Computer Bags

China's computer bag suppliers — faced with higher production costs and intense competition — are differentiating themselves by adding value to their products.

Now you can take advantage of this trend, with 86 profiles of China's major manufacturers — profiles that are only available in the pages of this report.

You'll also get a comprehensive overview of the computer bag industry in China, analyzing producer capabilities, R&D plans, output projections and more for the coming year.

Focusing on fabric and soft-plastic computer bags, this report provides you with invaluable information that will improve your sourcing efforts in the next 12 months.

What you'll get

In-depth profiles of 15 major computer bag manufacturers based on factory tours and interviews with senior managers. These profiles highlight product offerings, production strategies and future plans, and are available nowhere else.

Short profiles of 71 suppliers with key facts such as machinery installed, export figures and production capacities

A Product Gallery featuring 125 best-selling computer bags with detailed product descriptions and full-color pictures

The results of Global Sources' supplier survey, forecasting price, product, production and R&D trends for the next 12 months

How you'll benefit

Discover which companies are releasing more casual and fashion computer bags, and which are staying focused on classic models

Single out manufacturers that produce for Wal-Mart, Kmart, Target and Carrefour, and other major corporations

Learn the advantages of sourcing from Guangdong province, China's main production base for computer bags

Find out which alternate materials suppliers are using to make bags lighter and reduce product costs

Executive summary

The computer bags export industry in China grew 16 percent in 2003 and 18 percent in 2004. Suppliers are optimistic of at least 20 percent growth in 2005, on the back of steadily rising demand for computer bags.

China's more than 500 computer bag export manufacturers are slowly moving to more upscale manufacture. Suppliers in this OEM-driven industry have been producing low-end and midrange computer bags priced as low as US$1 each. However, increasing production costs and intense competition in the OEM market have led to shrinking profit margins, pushing makers to move to the manufacture of computer bags with higher returns.

The following are some of the key trends we see in China's computer bags export industry:

Suppliers will increase product prices in 2005 as a result of higher production costs. Many companies had already raised prices in 2004, but further inflation is projected because raw material costs continue to increase.

More suppliers are breaking away from low-end or OEM-dominated production. Companies are producing more computer bags with synthetic or genuine leather shells, as well as models in youthful and fashionable styles.

Classic briefcase-style designs in black or dark gray will still be mainstream, but the casual backpack and messenger-bag types in vibrant colors will gain greater market share.

In anticipation of increased orders, new factories are being built to expand capacities. Some suppliers are moving to bigger locations to make room for the additional equipment they will be purchasing to increase output.

This report focuses on softside computer bags made of fabric, soft plastic and leather. It does not cover hardside models made of hard plastic and aluminum. Most China makers of computer bags produce softside models, and those that make hardside versions usually offer these as a sideline.

Classic computer bags account for 47 percent of exports by companies in this report, while casual and fashion models and backpacks make up 24 and 22 percent, respectively. Because sleeves are sold mainly as attachments to backpacks and other bigger bags, their sales make up only a small percentage of exports.

The majority of these suppliers are wholly China-owned private enterprises, along with a few foreign-owned. More than two-thirds of these suppliers have direct export capability, but most still ship their products through trading companies. Suppliers are based mainly in the coastal provinces of Guangdong, Fujian, Jiangsu and Zhejiang.

Industry overview

Increasing production costs and intense competition in the low-end and OEM markets have considerably cut profit margins of computer bag suppliers in China. Many of them are therefore moving to more upscale manufacture where profit margins are higher, and some are also experimenting with alternate materials that can provide the same quality and durability at a lower cost.

Computer bag suppliers in China face rising production costs that are widespread in nearly all manufacturing industries in China. Raw material costs have increased 10 percent in 2003 and as much as 25 percent in the first 10 months of 2004. Companies have also had to increase migrant workers' wages up to 15 percent to keep workers from moving to the inland provinces, where economies are improving. In all, total operational costs have increased an average 20 percent in the past year, but suppliers have been able to pass only 10 percent of these additional costs to buyers.

