In the bustling environment of the China International Home Textiles & Accessories Fair, Jessica, a buyer from one of the world’s largest furniture supermarkets, appeared visibly exhausted on August 25th. She was attending a high-end meeting with key buyers and industry leaders, where discussions revolved around the evolving landscape of Chinese manufacturing. Jessica is responsible for sourcing home textile products in China, and over the years, she has engaged with numerous manufacturers. While she acknowledges that China's domestic R&D capabilities have improved, she believes they still fall short of international standards. “Their production capacity is strong and they are growing rapidly, but design is still a major challenge,” she said. “Suppliers in China are caught between high-end markets in Turkey and Italy and low-end competition from South Asia and India. The middle segment is also highly competitive.” This sentiment was echoed by other international buyers at the event. Although there are signs of transformation within Chinese factories, these changes have yet to be fully recognized or trusted by foreign buyers. The journey from low-end manufacturing to high-end innovation has been challenging for China. As Jessica pointed out, many domestic companies lack clarity about what international buyers truly value. “We focus on production capacity, equipment, social responsibility, and pricing. If these areas meet our expectations, we conduct further factory inspections,” she explained. She also mentioned her experience working with a company in Anhui, noting that while mainland factories are improving, the gap with coastal counterparts remains significant. After the financial crisis, rising labor costs pushed many coastal factories inland. However, Jessica doubts whether multinational buyers will follow suit anytime soon. The real gap lies not in production or quality, but in soft skills. Communication, for example, is much better in coastal companies, where English proficiency is higher. Poor communication can lead to costly mistakes. Social responsibility is another area where mainland companies lag behind, with issues like child labor, excessive overtime, and inadequate waste management still present. “Although mainland factories are cheaper, the cost difference isn’t as large as people expect,” Jessica noted. “They’re all trying, but progress isn’t as fast or as significant as many believe.” Andy, a procurement manager from a major U.S. retail chain, shared similar views. “Chinese companies are becoming more scalable, and we still value their strong production capacity, reliable quality, quick delivery, and competitive pricing. But when it comes to R&D and design, they’re still lacking,” he said. Many Chinese companies have tried to build their own brands after the financial crisis, but this shift hasn’t been widely accepted by international buyers. “We still prefer well-known European and American brands,” Andy admitted. “China is still mainly known for manufacturing and processing.” Huatex, a high-end textile company based in Hangzhou, has long focused on design and R&D. During the fair, the company’s chairman, Xu Bohua, noticed that many buyers asked, “Why is Chinese manufacturing so expensive?” He responded by pointing out that their designs, patterns, and quality are comparable to Turkish products. Despite higher profit margins—up to 30%–50%—Huatex invests heavily in R&D and intellectual property protection. Yet, even with these efforts, foreign buyers remain hesitant to embrace Chinese branding. “They often re-label our products as Made in Turkey or Italy to increase profits,” Xu said. Some buyers have even considered shifting production to other countries. In response to this challenge, Yang Zhaohua, president of the China Home Textiles Industry Association, remarked, “Change doesn’t happen overnight.” He noted that some smaller, less-technological companies are opting out of the fair, signaling a broader shift toward high-end innovation. “This divergence is a sign of progress,” Yang said. “It’s forcing companies to move up the value chain.”

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