Voluntary Report - public distribution

**Date:** 12/27/2005

**GAIN Report Number:** CH5828

CH5828

**China, Peoples Republic of**

**Market Development Reports**

**Leather Show Whips Into Shape**

**2005**

**Approved by:**

![](media/image1.wmf)Ross Kreamer

U.S. Consulate

**Prepared by:**

Susan Zhang/Ralph Bean

**Report Highlights:**

The All-China Leather Exhibition continues to be China\'s premier show
for hides, skins and leather products. The U.S. industry revamped its
efforts for the 2005 show, adopting a more aggressive profile and
setting the foundation for future efforts. ATO/Shanghai provided
critical support for this effort, translating the U.S. cattle hides
grading manual for Chinese buyers to understand.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Shanghai \[CH2\]

\[CH\]

**Too Big To Ignore**

Driven by demand from manufacturers of bags, jackets, shoes and other
leather products, China's imports of hides skins and leather products
during the first half of 2005 amounted to a staggering US\$ 2.6 billion
according to China Leather Industry Association. This compares with a
total of \$455 million in imports during the entire year in 2003. The
U.S. is the dominant supplier to China: U.S. Customs data show total
exports of \$461 million for the first half of 2005 for hides and skins
alone (a 13.9% increase over the period in 2004), but traders claim that
the actual number is considerably higher, as a large number of hides are
transshipped into China via South Korea. Hides now constitute the third
largest U.S. agricultural export to China, behind soybeans and cotton.

![](media/image2.png){width="3.0in" height="1.8402777777777777in"}

During the past five years more Asia regional tanners and leather goods
processors have relocated to East and South China. For the U.S.
exporters, the China market can be divided into three parts according to
their features: 1) the northern region is dominated by Korean
investments, 2) the east region is controlled primarily by Chinese
domestic firms, and 3) the south region is based primarily around
Taiwanese companies.

**A Big Show For A Big Market**

Mainland China's largest hides, skins and leather show is the All China
Leather Exhibition (ACLE), held this year from Sept 7-9, in the Shanghai
New International Expo Center. The show was held concurrently with the
China International Footwear Fair (CIFF) and Moda Shanghai (a leather
goods design show). The combination of the three events ensures that all
sectors of the leather industry are catered for, from raw hides, to
finished leather, to tanning machinery and chemicals, shoe making
machinery, accessories and finished shoe products.

The trade show was well attended by large numbers of exhibitors from
across the full spectrum of the industry. According to the show
organizer (Asia Pacific Leather Fair Ltd. and the China Leather Industry
Association), this year's show attracted 1,088 exhibitors from 36
countries and regions, including 21 pavilions from 16 countries allowing
visitors to focus on specific geographic areas. The ACLE alone attracted
857 companies, 20% larger than 2004, and exhibition space reached 34,500
square meters, 40% larger than in 2004.

**Cooperative Effort Yields Big Results**

The U.S. pavilion, organized by the U.S. Hides, Skin and Leather
Association (USHSLA), embraced 23 American leather companies, most of
them hides processors and traders with in-market representatives to
staff their booths and facilitate business discussions.

In order to capitalize on this opportunity, the organizer arranged a
series of seminars covering a wide range of topics, including material
trends in leather-making, technological advances and market development.
USHSLA was a key participant in these activities, organizing for the
first time a Leather School -- the U.S. Seminar on Buying U.S. Hides,
held on Sept 8. Dick Veale, Chairman of USHSLA was present to give the
introduction, and Ed Godsalve, Dennis Thams, and Chris Mullally
(representatives from American hides processors and traders) introduced
the U.S. hide industry's practices and standards, and presented
description of U.S. hide supply, production areas, breed, and hints on
sourcing hides and making comparisons. The seminar, attended by more
than 70 professional visitors, was extremely well received and marked a
more engaged market development effort by USHSLA.

ATO/Shanghai provided crucial support to this effort, undertaking a
major project to translate the reproduce the U.S. export grading
standards manual into Chinese, which lays out in detail the
specifications for exported hides, information that is crucial to enable
buyers to purchase products and grades appropriate to their
requirements. This is the first time this highly technical document has
been translated, creating a new and important tool for marketing U.S.
hides in China whose usefulness will carry far into the future. In
addition, ATO/Shanghai Director Ross Kreamer moderated the USHSLA
seminars. ATO's support helped to underscore the much more aggressive
profile taken by the U.S. industry at this year's show.

![](media/image3.png)

**2006: Be There Or Be Square**

All three of the exhibitions linked to this massive show continue to
grow. According to the organizer's post-event report, the 2005 event
required 20% more floor space than the previous year (2004), which
itself witnessed a whopping 50% growth compared to 2003. ACLE 2006,
which is to be held Sept 5-7, 2006 at the same venue, saw 50% of the
reserved exhibition space booked by the close of the 2005 show. Leading
leather chemicals and dyes suppliers, including BASF, Buckman, Dupont
and Clariant reconfirmed their participation in ACLE 2006. This augurs
well for the upcoming show, which will continue to provide a good
platform for U.S. leather & hides industry players seeking to enter and
develop in the China market. For more details and relevant support,
please contact ATO Shanghai.