309 45,317 49,628 74,404 128,971

UK 46,406 38,436 26,255 67,330 120,612

Canada 104,165 93,887 105,693 85,920 115,888

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Germany 50,170 60,712 79,104 75,880 107,484

Spain 34,791 50,468 55,118 61,573 96,786

Pakistan 61,836 70,781 74,898 64,730 93,468

Viet Nam 10,138 52,836 90,096 49,907 86,452


Table No. 3

Country-wise import of articles of leather and travel goods in China

(Unit: US$ 1,000)

Exporters Impo

rt

value

2006

Import

value

2007

Import

value

2008

Import

value

2009

Import

value

2010

Italy 66,14

5

119,246 204,797 197,829 355,046

France 59,77

0

100,165 142,898 188,200 276,951

Spain 3,647 6,998 22,720 38,282 63,601

South

Korea

59,91

0

65,976 42,522 32,582 44,916

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 2,613 5,677 7,813 8,495 10,892


Table No. 4

Country-wise import of footwear and parts in China

(Unit: US$ 1,000)

Exporters Impor

t value

2006

Import

value

2007

Import

value

2008

Import

value

2009

Import

value

2010

Viet Nam 60,839 92,720 153,496 138,727 216,620

Italy 66,480 89,197 154,290 150,929 216,172

United

States

94,293 71,894 65,378 68,516 86,219

Indonesia 22,788 44,836 77,944 57,285 71,693

South Korea 110,15

9

101,663 86,365 69,834 68,067

Taiwan 46,681 40,545 43,938 33,369 34,573

Thailand 17,672 21,068 32,406 30,433 28,901

Japan 21,229 21,432 22,346 19,087 22,773

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Spain 5,866 9,768 15,910 16,320 22,269

Slovakia 6,029 9,816 13,789 12,343 18,183

Switzerland 4,952 7,625 11,127 11,789 14,384

India 1,532 3,103 9,302 6,883 11,213

Portugal 4,216 5,622 8,268 7,791 10,655

Hong Kong,

China

14,893 11,806 12,781 11,286 9,922

Brazil 4,304 5,384 9,539 6,674 8,457

Germany 4,436 7,114 10,298 7,654 5,928

Romania 2,779 3,979 2,877 2,895 5,400

France 5,548 4,403 4,460 3,380 4,919


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.

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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)

HS Code Product Description

Export

value

2006

Export

value

2007

Export

value

2008

Export

value

2009

Export

value 2010

Leather 34,218,807 39,527,480 46,494,799 43,132,264 56,481,094

6402.9920

Other footwear with

outer soles/uppers of

plastics,

0 0 0 8,496,369 11,486,411

4202.1290

Briefcases, satchels,

etc, of plastic or

textiles outer surface

4,226,091 5,118,663 6,418,184 5,953,630 8,397,584

6403.9900

Footwear with

rubber... soles, leather

uppers, not covering

5,642,838 6,312,861 6,712,539 5,914,490 7,426,270

10

the ankle

6404.1900

Other footwear, with

rubber or plastic soles

& textile uppers

1,866,512 2,514,119 2,847,534 3,359,413 4,958,900

4202.2200

Handbags of plastic

sheeting/textile

materials outer

surface

1,554,277 1,978,686 2,658,767 2,403,292 3,230,735

4202.9200

Cases & containers,

with outer surface of

plastic or textiles

709,979 963,163 1,264,301 1,263,585 2,062,919

6405.9010

Other footwear with

outer soles of rubber,

plastics or

composition leather

0 0 0 1,981,094 1,976,988

4202.2100

Handbags of

leather/composition

or patent leather outer

surface

520,082 633,404 1,164,246 1,022,300 1,339,366

6402.2000

Footwear with thongs

plugged into soles, of

rubber or plastics

674,126 802,258 912,916 907,333 1,218,882

4202.3200

Articles normally

carried in

pocket/handbag, of

plastics or textiles

380,063 495,626 684,461 745,322 1,196,871


Table No. 6

Country-wise import of leather exported from China

(Unit: US$ 1,000)

