Business

USTER Customer Speak: Vrajesh Kikani Speaks On How To Export Yarn To China

Exporting yarn to China is both a massive opportunity and a tremendous challenge. The market is huge and diverse. The rewards can be worthwhile but the risks are great and keep increasing. The key success factors are the same as for any other market area: control of sourcing, control of quality and control of costs. Above all else in China, price competitiveness is essential. One of India's leading yarn suppliers, Kikani Exports, has 12 years' experience in exporting to China, firstly as a yarn trader sourcing from Indian mills and also as a spinner in its own right.

Kikani Exports Managing Director Vrajesh Kikani explained that the biggest difference between China and other export markets is the volume of business available. "In China, volumes are huge. We started selling there in 2004, with about 60 tons per month. That increased over time to as much as 4,000 tons per month by 2014, but in the past year, the market has been more depressed, so we have recently been at a level of around 2,000 tons."

Despite the volatility, China remains a crucial customer for Kikani and other suppliers from India, together with Bangladesh representing about 60% of total exports in some cases. "If China stops buying Indian yarn, it would be a disaster. We simply have to deal with China," Kikani said. "The domestic market cannot take the big volume of Indian spinning mills. The textile industry and especially cotton spinning is an important industry which employs a lot of people."

Kikani's yarn trading experience has given the company a valuable overview of requirements spinners must fulfill to survive in the ultra-competitive China market. Quality management is right at the top of the list and Kikani has put in place a carefully-planned strategy -- from sourcing the right yarns at the right price from reliable spinners. "Latest technology and process control is also necessary," Kikani said.

The company has a fully-equipped testing laboratory, with latest USTER technology for fiber and yarn quality assurance. "We rely on USTER guidelines, ensuring our quality consistency within defect tolerances below 5%. Staff training for quality management is also a priority, and we implement both routine quality checks and random audits," said Kikani.

It was this quality-minded approach that led Kikani to invest in its own spinning mill operation. This helped him to extend options beyond the yarn trading business. The new mill, near Ahmedabad, Gujarat, started in 2015, expanding to 29,376 spindles and 4,320 TFO drums by the end of the year. Attractive incentives from the regional government helped the investment decision. However, the desire to control quality to its own standards was also important. "As traders, we were not always able to convince the quality conscious-customer. This prompted us to look into backward integration, focusing only on value-added yarn for niche markets," Kikani said.

Next in line was the contamination problem in India. Competing in China is a double-edged problem, facing both local yarn producers and other exporters. Contamination by foreign matter is a serious issue, and although it is generally 'expected' by spinners and their customers, there is a constant and growing need to monitor and control it.

Kikani achieved this in its own spinning mill by a combination of the latest USTER JOSSI MAGIC EYE detection in the blow room and USTER QUANTUM 3 (PP option) clearers on its winders. But contamination has remained an inherent problem with Indian cotton, because of the typical farming practices.

"We always inform our customers about contamination levels in our yarns. It is controlled as well as possible. Quality is one of our main advantages over local Chinese yarn producers. In fact, we find that quality requirements from most world markets are increasing, so there is very little difference in that respect between China and other markets," Kikani said.

Although the Chinese export business is large and extremely important to Kikani, it is not usually as lucrative as sales to the domestic Indian market. However, the China trade offers greater volumes, and is mainly financed through letters of credit (LCs). This provides for quicker payments compared to locally-negotiated deals with Indian customers. Selling direct to mills in China can also get better price. However, many Chinese weavers and knitters are unable or unwilling to work through LCs. They prefer paying in currency or purchase through traders.