(CN + CA) The skin trade war

[Guest guest]

http://www.theglobeandmail.com/servlet/story/RTGAM.20070317.wxfur17/BNStory/Inte\

rnational/home

 

by KAREN MAZURKEWICH

From Saturday's Globe and Mail

Posted AT 2:12 AM EDT ON 17/03/07

 

Thousands of pelts dangle from racks in the hangar-like building near

Toronto's Pearson Airport where Don Boyd has come to seek his fortune.

 

A second-generation mink rancher from Manitoba, he has hauled the

cream of his crop to the sprawling offices of North American Fur

Auctions (NAFA), and keeps a close eye on the electronic board that

tracks bids in what amounts to a global fur bazaar.

 

" Last year we saw the biggest crowd ever, " boasts Mr. Boyd, who

earned a tidy $530,000 by selling more than 7,000 pelts to buyers

from around the world. " It's nice to know where the furs are going. "

 

And they are going, more than ever, to China.

 

Five years ago, Chinese buyers barely registered in the marketplace.

But growing demand for luxury goods has seen interest in fur coats

soar, and mainland China now accounts for almost two-thirds of all

furs sold in Canada.

 

Thanks to this growing appetite, the Canadian fur trade is

experiencing its greatest transformation since the Hudson's Bay Co.

started shipping beaver skins to Britain in 1670. For more than 300

years, the business on which the Canadian economy was built - a

consolation prize when the storied trade route to the Far East failed

to materialize - supplied hats and coats to the rich and famous of

Europe.

 

Now the Bay has an American owner, and China - the initial object of

the early explorers' desire - has reversed the flow; cities such as

Beijing, Shenyang and Harbin have overtaken London and New York as

major fur fashion centres.

 

Trappers and ranchers love it. Since 2000, Canadian auctioneers have

witnessed a 50-per-cent increase in sales, soaring to an all-time

high of roughly $200-million last year. In November, China officially

removed many import restrictions on the industry, opening up trade in

raccoon and fox pelts.

 

" The Chinese are very showy, " says Diane Benedetti, international

marketing director for NAFA. " They like their Mercedes and Rolexes -

and furs. The consumer is very fashion-oriented there. "

 

But there is a serious downside to the trend. Canadian designers and

garment makers not only must pay higher prices for their furs, they

have to compete with Chinese companies that enjoy much cheaper

production costs. Even worse, they are watching helplessly as some of

their signature designs are being knocked off, further undercutting

their sales.

 

Perched on a chair behind the auction's glassed-in " bull pen, " Mr.

Boyd scribbles prices in his catalogue as traders and trappers vie

for the best deal.

 

The pace is relentless. Over six days, the auctioneers must sell

almost four million furs - a warehouse stacked with everything from

black mink and silver fox to bearskins. With a quick nod of the head

or flash of the paddle, lots go in a matter of seconds.

 

All this activity comes none too soon for the aging trappers trying

to eke out a living in the hinterland.

 

Max Clement has worked his Northwestern Ontario trap line for six

decades, and he has seen it all - from albino beavers to bear

attacks. But the strangest twists are in the marketplace: Between

1987 and 1991, he watched his income plummet as anti-fur protests

raged and groups such as People for the Ethical Treatment of Animals

(PETA) stigmatized fur here and abroad.

 

Sales of wild pelts dropped to $18-million, and then a growing

Russian market helped to soften the blow, bringing the tally back to

$50-million in the mid-1990s, only to have a ruble devaluation in

1998 leave trappers in the lurch again - until the rise of the Asian

dragon.

 

" If the economy of the Chinese goes the way we think it will, " Mr.

Clement says from his home in Atikokan, " we won't be able to keep

them in fur. " He predicts China's market will be more stable because

the Chinese " don't give a damn about the 'antis'- the tree-huggers

and the save-the-world folks. "

 

The traders who have flown in for the auction appear to bear him out.

 

Frankie Sun drags on a cigarette as he checks out what NAFA has on

offer. Like other members of the large delegation from mainland China

that can make or break the sale, he is sitting out the bidding on

white mink. Their market just isn't interested, so they've gathered

in a back room to play poker - a little recreational gambling before

the high-stakes battle begins on what their customers do like: black

mink.

 

The buyers stick together at the auction, but they never confuse

business with pleasure. Many are looking to capitalize on the fact

that NAFA has scheduled the event too close to Chinese New Year,

prompting some of last year's big players to stay home.

 

" They made a mistake, " says Mr. Sun, who divides his time between

Germany and China, and is keen to stockpile before prices climb.

 

His own fortunes have soared in lockstep with those of China's fur

trade. He started two decades ago as a trade representative for a

state-owned enterprise, but turned entrepreneur in the mid-1990s when

the Russians came to China to make coats. Then he switched to

supplying raw furs to the domestic market, starting with two

manufacturers in Xina Zhong, a town in northern Hebei province. " Six

years later, I have 30 customers, " he says. " It's become a fur

village now. "

 

NAFA's Ms. Benedetti has witnessed the Chinese transformation

firsthand. In the 1990s, she was based in Hong Kong and moved to

Shanghai in 2004 because " I could see things were changing. " The

pendulum was swinging toward emerging economies, and the Canadian fur

industry was looking for new territories to conquer.

