Question1: The hide price has been declining ever since January 2018, what do you think of the root cause for that?

First, we all know that hide and skin prices are notoriously volatile. Because they are by-products of the meat and dairy industry, the supply of materials is not affected by the level of demand and the consequent price; as a result, the prices can fluctuate significantly with relatively small differences between supplies and demand. In simple terms, therefore, the declining hide price is due to the supply and demand situation - increased global slaughter rates (more hides) vs falling demand for leather (reduced raw material requirements by tanners).

We see two main reasons for the recent worldwide weakness in prices. More recently there has been considerable uncertainty in the global economy, with particular uncertainty about the market in China, along with global concerns about high level of indebtedness and credit, the Trump-inspired trade war and uncertainties in Europe about the impact of BREXIT. This has been in addition to the slightly longer-term shift in the global shoe market (the biggest global end use market for leather) – away from traditional shoes and towards sports shoes (trainers) with each pair, progressively, incorporating less and less leather. One effect of this has been to contribute to a situation where Chinese tanneries require less hides, and demand from China still has a major impact on the raw hide market.

Question 2: Athletic shoes made with fabric or synthetic material are becoming more popular with consumers in some major markets such as the United States, could this trend change over time?

Trends are changing all the time – so anything is possible. However, it seems unlikely without some significant efforts to change consumer fashion trends and manufacturers’ choices regarding production processes. A change in fashion trends back to ’traditional’ leather footwear could reverse the swing to some degree. The other key factor is that footwear manufacturers have become more willing to use synthetic materials as components for footwear because they are easier to handle and to process, and both their appearance and behaviour are more consistent than leather. This lays down a challenge for tanners to produce leather or leather components that meet the specific production process requirements of the footwear manufacturer and that support a marketing “story” about leather as an environmentally friendly material.

Question 3: World widely the environmental protection standards are rising year by year, so is the overall tanning cost, that all make the tanning industry very challenging, how the tanning industry could do to cope with those challenges?

It is increasingly clear that all tanners will have to achieve reasonable levels of environmental performance sooner or later, but not all improvements automatically add costs. Innovations in waste handling – recycling, reuse and recovery instead of disposal can minimise disposal costs and generate income. Innovations in process efficiency can minimise chemical, energy and water use and reduce wastage.

The things that need to be done are well understood but tanners need to keep an open mind as to how they achieve them. Tanners also need to maintain a regular dialogue with their customers in order to share knowledge and, where possible, avoid unnecessary costs by ensuring – as far as possible – that customers’ demands are reasonable and technically sensible.

Question 4: Recently the tanning industry was wrongly reported by some animal welfare organizations, some consumers began to believe cows are slaughtered primarily for skin. Is there any way ICT help brands and consumers understand if not processed by the tanneries the pollution of the cow skins will be much more serious?

I think that everyone in the leather industry understands that there is a continuing need to educate both the end consumer and the distribution chain about the nature of leather and the leather-making process. Clearly, ICT has a part to play in this, but reaching the consumer, in particular, is not easy and it cannot fall to the ICT alone. All actors in the leather supply chain need to play a part to reach their customers with the correct information, and industry bodies such as ICT and Leather Naturally are co-operating to develop their activities in this area. ICT will shortly be launching its new website and is involved in the organisation of the 4^th World Leather Congress – “Leather in Everyday Life” - due to be held in New York on 16 July 2019, which will to address this issue, along with giving other positive messages about leather.

Questions 5: Hide conditions has been worsening for many years, 85% SATRA cutting coefficient becomes challenging especially on natural products. To improve the grading also leads to the increase in chemical use. The primary reason for customer to buy a pair of leather shoe is for the nature beauty and comfortableness. Can ICT take the lead working with the leading companies in the shoe industry to set up a much more relaxed standard on leather defects, this could also meet consumers’ expectation of less waste and a cleaner earth.

Yes, ICT can become involved in this argument, but a major part of the discussion has to involve the other actors in the leather supply chain in order to reach their customers with the messages that demanding high cutting co-efficients, just for themselves, can create unnecessary problems and compromise the environmental credentials of the product. Eventually, it will also need the product manufacturers to be open to using leather with more defects, and the final consumer needs to appreciate that part of the beauty of leather is that it is a natural and variable material – and, of course, this is another part of the marketing story of using leather.

Question 6:Currently cow leather is mainly used for shoes, car seats, upholstery, any other areas that leather can be widely used in the future?

Leather has been around for a very long time and it is already very widely used – as well as those sectors listed above, traditionally it has been used in an extensive range of products including industrial products (such as drive belts, valves and seals), in protective products, equestrian products (saddles, harnesses), bags, belts, straps, garments, sports equipment (balls, gloves, coverings). However, it is difficult to envisage any new major uses, although potentially profitable niches are likely to arise on a reasonably regular basis. For example, the fashion sector of handbags and accessories has recently been performing well and there has been recent growing interest in corporate and institutional interior design (furniture, décor, floor tiles, wall panels) of public buildings, offices, hotels etc. Leather has also become popular in transport (airplanes, buses, trains)because it is easier to clean and lasts longer than alternative materials.

Question 7: From the technical perspective, what the Future Leather would be compared with what it is like today?Will there be more breakthrough to make leather more comfortable and environmental friendly?

It is difficult to envisage any single, major technical breakthrough that will benefit the tanning industry in the future, but there will be a steady stream of developments aimed at improving efficiency, environmental performance and the functional properties of leather.