The majority of computer bag exports from China are for OEM orders. While this has helped suppliers enhance their design and manufacturing capabilities, and boost quality, it also translates to minimal profits.

In addition, profit margins have also been affected by intense competition in the low-end and OEM segments, which most of China computer bag suppliers specialize in.

Makers are therefore taking steps to increase their profitability, mainly by moving away from the low-end segment. Some are developing inhouse brands and aggressively marketing their products under these labels. Although only a few China suppliers have taken this step, those that are exporting computer bags under in-house brand names have been able to raise prices. Branded computer bags from China usually start at about US$3 each for basic nylon or polyester shell models. The same type of models can be sold for as low as US$1 each on OEM orders.

In this report, Jiahua Luggage, Magicase, Top and Best, and Yuyao Freelife are actively promoting their in-house brands in international markets. OEM and ODM work comprise only 10 to 30 percent of export business at these companies.

In addition to building brands, makers are moving to the manufacture of products that can give them higher returns. One is the use of synthetic and genuine leather for the shell, instead of the standard nylon or polyester. Another is to increase the production of casual and fashion computer bags and backpack models. These emerging product lines have strong growth potential but are made by relatively fewer companies.

Suppliers are also researching the use of alternative fabrics that cost less but perform as well as nylon or polyester. The cost of synthetic and chemical fibers has surged by as much as 40 percent over the past year, and inflation is expected to continue well into 2005.

Bamboo fabric is one such alternative. The fabric is durable, has a soft hand and smooth finish, and can be dyed in various patterns and colors. It also costs less than nylon or polyester.

Industry composition
China is home to more than 500 computer bag exporters, 95 percent of which are privately owned enterprises and the rest state-owned. Of the private enterprises, 74 percent are wholly China-owned and the remainder are foreign-owned or invested. Some companies, such as Anhua Zhouli, have acquired licenses to use patented versions of bamboo fabrics.

Samples of supplier profile

Anhua Zhouli Industry Development Co. Ltd
Guangdong-based Anhua Zhouli produces midrange to high-end bags, cosmetic items and bathroom products for export. Established in 1997, the company was initially involved in import-export trading, but in 2001 it built a manufacturing plant in Shenzhen. Mass production of computer bags started early 2004, with more than half of products now exported to the United States and Canada, 25 percent to Europe, and the rest to Asia and the Middle East. Wal-Mart is one of the company's OEM customers.

Products
Anhua Zhouli offers a wide range of bags, from travel bags and backpacks, to business bags, tool kits and computer bags. Both softside models made from nylon, PVC and PU, and hardside models made of aluminum and ABS are available. Production of softside models is done in-house while hardside versions are subcontracted.

Classic models dominate the line, accounting for 70 percent of total computer bag output. Prices range from US$3 to US$6. Shells are made from nylon, polyester, PVC, PU, cowhide and sheepskin leather. Lining is made of satin.

Since early 2004, prices of raw materials have risen by more than 10 percent, resulting in a 10 percent increase in computer bag prices. The company expects prices to remain stable in the coming year and is in the process of developing lower-priced substitutes for nylon and polyester fabrics.

Fifteen in-house designers and 20 technicians comprise the R&D and design center. The company has employed an American designer, who has developed a durable fabric made from bamboo that features a soft hand. This fabric can be dyed in various patterns and colors. The company recently acquired a US patent for this innovative fabric and intends to use it as a substitute for polyester and nylon in making computer bags. Aside from improving features of textiles used in bag production, the team releases between 10 and 30 new styles each month.

Sample of product gallery

Classic computer bags Anhua Zhouli Model: 118583 Minimum order: 2,000 pieces Packaging type: Polybag and export carton Delivery time: 50 days Indicated price: US$12.50 Description: 17.38x6.75x12.38 inches; PVC shell; satin lining; detachable slipcover; multiple compartments

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All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.

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