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tv   Asia Insight  PBS  September 21, 2016 6:30pm-7:01pm PDT

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in april 2016, fashion world tokyo welcomed fashion companies from around the world. in its third year, it is one of japan's largest exhibitions,
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attracting 660 companies from 35 countries and regions. one participant specializing in cashmere is from mongolia. after china, mongolia is the second largest producer of raw cashmere in the world, responsible for 40% of the global output. however, many of the buyers visiting the company's booth were unaware of this. >> translator: whether the cashmere comes from mongolia or whether it comes from china, that's not really the sort of thing i've ever really thought about. >> although mongolia produces large volumes of raw cashmere, it doesn't have sufficient facilities to manufacture it to
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finished product so 5% of the output is exported to china. however, work is currently under way to ensure that the production and sale of cashmere products becomes one of mongolia's core industries. mongolia's largest cashmere manufacturer privatized in 2007 has actively striven to introduce the latest technology from japan and italy and develop products for overseas sales. leading this effort is the company's ceo, one of mongolia's most prominent entrepreneurs. >> translator: monday goalia has around 600,000 house holds and a population of 3 million. roughly 147,000 of the households are involved in cashmere production. there is no other industry in mongolia quite so widespread as the cashmere industry. we're working hard to boost the
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production of cairn mere into an industry that can make a greater industry into the lives of mongolians and we need to continue making these efforts in the future. >> in this episode of "asia insight" we follow work under way in mongolia to expand domestic production of cashmere products and move away from its current depend eence on china. over the past decade, the economy of mongolia has been developing rapidly, supported by its wealth of mineral resources. however, in the wide open plains outside the capital ulan bator, many families still live a traditional lifestyle as nomadic herders.
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there are more than 50 million head of livestock in mongolia and around 20% of the population is employed part-time or full time in livestock farming. in april as winter turns to spring it's the peak season for the cashmere harvest. a nomad and his family harvest cashmere from their goats. cashmere is the name given to the goats' down undercoat. to survive the harsh winters they maintain their body temperature growing soft fine down under an outer layer of coarser hair. the undercoat is harvested using a comb. the down sheds naturally, as the days grow warmer, so the goat
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herders need to watch the temperature carefully to judge exactly when to comb. the average amount of cashmere taken from a single goat is only around 300 grams. he has a herd of 160 animals, 110 of which are cashmere goats. every year he can harvest a total of 30 and 40 kilograms of raw cosh mere. small scale farmers across mongolia produce an annual total of 8,000 tons. in the outskirts of ulan bator, signs like this can be frequently seen alongside the roads. herders either sell their cashmere directly to traveling buyers or they visit those who
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put up these signs. he and his wife are here to sell their harvest. every year they produce around 30 kilograms of cashmere. as the price of cashmere fluctuates every day, depending on the buyer, the herders search to find the best deal. today's price is $30 u.s. per kilo. the cup value brought three kilograms with them which will earn them $90. nearly 90% of unprocessed cashmere purchased in this way eventually finds its way to china, but why is this?
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the reason dates back to mongolia's former socialist economy. under the planned economy, all livestock was the property of the government and herd numbers were regulated, nomed aic herders were paid a salary by the government as long as they met quotas imposed for meat and dairy produce. there was only one state-owned factory that made cashmere products and most of these were exported to the soviet union and eastern bloc countries. in the early 1990s the socialist government collapsed and as a market economy was gradually introduced, private ownership of livestock increased. as unprocessed cashmere sells for nearly 50 times the price of
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regular sheep wool, most farmers expanded their herds of cashmere goats. in the early 1990s, there were about 5 million goats but over the following decade, up 'til today, that number has increased to more than 20 million. this dramatic increase in the volume of raw cashmere production has made it impossible for factories in mongolia to process the entire output. as mongolia transitioned into a market economy, china was also making significant investments into the cashmere industry. this included the construction of many cashmere product manufacturing plants in the inner mongolia autonomous region. in this way, mongolia came to rely upon its neighbor as the major export market for its raw cashmere with china becoming the world's leading manufacturer of cashmere products.