In processing, we will see new alternative tanning agents, all with special properties, but with the challenge to improve on what is already available, in terms of functionality, cost effectiveness and environmental acceptability; new processing systems that reduce or remove the need for certain strong chemicals, or even water from the process; new process chemicals that improve functional properties, such as strength, flexibility, waterproofing, fireproofing; new chemicals for masking surface faults potentially improving cutting co-efficients; new systems for re-use, recovery, recycling of by-product, waste, chemicals, water – leading to zero emissions.

Question 8: For the tanning process, how much it will be reshaped by automation in the future though we all know this is already not a labor intensive industry.

Tanning is typically a series of batch processes and the level of automation has been increasing on a step by step basis, as individual processes have been automated wherever practical. The most obvious area has been in automated handling systems for collecting, stacking and moving hides, skins and leather from one process to the next. This replacement of manual handling also has benefits for improving the health and safety of workers. The individual processes such as dosing of drums, spraying, measuring and cutting are being automated, along with the collation of process data for use in monitoring and quality control. If carried out properly, automation can improve quality and consistency of product, as well as achieving efficiency savings.

Question 9: Man made leather, fabric, synthetic are all eroding the market share of leather, in the near future, any other kind of materials can substitute leather for shoes?

There are many interesting materials being developed but many seem not to have progressed much further than the concept stage. Also, a key element of footwear composition is the process of manufacture, with the manufacturers essentially wanting materials that fit easily and efficiently into their manufacturing processes.

Having said this, we see, in the longer term, a number of types of material that could become available to footwear manufacturers alongside leather. We have already seen improvements in PU and PVC materials that mimic leather and there is a new generation of “hybrid” materials entering the market, with mixtures of leather fibres (from waste leather) and other materials often combined with a synthetic or fabric base layer. Beyond that there is biofabricated material, based on genetically engineered collagen, which still appears to be at the development stage. Also, on the horizon are plant-based materials.

Reverting briefly to the process of footwear manufacture, one aspect that the whole industry sector should be monitoring carefully is the use of 3D printing. There are already reports of some niche operators printing whole shoes using this technology, and also some of the major brands are reported to be using 3D printing to produce components, such as insoles. Currently the materials typically used in 3D printing are reported to be plastics such as acrylonitrile butadiene styrene (ABS), polyamide (nylon), or polycarbonates and metals such as silver, titanium and steel, but research is understood to be ongoing to use additional materials.

The leather industry needs to continue to stress that none of the materials described in the above paragraphs can accurately be described as leather, which is still a powerful marketing term, and any attempts to undermine the definition and description of leather should be resisted.

Question 10:Facing with so many challenges, can the tanning industry still have a bright future?

The current market situation and trends make looking into the future rather difficult, but the overall situation is that raw material supplies – though finite – will continue to grow slowly over the coming years. With population growth and rising living standards, especially in Asia, it would be expected that demand will return. While footwear is likely to take a smaller proportion of total finished leather, there is the prospect that the absolute total will remain stable. Production of leathergoods is most likely to increase steadily, while car upholstery, albeit with a slower growth rate is still likely to grow slowly. The other broad sectors are likely to be fairly stable, although there may be some growth within specialist niches.

Looking from another perspective, the future for the high quality end of the market looks positive, and it is interesting to see more and more quality brands investing in tanneries to secure their long term raw material supplies. It seems that luxury products will always be in demand.

For companies producing lower grades of leather, life is likely to become difficult, with growing competition from synthetics and alternative materials, and these companies may struggle to maintain their margins.

Those companies producing the mid to upper quality ranges of leather will face significant threats and opportunities. They will face the same challenges from alternative materials but need to take a positive approach to promoting and selling the qualities of leather, along with its environmental credentials and its potential to add value to the finished products. In this context, the whole industry and its associations need to work together to maintain the image and cache of leather, along with its authenticity, in terms of accurate product labelling and designation.

Question 11: In addition to the major markets like the U.S. EU, Eastern Asian countries, are there still any countries or regions that have great potential for leather sales?

This needs to be considered as two separate questions, although they are related. There are the markets for consumer products, which is where the spending power is, and the markets for leather, where leather products are fabricated, historically based primarily on low labour costs.

The main areas for the growth of consumer markets would still appear to be in South East Asia, while Africa remains a prospect for growth in the long term. One area not to be ignored is Russia and Eastern Europe, where it appears that demand for consumer products significantly exceeds supply. South America will grow as a consumer market, but the region already has a strong production base.

As regards markets for leather, the main areas of growth are currently those around the periphery of China – (such as Vietnam, Cambodia, Bangladesh, Indonesia) but the main long term markets are predicted to be in Africa, as the low labour costs attract leather product manufacturers, with the current main focus being Ethiopia.

Question 12: Any suggestions for Tehchang specifically in this fiercely competitive industry?

The company should continue to do what it is already doing, but continually look at what it is doing and how it is doing it – and look ahead at what is likely to happen next.

The company needs to maintain a regular, constructive and positive dialogue with existing and potential suppliers and customers throughout the supply and distribution chain, so that the whole chain knows what the company is doing and understands the quality and the properties of the leather produced.

Tehchang tanneries need to ensure that they are operating in a way that is environmentally, socially and ethically responsible, and that investments in these areas are cost effective. The company should be monitoring its performance in these areas and be prepared to report the results.