Wool exports to China reach record levels

China’s dependence on African raw materials to keep its vast economic machine ticking over stretches much further than oil, iron ore and coal – including textiles, for example, and making it the world’s biggest importer of South African wool. Latest statistics reaching FTW from Cape Wools SA reveal that exports to China reached record levels, rising from 14 million kg in the 2007/08 season to 21.2 million in 2008/09 and accounting for revenues of R1.3 billion. China’s market share, as a percentage of free on board value of all South African wool exported, rose to 46.7%, from 31.3% in 2007/08. Even so, the Chinese textile industry has also been hard hit by the global economic slump as demand from traditional markets such as Japan, the US, Europe and South Korea waned, forcing wool textile manufacturers to focus on a domestic market fuelled by a government financial stimulus. What is more, Chinese manufacturers have switched from knitwear to exporting more expensive woven wool garments, hence an increase in fine merino wool imports from South Africa and Australia. Cape Wools SA’s Ona Viljoen says China primarily imports unprocessed grease wool (that shorn from the animal’s back), and mainly from the Merino sheep. As to why the demand is for unprocessed product she says: “We have the technology but cannot compete with the Chinese on price since they have cheaper labour and so on. And the same scenario applies to other countries in Europe and Australia where many processing plants were forced to close.” As to the outlook for South African wool exports, Vijoen says: “We are expecting a better season than last in view of the predicted improvement in the world economy. “There are also indications that the continued decline in world apparel production and subsequent supply concerns will support the market.” South Africa’s approximately 6 000 wool farmers export around 48 million kilograms a year. The major markets aside from China include Italy, Germany, the Czech Republic, India, United Kingdom, South Korea and Mauritius. This being a free-market situation, exports are not co-ordinated, each exporter rather serving an own client base.