Many Chinese wig manufacturers are experiencing a scarcity of raw material - genuine hair - which they used to import in large quantities from neighboring countries, including India. However, the escalating coronavirus pandemic has curtailed both production and transportation from those countries, according to industry insiders who spoke to the Global Times.
As a result of the current situation, companies with available hair inventory, particularly leading industry players, are seeing increased opportunities.
On Monday, Zhang Tianyou, deputy general manager of China's hd lace wig giant Rebecca, told the Global Times that those who have real hair inventory now have control over the entire market.
Because of a lack of raw materials
Professionals in the hair industry say that China has become increasingly reliant on other Asian countries for the importation of genuine hair as well as hair processing equipment. Currently, China imports the majority of its real hair from India, with other countries such as Thailand and Bangladesh also exporting real hair to Chinese companies in the past. North Korea is home to the majority of the hair processing and knitting.
However, as a result of the pandemic outbreak, many Asian countries have either halted production or cut off transportation to and from China. North Korea, for example, has sealed off its borders for several months in order to prevent the spread of the coronavirus from entering the country. As a result, long wavy hair manufacturers throughout the country are experiencing a shortage of raw materials.
According to Zheng Jiangmin, manager of the Dongyang Lansi Wig Co, a wig producer, many wig companies in China are on the verge of running out of hair inventory, which is causing wig demand to significantly outstrip supply, according to the Global Times on Monday.
Zhang Tianyou, deputy general manager of China's hd lace wig behemoth Rebecca, stated that many small factories in China do not have sufficient supplies of raw materials, and as a result, many have already halted operations.
Recent increases in the price of hair materials have been attributed to a scarcity of raw materials as well as inconvenient shipping methods. For example, the price of some real hair lace strips has increased by a factor of ten, according to Zheng.
The increase in the price of raw materials has also resulted in an increase in the price of finished goods. Zhang revealed that the company has raised the prices of its products twice recently and that it is considering raising the prices of its products yet again in the near future.
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According to Zhang, the price of real hair has increased nearly threefold, and the company has no choice but to raise its product prices in order to keep up with market fluctuations.
A number of domestic companies have attempted to train their own hair knitters in order to deal with the situation. Rebecca, for example, began training domestic hair knitters at a time when hand-knitted hair was difficult to come by from other countries. She has since expanded her training program.
In an interview with the Global Times, Zhang stated that he traveled to dozens of Chinese provinces during the epidemic last year in an attempt to establish hand-knitting bases. Following North Korea's closure of its borders, the company established similar facilities in five other countries to fill the void left by the industry.
According to industry sources, however, this is not a problem that can be easily resolved.
It is difficult to train hair knitters in a short period of time, Zheng explained, not to mention the fact that China's labor costs are significantly higher than those in some other Asian countries. According to him, China has not yet been able to establish a true hair knitting industry capable of large-scale mass production.
As of now, I would say that there are no effective solutions to the dilemma, according to Zheng.
Inventories receive a boost
The burgeoning wig industry in the country, which includes wigs made of human hair and chemical fiber, is the driving force behind the domestic wig makers' desperate search for raw materials and processors. There are now thousands of wig factories in China, the majority of which are concentrated in East China's manufacturing hub Yiwu in Zhejiang, Henan's Xuchang, which has been dubbed the "wig capital of the world," and Qingdao in East China's Shandong Province.
About 30% of the wigs are sold in China, with the remainder being exported to countries such as the United States, Europe, and Africa.
The primary driving force behind China's long wavy hair industry is international demand. Data from Chinese international e-commerce platform AliExpress shows that the platform's turnover for wigs more than doubled in April 2020, with African countries experiencing the fastest growth in demand for Chinese wigs. On average, one wig made in China is sold on the platform every two seconds, according to the company.
The reason why the coronavirus pandemic closed the borders of many Asian countries and why it sent shockwaves through a long and extremely complicated industrial chain in China, affecting numerous companies, can be explained in this way.
In addition, according to Zheng, the problem of rising costs is a challenge for the fiber wig industry, though it is not nearly as serious as the problems faced by the real hair industry.
For companies like ours, which primarily manufacture fiber wigs, the price of raw materials has increased by approximately 10% in response to the fluctuation in the price of oil at the beginning of the year, while the cost of transportation has increased by less than 30%, he explained. "
However, industry practitioners stressed that not everyone is suffering as a result of the tightening market conditions, as companies with a large supply of real hair inventory, primarily large industry giants, are benefiting from the tightening market conditions.
According to Rebecca, China's largest wig producer, the current real hair shortage has resulted in windfall profits for the company, which has seen an increase in orders as a result of many smaller factories being unable to roll their machines.
In an interview with Business Insider, Rebecca's Zhang stated that the company has thousands of tons of real hair in what he refers to as "strategic reserves."It has now been determined that his company's orders will be fulfilled until March 2022.
In an earlier interview with the media, Rebecca's board secretary Hu Liping stated that whoever has real hair inventory has an advantage in the market competition.
