Shandong wigmakers advancing into high-end market

Wigmakers in Juancheng county, East China's Shandong province, are making great strides toward the high-end market after several years' stable development.

Juancheng is a small county with a history of 2,200 years in Shandong province, and has a history of more than 40 years in the hair-processing industry.

Hair-processing is one of the pillar industries for Juancheng, which is known for hair products, and also an important raw material distribution center and processing and export base for wig products. Currently, Juancheng has a population of 900,000, among which 75,000, or nearly one-in-12 work in the hair-processing industry.

According to Juancheng's official website, 220 hair-processing enterprises have been set up in this county, processing more than 15 million units of wig products annually. In 2017, the hair-processing industry achieved 1.09 billion yuan in import and export, accounting for 74.67 percent of the total.

In the peak season, there were nearly 2,000 small and micro businesses engaged in wig production, a man surnamed Liu from a local wig company told Chinese financial news outlet Yicai. 

Wigs, made from human hair or synthetic fiber, are becoming increasingly popular, not only in the entertainment industry but also in daily life.

China's wig producers have high regional concentration, and mainly focus on Henan and Shandong provinces, according to Northeast Securities. In 2017, Henan's export in wig products was $1.61 billion, accounting for 50.7 percent, while in Shandong, exports reached $768 million yuan, accounting for 24.16 percent.

According to Liu, his father began to get into this industry in 1988. In 2011 when Liu graduated from university, he started a company with his father. Last year, the export value of his company was 48 million yuan, and more than 90 percent of products were exported to Europe, Africa and the United States.

"Our raw material mainly comes from Hunan, Sichuan and Yunnan provinces, as well as Myanmar, India, and Ukraine," Liu said, adding that the price of domestic raw materials is higher than that of imported raw materials.

There is stiff competition among domestic wig producers, who reduce the price to compete for market share, squeezing profit margins, Liu said. His company is reducing business in the African market because the net profit margin is only about 3-4 percent.

Compared with wigmakers in Japan and South Korea, Chinese enterprises should enhance their market competitiveness in high-end wig products, Liu said.

In the United States, local customers prefer high-end products made from real hair over cheaper fiber wigs. Liu said his company plans to put more investment in real hair this year, and has employed several veterans as products advisers.

In Europe, wig products usually have higher prices and profit margin. A delicate wig can be priced at 1,000 - 1,500 pounds sterling, which is the price of a Louis Vuitton bag, Liu said, adding that the European market is one of priorities in his company transformation.

Domestic wigmakers have to transform more actively, put more effort into research and development, and promote brand awareness, Liu added.