Soft Market for Cashmere Takes Toll in China

The global economic crisis is now starting to be felt in even remote countries like China’s Inner Mongolia and normally less cyclical professions like goat herding. Demand for cashmere sweaters knit in China and exported to the US and Europe is down 30 percent this summer, causing raw cashmere prices to fall 50 percent and forcing many Mongolian goat herders to sell their flock to make ends meet. Much of the cashmere used in the Chinese sweaters came from Kashmir goats in Inner Mongolia. But herding these goats has been banned over much of the province due to the environmental damage. Other links in the global supply chain of cashmere sweaters to suffer include the yarn factories that are employing fewer people due to slack demand. And to add insult to injury, some foreign buyers are reneging on purchase agreements. Yet, cautious optimism is returning due to a rise in commodity prices and some stockpiling of inventory in anticipation of a demand rebound. But if demand doesn’t return this excess inventory could spell an even worse downturn. – YaleGlobal