Importers

Export

value

2006

Export

value

2007

Export

value

2008

Export value

2009

Export value 2010

World 34,218,807 39,678,333 46,710,888 43,133,020 56,481,094

United States 11,238,215 12,264,313 13,570,503 12,633,448 16,565,969

Japan 2,733,139 3,132,465 3,564,996 3,552,108 3,925,544

Russian Federation 2,183,433 2,508,090 2,477,882 1,869,564 3,078,231

Hong Kong, China 2,359,129 2,398,938 2,250,288 1,929,672 2,379,856

Germany 1,198,101 1,456,393 1,774,796 1,707,597 2,334,718

United Kingdom 990,214 1,259,025 1,490,182 1,463,809 2,068,698

France 676,644 832,003 1,013,161 1,025,162 1,391,157

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Spain 670,085 820,458 927,786 910,724 1,245,588

Italy 735,490 867,722 1,045,828 972,348 1,223,324

Kazakhstan 579,606 638,059 770,841 781,159 1,153,697


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

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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

13

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

14

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

2079

3338

3020

7416

10206

157

303

L eather P roces s ing

F ur

L eather garments &glovesL eather bag &acces s oriesL eather F ootwear

L eather C hemis try

L eather Machinery

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

http://www.chinaleather.org/eng/jidi/wenzhou.htm

http://www.chinaleather.org/eng/jidi/haining.htm

http://www.chinaleather.org/eng/jidi/xinji.htm

http://www.chinaleather.org/eng/jidi/xinji.htm

http://www.chinaleather.org/eng/jidi/huadu.htm

http://www.chinaleather.org/eng/jidi/chongfu.htm

15

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%

http://www.chinaleather.org/eng/jidi/sunning.htm

http://www.chinaleather.org/eng/jidi/chengdu.htm

http://www.chinaleather.org/eng/jidi/chengdu.htm

http://www.chinaleather.org/eng/jidi/chongqing.htm

http://www.chinaleather.org/eng/jidi/huidong.htm

http://www.chinaleather.org/eng/jidi/huidong.htm

http://www.chinaleather.org/eng/jidi/tongerpu.htm

http://www.chinaleather.org/eng/jidi/baigou.htm

http://www.chinaleather.org/eng/jidi/jinjiang.htm

16

-Street Markets 8%

-Sports Stores 4%

-Others 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

17

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

18

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

19

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:

20

- 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.

