The goats don't care

Rico says it seems the cashmere market is down, what with the economy and all. Keith Bradsher has an article in The New York Times about the problem:

This summer, as always, the cashmere on offer in department stores and malls is mostly in ultrathin “summer weight” tops. Come fall, these usually are replaced by thick, luxuriant sweaters. But this year is shaping up to be different. Merchants in China say that American and European orders for the holiday season, for which sweaters are just starting to be knit, have fallen by as much as thirty percent. And the garments chosen by buyers from Western stores are noticeably skimpy, using less of the costly material. “They are too small— half the breast is outside the sweater,” complained Wang Jie, the sales manager of the Inner Mongolia Dongda Cashmere Products Company Ltd.
Western consumers are buying fewer luxury goods, and demand for cashmere has plunged. The painful effects of this are being felt all the way to these nearly empty plateaus of Inner Mongolia, by goatherds and factory workers and owners— showing how ripples from markets in the United States, Europe and Japan can reverberate to some of the most remote corners of the world.
Nicknamed the “diamond fiber” in Inner Mongolia, cashmere has changed the life of Yrthashun, a herder who like many ethnic Mongolians has only one name. He lives in the tiny village of Baiyuanhua, a four-hour drive north of Hohhot on a two-lane, paved road that traverses a vast flatness, where close-cropped grass and areas of dirt stretch beneath an immense sky.
As affluence spread worldwide in the 1990s, the middle classes began to wear cashmere and Mr. Yrthashun grew prosperous. As recently as a year ago, the cashmere combed from his flock of one hundred thigh-high Kashmir goats sold for as much as $27.50 a pound, allowing Mr. Yrthashun to buy a compact Chinese car. But the price of cashmere has fallen by almost half since then and herders have been forced to sell many of their goats for meat. “The end to goat herding after centuries is the most sorrowful thing I have ever had to face,” Mr. Yrthashun said.
The problem is not just the collapse of the cashmere market, but also a government ban on Kashmir goats across much of Inner Mongolia for environmental reasons. Hungry goats with sharp hooves have denuded arid plateaus and broken up the soil, contributing to dust storms that fill the sky in Beijing and other cities in northeastern China.
Yarn factories, which take cloud-soft wool from the goats and spin it for the sweater factories’ looms, are suffering too. The Tiaje Cashmere Company’s factory here, a windowless hall the size of a football field, is filled with rows of machines that transform wool into yarn. But because business has shrunk, in recent months only a handful of workers have labored in small pools of light in an otherwise dark expanse of shadowed machinery. “I wish more of the lights were on; it’s a bit dark,” said Lin Siuchi, a soft-spoken 38-year-old, adjusting several spools of downy white cashmere being twisted into yarn. “I’m not afraid to be here alone,” she said, “but I would be happier if there were more people here with me.”
The Tiaje Cashmere Company sells yarn to the nearby Inner Mongolia Harmony Industry and Trade Company, which knits beautifully textured sweaters and other cashmere garments for the American and Italian markets.
But the factory has been operating at less than half of capacity for much of the last year. Employment at the factory fell to fifty early this year. Muren, the owner and general manager, who also has only one name, said that employment had since recovered to seventy— but this is supposed to be the annual surge of production, from June to September, to accommodate the autumn retailing season in the West. Inner Mongolia Harmony has orders for 20,000 sweaters so far this year, compared with 28,000 at this time last year. And Mr. Muren differs with some economists, saying that he sees little sign of a nascent recovery in the United States. “Our American and European customers say the situation is terrible,” he said.
Da Lisu, the merchandise manager of the rival Inner Mongolia Saihan Cashmere Products Company, said some cashmere companies had failed in recent months. One mistake by the failed companies was to ship sweaters to American customers on promises that they would be paid later, Ms. Da said. “I’ve had friends at companies that have gone bankrupt because U.S. buyers have reneged on payments,” said Ms. Da, who added that she did not know the identity of these American buyers. Her company demands payment in advance and has not had problems, she said, and it is following that policy with particular attention now. “We all have to be much more cautious,” she said.
Mr. Wang said that American buyers facing slower sales had become much quicker to reject shipments by complaining that the garments did not precisely match the original specifications. “Our sizes are very accurate— now they say, ‘You made a mistake,’ ” he said. Complaints about the accuracy of designs are often followed by demands from buyers for further deep price reductions. “They say, ‘please give me a discount and I can sell it anyway,’ ” Mr. Wang said, folding the fingers of his left hand in the shape of a gun and pretending to shoot such buyers. As China tries to make up for falling exports of all sorts, many export industries are trying to sell more to the domestic market. But garments designed for American customers frequently cannot be marketed in China, and demand in China is still weak for luxuries like cashmere sweaters.
Indeed, the speed of the economic downturn last autumn left Inner Mongolia Dongda with 2,000 unsold sweaters made for Americans. Now they are piled in a warehouse. In China, Mr. Wang said, “we can only sell the ‘S’ size.”
But Mr. Muren sees one small sign of hope in Inner Mongolia: the global recovery in commodities prices is starting to reach cashmere, as companies have started stockpiling raw cashmere again in anticipation of eventual better times, pushing up the price by three to five percent in the last several weeks. “Some people are collecting the cashmere even though they do not have orders,” he said, “because they think, and I also think, that this is the bottom price.”