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Global Trade

July 2012 - Posts

  • The Leather and Hide Industry

    Where centuries ago man relied on leather as a necessity for clothing and shelter, modern times showcase leather almost as a status symbol. A home with leather upholstered furnishings and a car with leather seats may indicate wealth, while a leather jacket worn by a celebrity evokes an image of rebellion. High-quality bound books, footwear, apparel, and briefcases are just a few items one can find made with tanned animal hide, which brings in nearly $50 billion dollars annually in global trade.

    Considered a sub-industry of the cattle and livestock trade, the leather industry is perhaps one of the most versatile. Leather may be tanned and preserved using different methods, dyed a variety of colors, and used for anything from sporting goods to protective covers to fashion accessories. Tastes and styles will vary, but leather remains a premium commodity for retailers around the world.

    Quick Facts About the Leather Industry

    • According to the BLC Leather Technology Centre, the average consumer may have as many as four leather-made items on person or in use daily.
    • According to the International Council of Tanners, 65 percent of global leather production goes into footwear.
    • Of an animal’s total value, only ten percent comes from the hide used to make leather.
    • The oldest leather shoe in the world is believed to be 5,500 years old, found in Armenia.

    Top Exporters of Leather

    Hides for leather are tanned around the world, in large factories managed by economic leaders and by hand in small Moroccan villages. Among the economies considered the most productive in the industry:

    • Brazil – This South American economic leader is a large exporter of cattle and by-products, and consequently top leather exporter. The privately held company Bertin S.A. is one of the country’s largest producers.
    • Bangladesh – Bangladesh is home to Apex Tannery Ltd., an important player in the industry. Leather International reported in 2001 that the company produces and exports 2.5 million feet of leather hide monthly. Major importers include Italy and Hong Kong.
    • China – As a major exporter of footwear and apparel, China has a strong hold in the industry.
    • Vietnam – This developing economy is fast becoming an important figure in the industry. China Leather Net reported that in 2012 the country’s leather footwear exports rose over 40 percent from the previous year.

    Challenges in the Leather Industry

    Though leather products remain high in demand around the world, the industry does not operate without challenges and detractors. In South America, for example, the growing cattle industry has led to deforestation, which threatens the global eco-system. Bertin S.A. of Brazil is one company dedicated to helping find a balance and preserving the forests.

    Chemicals used to tan and preserve leather are also known to cause environmental damage. In recent years, however, some factories have turned to eco-friendly methods that recycle water used in the process and reduce waste. Chinese companies, according to Treehugger, have utilized systems that have reduced waste by 40 percent.

    Animal rights remain a concern in the industry as well. Organizations like People for the Ethical Treatment of Animals continue to appeal to clothing manufacturers to utilize animal-friendly alternatives to leather, while in India an illegal leather trade thrives in a nation where cows are sacred. Nonetheless, leather remains an irreplaceable commodity since the barter trade era and forms a billion-dollar global industry that works in tandem with automotive manufacturers, clothing designers, and markets that produce accessories for computers, fashion, and publishing needs.

  • The Mobile Phone Industry and Global Trade

    These days, it seems impossible to go anywhere without checking your mobile phone for an incoming message, scanning a QR code, or sharing a status update via social media. In restaurants, on the subway, even clandestinely in church, somebody, somewhere in the world, is bent over a phone talking or texting. As companies announce new lines of mobile and smart phones for personal and commercial consumption, one must recognize that this industry will continue to evolve, possibly to the point where mobile communication claims a large percentage of Internet and telecommunication usage. In 2011, Google released a report revealing that 69 percent of American mobile users access the Internet via their phones every day, while that percentage is much higher among the Japanese. The evolution of cloud computing may assist in an increase in these numbers in the future.

    Quick Facts About the Mobile Industry

    • The first prototype for a mobile phone was created nearly 40 years ago by Motorola. The bulky handheld device initially sold in the early 80s for close to four thousand dollars!
    • According to DataFlow, there are about 3.4 billion mobile phones in use, accounting for over a trillion dollars in revenue.
    • In the US alone, close to two billion text messages are sent monthly.
    • Text messaging is the most popular mobile activity, followed by using the phone for voice message, surfing the Internet, and using a specific application.

    Majors Brands/Exporters of Mobile Phones

    According to The Verge, over 420 million mobile units were shipped globally in the last quarter of 2011 alone. Among the top brands/exporters, the shares are divided thus:

    • Nokia (Finland) – Despite having to close or downsize factories in Romania and Finland, Nokia managed to maintain the highest percentage of the mobile market share. More than a quarter of all shipments in the final months of 2011 were Nokia brand phones, shipped from factories around the world, including India, Hungary, and China.
    • Samsung (South Korea) – Samsung gained much ground in the mobile market from the last quarter of 2010, claiming over 20 percent of the overall market. Samsung maintains factories in South Korea and China for manufacture of mobile phones and components.
    • Apple (United States) – One might suspect Apple’s huge media presence means a large share of the market. While the brand is popular, Apple phones only accounted for about nine percent of sales in the last quarter of 2011, though this represented a staggering growth of 128 percent over the previous year. Apple contracts with factories in China to produce their phones.
    • LG Electronics (Korea) – As the third largest producer of mobile phones, LG claimed under five percent of this quarter’s share. LG maintains factories throughout Asia.

    Major Consumers of Mobile Phones

    Mobile usage by country often corresponds to the country’s population. Therefore, it stands to reason that the top consumers in the mobile market rank among the highest populated nations in the world. In terms of mobile usage, the largest countries are:

    • China – Reuters reports early in 2012 that over one billion mobile subscribers exist in the country.
    • India – The Telecom Regulatory Authority of India reported in mid-2012 that well over 900 million residents subscribe to some type of wireless mobile plan.
    • United States – Over 330 million mobile users are registered in the US according to CITA, an increase of over 100 million from five years ago.
    • Brazil – One of the largest South American nations also claims a large percentage of mobile usage on the continent, with over 250 million subscribers.
    • Indonesia – Nearly the entire population of the country – a quarter of a billion people – have some kind of mobile plan.

    The Future of the Mobile Industry

    Mobile Marketing reports that mobile Internet usage is poised to overtake desktop computer usage in the next two years. As devices become more sophisticated (already we read books, watch movies, and shop for products), this seems very likely, though this doesn’t mean the mobile industry is not without challenges:

    • Outages remain a concern for mobile companies and users. Recent problems with outages have plagued RIM’s BlackBerry brand, leaving users to research other options on the market.
    • Competition among brands could benefit users searching for low subscription plans, possibly at the expense of a monopoly. HTC’s Android, for example, enjoyed strong sales due to its association with Google, but Google’s recent acquisition of Motorola may threaten their success.  And there's a rumor going on that Amazon will likely roll out its own smartphone produced by Foxconn, the same manufacturer for Apple late this year or early next year.
    • Though the mobile industry appears recession-proof, jobs are still cut in the industry. Though Nokia has one of the top selling phones, the company plans to lay off 10,000 employees around the world because their profit margin is less than that of other companies – including Apple. For Nokia to grow, they will need to improve their supply chain.

    The mobile phone opens new avenues to communication, travel, and entertainment, and stands to replace land lines in homes, and possibly more. How companies will continue to meet the demands of the market depend upon strong planning and robust supply chains that encourage profit.

    by Kathryn Lively