21

- 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

22

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

23

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 15

th 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

24

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

25

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

http://www.trademap.org/

http://www.chinaleather.org/eng/

http://www.mofcom.gov.cn/

http://www.sccom.gov.cn/

http://www.leather.hc360.com/

http://www.clii.com.cn/

http://www.westleather.com.cn/

26

Annex I

Conventional Duty and Duty Rates for Import 2011

Chapter 41 Raw hides and skins (other than furskins) and leather

HS Code Discription of Goods MFN

Rate

Rate for

Pakistan

under

FTA

English Chinese 2011

4101.2011

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

规定重量范围内的整张

生牛皮，经逆鞣处理的 8 5.5

4101.2019

Whole hides and skins of bovine animals, of a weight



otherwise preserved, not have undergone reversible

tanning process, whether or not dehaired or split


生牛皮，经逆鞣处理的除

外 5 0

4101.2020

Whole hides and skins of equine animals, of a weight



otherwise preserved, not tanned, parchment-dressed or

further prepared, whether or not dehaired or split


生马皮 5 0

4101.5011


exceeding 16 kg, not tanned, parchment-dressed or

further prepared, whether or not dehaired or split, have

undergone a tanning which is reversible

经逆鞣处理的重量＞16

公斤的整张生牛皮 8.4 5.6

4101.5019



further prepared, whether or not dehaired or split,

excluding those which have undergone a reversible

tanning

重量＞16 公斤的整张生

牛皮，经逆鞣处理的除外 5 0

4101.5020

Whole hides and skins of equine animals, of a weight



重量＞16 公斤的整张生

马皮 5 0

4101.9011

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

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

4101.9019


of bovine animals, not tanned, parchment-dressed or

further prepared, whether or not dehaired or split,

excluding have undergone a tanning which is reversible


背皮及腹皮）生牛皮，经

逆鞣处理的除外 5 0

4101.9020


of equine animals, not tanned, parchment-dressed or


背皮及腹皮）生马皮 5 0

27


4102.1000 Raw skins of sheep or lambs with wool on 带毛的绵羊或羔羊生皮 7 5.3

4102.2110

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

浸酸的不带毛绵羊或羔

羊生皮，经逆鞣处理的 14 11.8

4102.2190

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

浸酸的不带毛绵羊或羔

羊生皮，经逆鞣处理的除

外 9 5.7

4102.2910

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

其他不带毛的绵羊或羔

羊生皮，经逆鞣处理的 14 8.3

4102.2990

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

其他不带毛的绵羊或羔

羊生皮，经逆鞣处理的除

外 7 5.3

4103.2000

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 爬行动物的生皮 9 5.7

4103.3000

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 生猪皮 9 5.7

4103.9011

Dried hides and skins of goats have undergone a

reversible tanning process 经逆鞣处理的山羊板皮 14 8.3

4103.9019

Other dried hides and skins of goats have not

undergone a reversible tanning process

山羊板皮，经逆鞣处理的

除外 9 5.7

4103.9021

Other hides and skins of goats or of kids have


经逆鞣处理的其他山羊

或小山羊皮 14 8.3

4103.9029

Other hides and skins of goats or of kids have not


其他山羊或小山羊皮，经

逆鞣处理的除外 9 5.7

4103.9090 Other raw hides and skins 其他生皮 9 5.7

4104.1111

Chrome-tanned bovine leather (wet blue skin leather),

full grains, unsplit, or grain splits, not further prepared

全粒面未剖层或粒面剖

层蓝湿牛皮 7 0

4104.1119

Bovine leather, wet state other than wet-blue, full

grains, unsplit, or grain splits, not further prepared

其他全粒面未剖层或粒

面剖层蓝湿牛皮 8 0

4104.1120

Equine leather, wet state, full grains, unsplit, or grain