 

Her company now spends more money promoting Canadian furs in China

than anywhere else in the world, supporting local runway shows and

promotions. The Chinese have an appetite for Louis Vuitton and Prada,

says Ms. Benedetti, who is trying to market Canadian fur as a

distinctive brand and boasts it is gaining ground in the marketplace.

 

Last year, Guifuren Fur, a major retailer in Harbin, paid the highest

recorded price at auction: $65,000 for a lot of 50 wild black mink

pelts. Then the company, acting on NAFA's recommendation, hired

Canadian designer Izzy Camilleri to fashion a dramatic coat, complete

with crystal-studded collar and sleeves, accessorized with a $10,000

diamond broach.

 

Dubbed the " Million-Dollar Coat " (it's worth 2.88 million yuan, or

almost $440,000), it was modelled by movie star Rosamund Kwan for the

opening of Guifuren's new Harbin store in December. " When she came

out, the cameras were flashing, " says Ms. Camilleri, who was at the

gala opening dinner and spent two weeks in China promoting her

designs to a market she says is becoming increasingly sophisticated.

 

Guifuren owner Yu Changjiang says the coat is still on display at the

store, and his company (whose products mostly sell for about $2,500

U.S.) has had its business grow tenfold in recent years and last year

took in $36.5-million (U.S.).

 

The China boom has trappers and ranchers smiling, but many Canadian

manufacturers worry about what the changing marketplace is doing to

their 300-year-old business.

 

The increased competition has sent pelt prices soaring so much, says

Betty Balaila, executive director of Montreal designer Zuki's fashion

house, that her company's costs have leapt 30 per cent in the past

two years alone.

 

Design piracy is another problem. Zuki recently spotted an Asian copy

of his coat in a major New York department store, and dozens of

Chinese companies are now copying Ontario-based Paula Lishman's

knitted fur concept.

 

Ms. Lishman, a self-described " hippie, " stumbled on the notion of

knitting fur in the 1970s when she was seeking new ways to clothe her

own 6-foot frame. She was an outsider in the fur club then dominated

by big players such as Toronto-based Creeds and Montreal's Grosvenor

Furs. But she patented the innovation and by 1995, her company, based

in an old schoolhouse in Blackstock, was pulling in $10-million a

year.

 

But then, while in Moscow, she stumbled upon a garment that made " my

heart sink to my stomach " - it was knitted and made in China. Having

fought off patent infringement in Canada, she now faced the ultimate

business challenge: a cheap Chinese knockoff.

 

Rather than truly knitted, the fur strips were simply wrapped around

a mesh, she says, but " I knew it would impact my product. "

 

At first she tried to fight the copycats on their own turf, using

machines in southern China. But the quality did not match that of the

cottage industry she'd built in rural Ontario, where women take the

fur yarn she processes and hand-knit garments at home or even

while " attending hockey tournaments. "

 

So she made " a conscious decision to keep making the product here, "

and shut the overseas operation. To survive, she developed a line of

custom-made clothes for upscale stores such as Neiman Marcus and for

singer Barbra Streisand, and recently launched a line of yarn for all

knitters.

 

But it hasn't been enough to stabilize sales. Revenues have fallen 75

per cent since the company's 1995 high, and like Zuki, Ms. Lishman is

now looking to sell Canadian-made fur coats in China. If you can't

beat 'em, join 'em, she says. The company attended the Hong Kong fur

fair this winter, recently hired a Shanghai research firm to

investigate retail opportunities, and has designed a series of coats

to appeal to mainlanders.

 

" China is the wild west, " she says. " It's a big open market with tons

of potential. " Her company can't compete on price, but she believes

wealthy customers will prefer high-quality coats made in the

West. " The Chinese, " she says, " would rather not buy Chinese. "

 

Her son Aaron, the company's managing director, is more blunt: " China

is making all the money now. We are hoping to get a little bit of it

back. "

 

So now Canadian manufacturers must take trends in China into account -

and sales at the NAFA auction reflect the new reality.

 

For example, mainland buyers have traditionally snapped up large

stocks of ranch mink, but now there is increasing emphasis on mink

caught in the wild, as well as other furs not typically used in China.

 

This year's auction record for wild red fox and muskrat pelts went to

Beijing Hexin Leather, a company that was founded just nine years ago

and now is beginning to target China's growing appetite for luxury

home furnishings. Its product line now includes fur carpets, says

marketing manager Wu Zhaoqing.

 

As the Canadian garment makers struggle to keep pace with the

changing climate of the market, Don Boyd, the Manitoba rancher,

dreams of the real thing.

 

His ranch produced some of the white mink that prompted so many

Chinese buyers to head off and play poker. But he is

undeterred. " Given the warm weather [globally], the sale is better

than expected. " He fared better with his black male mink, and hopes

the lack of interest in the white pelts is " nothing a bit of cold

won't cure. "

 

According to Mr. Boyd, Canadian traders were a little " spoiled " by

last year's record prices, and he remains convinced that China is the

future.

 

" It's all a person can ask for, " he says, turning back to the bidding.

 

Karen Mazurkewich is a Toronto writer and the author, most recently,

of Chinese Furniture