China's rich to wool's rescue

Superfine wool prices are in the doldrums, so handing Chinese wool maker Shandong Ruyi membership of The Australian Superfine Wool Growers' Association is an attempt to tap into China's staggering growth.

Australian Wool Innovation, the research and marketing body, has also pledged to quadruple its marketing budget for China this year.

Madame Ding, the vice-president of the Shandong Ruyi group made a special trip to receive the membership.

Shandong Ruyi is one of China's top 500 companies, and takes raw wool from mill to garment, producing 20 million metres of worsted wool for suits each year.

But that's not its only market.

"Actually, this 20 million metres just covers from medium to high end men's suits.

"Ruyi has a special Royal Ruyi line, featured in luxury suits with the end use production... (for which they produce)500,000 metres per year."

Becoming a member of The Australian Superfine Wool Growers' Association is natural next step since Shandong Ruyi became one - buying the "Larundel" sheep property just outside Melbourne in Victoria for $14 million last year year.

"Now the sheep in this farmland is around 20,000 sheep.

"While our purpose is to utilise these sheep for the luxury line, for the 500,000 metres a year, while the other for 20 million metres (of worsted wool) production, we still need to source from other farmland," says Madame Ding.

Should Italy feel threatened by Shandong Ruyi's big plans?

"It's a trend for the manufacturing base to shift from Europe to Asia, especially to China; and now China is the biggest manufacturing hub for all over the world.

"We think it's good for competition, and also in line with the trend, especially for the China Luxury market; the growth rate is 30 per cent per year.

"So we don't think it's a threat to anybody. Especially for the growers, I think they're happy."

Shandong Ruyi is even funding research into ultra fine wool at Deakin University and the CSIRO.

Superfine and ultrafine woolgrowers opting out

"Our price for ultra fine wool at the moment is very low. Growers are becoming very despondent," says Andrew Ledger, superfine woolgrower at the Mullion, west of Canberra.

"There was a 13.2 micron wool that sold a few weeks ago for 3,900 cents per kilo, whereas a couple years ago that would have been making 20,000 to 25,000 cents per kilo. It's a massive drop.

"People are becoming very despondent and rather apathetic and a lot of people have decided that's it.

"People with shedded sheep are turning their sheep out and it's a very sad state of affairs at that end of the market, and hopefully we can turn that around."

Campaigns hit the target market in China

Australian Wool Innovation has held two major marketing campaigns in China, aimed at the top end, the rich set of 45 million women and 100 million men.

Paul Swann, manager of market intelligence at AWI, says the marketing budget for China will increase from $1.6 million last year to $4 million this year.

Latest research shows the Goldmark campaign is shifting consumer perceptions.

"We've seen significant strengthening of the Chinese consumer attitude as a "symbol of status," "worth paying extra for". And so on.

"The challenges we have is the prickle and itch remain, to some extent driven by product, an outstanding quality product that consumers experience.

"That's why these programs are so important, so important to have an enormous reach, to use the media well, because it's a massive market, to educate them about the fibre."

Slight rise in superfine gave false hope

Helen Cathles, superfine wool growers Association president says Shandong Ruyi has already signed a memorandum of understanding with superfine woolgrowers on spending for research and marketing to boost sales.

"One of the fantastic things they've done to date is develop Ruyi spun, to spin ultra fine wool 12 microns and finer to spin into a yarn, using a filament, in the centre of the spun yarn.

When the weaving occurs, there's less stress on the ultra fine wool. Once the cloth is woven, it has it's own strength the filament's dissolved out, so you're left with just the soft superfine wool garment.

But times are tough, how long before people give up growing ultra fine wool?

Helen Cathles says people have already given up when the last market rise in March 2011, provided false hope.

"I think that was more difficult than if it had never gone up, that was absolutely shocking for the industry."

"So a lot of people have said, 'great what's happening in China, but we're not hear for it, we can't take it any more!'

"I don't know how long it will take, but I know the more work we do on it, the sooner it'll be."