splits, not further prepared


层马皮革 5 0

4104.1911 Other wet blue bovine leather, not further prepared 其他蓝湿牛皮 7 3

4104.1919

Bovine leather, wet state other than wet-blue, nes, not

further prepared 其他湿牛皮革 7 0

4104.1920 Other equine leather, wet state, not further prepared 其他湿马皮革 7 0

28

4104.4100

Bovine or equine leather, without hair on, dry

state(crust), full grains, unsplit, or grain splits, not

further prepared


层干革（坯革） 5 0

4104.4910

Bovine or equine leather, without hair on, dry

state(crust) , not further prepared, for machinery

belting

其他机器带用干革（坯

革） 5 0

4104.4990

Other bovine or equine leather, without hair on, dry

state(crust) , not further prepared 其他干革（坯革） 7 4.9

4105.1010

Wet-blue sheep or lamb skin leather, without wool on,

but not further prepared, whether or not split 蓝湿绵羊或羔羊皮 14 6.5

4105.1090

Sheep or lamb skin leather, in the wet state other than

wet-blue, without wool on, but not further prepared,

whether or not split 其他绵羊或羔羊湿皮革 10 5

4105.3000

Sheep or lamb skin leather, in the dry state(crust),

without wool on, but not further prepared, whether or

not split 绵羊或羔羊干革（坯革） 8 5.6

4106.2100

Goat or kid skin leather, in the wet state(including

wet-blue), without hair on, but not further prepared,

whether or not split 山羊或小山羊皮湿革 14 12

4106.2200

Goat or kid skin leather, in the dry state(crust), without

hair on, but not further prepared, whether or not split

山羊或小山羊干革（坯

革） 14 9.8

4106.3110

Wet-blue swine leather, without hair on, but not further

prepared, whether or not split 蓝湿猪皮 14 11.8

4106.3190

Swine leather, wet state other than wet-blue, without

hair on, but not further prepared, whether or not split 其他猪湿皮革 14 8.3

4106.3200

Swine leather, dry state(crust), without hair on, but not

further prepared, whether or not split 猪皮干革（坯革） 14 11.8

4106.4000

Leather of reptiles, tanned or crust, without hair on, but

not further prepared, whether or not split 爬行动物皮革 14 8.3

4106.9100

Leather of other animals, in the wet state(including

wet-blue),without hair on, but not further prepared,

whether or not split

其他未列名动物皮湿革

（包括蓝湿皮革） 14 11.4

4106.9200

Leather of other animals, in the dry state(crust),

without hair on, but not further prepared, whether or

not split

其他未列名动物皮干革

（坯革） 14 11.4

4107.1120

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

已鞣全粒面未剖层整张

马皮革 5 0

4107.1220


including parchment-dressed leather, of equine

animals, without hair on, other than leather of

heading 41.14, whole hides and skins, grain splits

已鞣粒面剖层整张马皮

革 5 0

29

4107.1910


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

已鞣机器带用整张牛马

皮革 5 0

4107.9100





heading 41.14, other than whole hides and skins, full

grains, unsplit

已鞣全粒面未剖层非整

张牛马皮革 5 0

4107.9910





heading 41.14, other than whole hides and skins, for

machinery belting

已鞣机器带用非整张牛

马皮革 5 0

4112.0000


including parchment-dressed leather, of sheep or lamb,

without wool on, whether or not split, other than

leather of heading 41.14

已鞣进一步加工的不带

毛绵羊或羔羊皮革 8 5.6

4113.1000


including parchment-dressed leather, of goats or kids,

without wool or hair on, whether or not split, other than


14 9.8

4113.3000


including parchment-dressed leather, of reptiles,

without wool or hair on, whether or not split, other than


已鞣进一步加工的不带

毛爬行动物皮革 14 11.8

4114.2000

Patent leather and patent laminated leather; metallized

leather

漆皮及层压漆皮；镀金属

皮革 10 9

30

Annex II


Chapter 42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers;

articles of animal gut(other than silk-worm gut)


