China's domestic cashmere market appears to be booming, according to figures released at the fourth annual Cashmere World trade show in Beijing - but rising costs cause concern.

Chinese imports of cashmere products increased 153% to US$13.2m from January to July this year compared with the same period last year, said Tian Hong, director of the CFNA (China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce & Animal By-Products).

"China has become the biggest potential consumer market with the fastest growth," Tian said. "The marketing focus of Italian enterprises has quickly shifted to China and Italy's high-grade cashmere products and brands have been adapted to China consumer demand."

China already produces more than 75% of the world's raw cashmere and more than 90% of all raw material is pre-treated in China, added CFNA vice president Yang Shengjun. More than three-quarters of the world's cashmere products were also finished in China, he claimed.

After factoring in cross-border trades and the smuggling of raw cashmere into China mostly from Mongolia, 93% of the worlds' raw cashmere today is produced in or sold to China, according to a 2009 China Wool Textile Association report.

About 2,000 Chinese cashmere processors process cashmere, Tian Hong said, but statistics are somewhat misleading as "China cashmere products basically occupy the lowest end of the market."

More than 85% of exported cashmere products are in fact original equipment manufacturer (OEM) exports for retail under foreign company brand names, he explained, mostly going to Italy.

Despite low international demand, China's exports of cashmere products also grew quickly from January to July 2011, Tian said. The total value of exported cashmere and cashmere products in those six months rose 34% year-on-year to US$741.9m.

The exported amount of cashmere and de-haired wool was 1,244 tonnes, a 1% year-on-year drop but their export value rose 29% to US$123.1m during the first six months of this year.

The value of exported cashmere scarves hit US$451.1m, a 30% increase, while the value of exported cashmere garments from China increased 29% to US$271.7 million.

Tian stressed that while these export value increases were impressive, they do not reflect a huge growth in production - rather higher yields. He said the real growth in the quantity of cashmere - whether primary or finished products - was "much lower than its growth in value".

Concern over costs
Meanwhile, these rising costs are starting to cause concern amongst buyers abroad.

Laura Galatioto, whose husband Francesco is president of Pashmere, an Italian family-run company that attended as part of an Italian delegation, told just-style she visited the trade fair to find a Chinese supplier and partner to help process their product, to look at materials and factories "because the prices have become impossible.

"They just get higher and higher. The Chinese have taken over the market. They seem to control almost everything," she said.

Tian, however, reacted with apparent indignation at the suggestion China in any way improperly monopolised the market.

"Who manipulates? How?" he said. "The government doesn't order anything. It's all about the market. You buy low and you sell high. It's all normal business behaviour. It's only according to how much profit you make how much influence you have on the market."