Rate

Rate

for

Pakista

n

under

FTA


4201.0000

Saddlery and harness for any animal (including

traces, leads, knees pads, muzzles, saddle cloths,

saddle bags, dog coats and the like), of any material

各种材料制成的鞍具及挽

具，适合各种动物用 20 11.8

4202.1110

Trunks and suitcases with outer surface of leather,

of composition leather or of patent leather

以皮革、再生皮革或漆皮作

面的衣箱 15 12.6

4202.1190

Vanity-cases, executive-cases, brief-cases, school

satchels and similar containers, with outer surface

of leather, of composition leather or of patent

leather

以皮革、再生皮革或漆皮作

面的箱包 10 5.8

4202.1210

Trunks and suitcases with outer surface of plastics

or textile materials

以塑料或纺织材料作面的衣

箱 20 16.8

4202.1290

Vanity-cases, executive-cases, brief-cases, school

satchels and similar containers nes, with outer

surface of plastics or of textile materials

塑料或纺织材料作面的其他

箱包 20 16.8

4202.2100

Handbags, whether or not with shoulder strap,

including those without handle, with outer surface

of leather, of composition leather or of patent

leather

以皮革、再生皮革、漆皮作

面的手提包 10 5.8

4202.2200

Handbags, whether or not with shoulder strap,

including those without handle, with outer surface

of plastic sheeting or of textile materials

以塑料片或纺织材料作面的

手提包 10 5.8

4202.2900

Other Handbags, whether or not with shoulder

strap, including those without handle, (for example,

with outer surface of vulcanized fibre or of

paperboard) 以钢纸或纸板作面的手提包 20 14

4202.3100

Articles of a kind normally carried in the pocket or

handbag, with outer surface of leather, of

composition leather or of patent leather

以皮革、再生皮革作面的钱

包等物品 10 5.8

4202.3200

Articles of a kind normally carried in the pocket or

handbag, with outer surface of plastic sheeting or of

textile materials

以塑料或纺织品作面的钱包

等物品 20 14

4202.3900

Other articles of a kind normally carried in the

pocket or handbag, (for example, with outer surface

of vulcanized fibre or of paperboard)

以钢纸或纸板作面的钱包等

物品 20 14

31

4202.9100

Tool bags, cutlery cases and containers, with outer

surface of leather, of composition leather or of

patent leather

皮革、再生皮革或漆皮作面

的其他容器 10 5.8

4202.9200

Tool bags, cutlery cases and containers, with outer

surface of plastic sheeting or of textile materials

以塑料或纺织材料作面的其

他容器 10 5.8

4203.1000

Articles of apparel of leather, of leather or of

composition leather 皮革或再生皮革制的衣服 10 0

4203.2100

Gloves, mittens and mitts, specially designed for

use in sports, of leather or of composition leather

皮革或再生皮革制专供运动

用手套 20 0

4203.2910

Working gloves, of leather or of composition

leather

皮革或再生皮革制的劳保手

套 20 0

4203.2990

Other gloves, mittens and mitts, of leather or of

composition leather

皮革或再生皮革制的其他手

套 20 0

4203.3010 Belts of lether or composition leather 皮革或再生皮革制腰带 10 0

4203.3020 Bandoliers of lether or composition leather

皮革或再生皮革制的腰带及

子弹带 10 0

4203.4000

Other clothing accessories, of leather or of

composition leather

皮革或再生皮革制的其他衣

着附件 20 0

4205.0010 Cover of seat of lether or composition leather 皮革或再生皮革制坐具套 12 7.1

4205.0020

Other articles of leather or of composition leather

of a kind used in machinery or mechanical

appliances or for other technical uses

机器、机械器具或其他专门

技术用途的皮革或再生皮革

制品 8 5.5

4205.0090 Other articles of lether or composition leather 皮革或再生皮革的其他制品 12 7.1

32

Annex III


Chapter 64 Footwear, gaiters and the like; parts of such articles


Rate

Rate for

Pakista

n under

FTA


6401.1010 Footwear incorportating a protective metal toe-cap

with upper of rubbers

橡胶制鞋面的装金属护头

的塑料、橡胶制防水鞋靴 24 12

6401.1090 Footwear incorportating a protective metal toe-cap

with upper of plastics

塑料制鞋面的装金属护头

的塑料、橡胶制防水鞋靴 24 12

6401.9210 Other footwear covering the anckle but covering

the knee with upper soft rubbers

橡胶制鞋面的橡胶、塑料底

及面得中、短统防水靴 24 12

6401.9290 Other footwear covering the anckle but covering

the knee with upper soft plastics

塑料制鞋面的橡胶、塑料底

及面得中、短统防水靴 24 12

6401.9900 Waterproof footwear (not covering the ankle) 其他橡胶、塑料制外底及鞋

面防水靴 24 12

6402.1200 Ski-boots & cross-country ski footwear of rubber

or plastics 橡胶、塑料底及面得滑雪靴 10 5

6402.1900 Sport footwear, nes, of rubber or plastics 橡胶、塑料制底及面得其他

运动靴 24 12

6402.2000 Footwear with thongs plugged into soles, of rubber

or plastics

橡胶、塑料的将鞋面条带栓

塞在鞋底上的鞋 24 12

6402.9100 Footwear, nes, covering the ankle of rubber or

plastics

其他橡胶、塑料短统靴（过

踝） 24 12

6402.9910 Other footwear with upper soft rubbers 橡胶制鞋面的其他橡胶、塑

料鞋靴 24 12

6402.9920 Other footwear with upper soft plastics 塑料制鞋面的其他橡胶、塑

料鞋靴 24 12

6403.1900 Sports footwear, with rubber/plastics/leather..soles,

leather uppers

皮革制鞋面的其他运动鞋

靴 15 12.6

6403.5111

Other footwear with outer soles of leather covering

the ankle,no part of the calf, with insoles of a

length of less than 24cm

低于小腿的内底长度＜

24cm 的皮革制外底皮革面

的短统靴（过踝）

10 5.8

6403.5119

Other footwear with outer soles of leather covering

the ankle,no part of the calf, with insoles of a

length more than 24cm

低于小腿的内底长度≥24cm

的皮革制外底皮革面的短

统靴（过踝）

10 5.8

6403.5191

Other footwear with outter soles of leather

covering the ankle ,with insoles of length of less

than 24cm

其他内底长度＜24cm 的皮

革制外底的皮革面短统靴

（过踝）

10 5.8

6403.5199

Other footwear with outter soles of leather

covering the ankle ,with insoles of length of more

than 24cm

其他内底长度≥24cm的皮革

制外底的皮革面短统靴（过

踝）

10 5.8

33

6403.5900 Footwear with leather soles & uppers, not covering

the ankle

皮革制外底的皮革面其他

鞋靴 10 5.8

6403.9111 Other footwear covering the ankle with insoles of


其他低于小腿的内底长度

＜24cm 的皮革面的短统靴

（过踝）

10 5.8

6403.9119 Other footwear covering the ankle more part of the

calf with insoles of a length of more than 24cm

其他低于小腿的内底长度

≥24cm 的皮革面的短统靴

（过踝）

10 5.8



其他内底长度＜24cm 的皮

革面短统靴（过踝） 10 5.8


length more than 24cm

其他内底长度≥24cm的皮革

面短统靴（过踝） 10 5.8

6403.9900 Footwear with rubber... soles, leather uppers, not

coverng the ankle 皮革制面得其他鞋靴 10 5.8

6404.1100 Sports footwear,with rubber or plastic soles &

textile uppers

纺织材料制鞋面的运动鞋

靴 24 12

6404.1900 Other footwear,with rubber or plastic soles &

textile uppers

纺织材料制鞋面胶底的其

他鞋靴 24 12

6404.2000 Footwear with leather or composition leather soles

& textile uppers

纺织材料制鞋面皮革底的

鞋靴 24 12

6405.1010 Other footwear with outter soles of

rubbers,plastics,leathers,or composition leathers

橡胶、塑料、皮革及再生皮

革制外底的皮革或再生皮

革制面的其他鞋靴

24 12

6405.1090 Other footwear with outter soles of other materials 其他材料制外底的皮革或

再生皮革制面的其他鞋靴 24 12

6405.2000 Other footwear with uppers of textile materials


革制外底的纺织材料制面

的其他鞋靴

22 11

6405.9010 Other footwear with outter soles of

rubbers,plastics,leathers,or composition leathers


革制外底的其他材料制面

的鞋靴

15 8.8

6405.9090 Other footwear without a soles of other materials 其他材料制外底的其他材

料制面的鞋靴 15 8.8

6406.1000 Uppers & parts thereof (excl. stiffeners) 鞋面及其零件，硬衬除外 15 8.8

6406.2010 Upppers&parts of rubbers 橡胶制的外底及鞋跟 15 12.6

6406.2020 Upppers&parts of plstics 塑料制的外底及鞋跟 15 12.6

6406.9100 Other of wood 其他木制 15 8.8

6406.9900 parts of footwear of other materials (excl. uppers,

outer soles & heels)

木制鞋靴零件，活动式鞋内

底等 15 8.8

***********************************************************************