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but now mongolia is trying to escape its overreliance on china. >> translator: the reason we have adopted a policy of producing finished products inside mongolia is that, at the moment, only around 10% of the cashmere wool produced within mongolia is turned into a finished product. by changing this, we would be able to earn many times the profit than we do now by simply exporting raw cashmere that has only been washed and combed. if we manufacture cashmere products in mongolia, this will increase our domestic tax revenue, boost wages and raise incomes. it's clear that this will have widespread economic benefits on our country. >> with a decrease in the global prices of natural resources mongolia's economy has also rapidly slowed down. the government is trying to diversify an industrial structure that is overly reliant
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on mineral resources. the government has been pushing forward a plan to actively develop the cashmere industry between 2013 and 2020. the government provides low-interest loans for the purchase of raw cashmere and the refurbishment of processing facilities and this year steps are being taken to develop new product quality standards. the government aims to secure reputation for product quality following recently reported incidents of cashmere contaminated with hair from other animals. the new standards are called the hanshurhegt. khaan means emperor. the longer and finer the fibers used in the make of the yarn the more expensive the resulting fabric. it is softer to the touch and less prone to producing fuzz
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balls. under the khaan shuhegt by length. the fiber that passes the screening tests is allowed to use the logo for two years. the logo has already been trademarked in over 30 countries in europe and asia. companies will be able to apply for accreditation from this year onwards. the monday goalian government intends to introduce these policies in order to foster the development of the mongolian cashmere industry. >> translator: once we are able to process 100% of our cashmere we intend to ban the export of raw fibers. >> mongolia's largest cashmere company is gobi working hard to promote overseas sales.
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at the company's store in ulan bator, a wide range of products is available to regular consumers, including catch mere cardigans and sweaters. their yearly turnover is around $40 million. the company set out as a state-owned factory but was privatized in 2007 and now employees 1,300 workers. they also own garment manufacturing plants in ulan bator. gobi's strength is its ability to handle every process of manufacturing internally. the company processes around 400 tons of fibers annually under contract with nomadic herders. the first task is to separate the fibers by color. there are four types of mongolian cashmere, the most
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common color is beige, followed by brown and white. the rarest is warm grey. once the colors have been sorted, they are washed separately by machine. the washed and processed fibers are initially contaminated with coarser hairs and the cashmere is refined by removing them. all that's left are the soft and fluffy fibers of pure cashmere. the refined cashmere is then arranged into rectangular shaped blocks from which the yarn is then spun.
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there are only a few companies in monday goalia with the necessary equipment for spinning cashmere yarn. gobi provides smaller manufacturers with yarn for their cashmere garments. the factory owns 150 looms of which 20 are state-of-the-art models from japan. these are extremely expensive pieces of equipment costing close to $100,000 each. once the machines are programmed, they can automatically produce finished products. when the company was state-owned the majority of their business was to manufacture products for other brands. less than 10% of the products were for direct sale by gobi. however, since privatization in 2007, the company has rigorously engaged in capital investment to
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produce a large number of products for direct sale. gobi is putting much effort into designs aimed at the overseas market. in the past, the company manufactured the same designs for both domestic sale and overseas sale. recently a new team has been set up within the design department to specialize in designs targeting overseas consumers. the company is also recruiting designers with experience of studying overseas. in the near future the company plans to secure contracts with italian designers. the president is the force behind the transformgsz of gobi into an internationally recognized clothing brand. he bought out the state-owned company. he's also trying to launch a new fashion label to highlight the appeal of mongolian cashmere to
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consumers around the world. >> translator: i'm aiming to develop a mongolian cashmere brand recognized by consumers across the globe that will sell in larger quantities. at the moment, i believe that italian brands produce the finest cashmere products in the world. i aspire to create a brand that will be able to compete in the future. >> the name of the first ever in-house gobi brand is the organic. under this new strategy, the company is aiming to win over high-end customers. a mainstay of the new brand is its line of coats. by 2020, gobi's goal is to 100,000 cashmere koetsz every year. in fact their catch phrase is from goat to coat.
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♪ today the company is holding a meeting dealing with brand development. sales staff responsible for overseas markets such as china and japan give their opinions on appropriate inclusions to the product portfolio. >> translator: the major characteristic of the organic is that the raw material used is completely natural. incorporating the very latest design trends, our brand is higher in value and in quality. >> translator: the most important thing to bear in mind is that our customers are interested in the latest trends. chinese customers, for instance, are showing an interest in our coats. >> translator: they're particularly keen on these reversible coats. >> translator: try it on.
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>> translator: this two-colored coat is reversible and it's also hand stitched. now, please, why don't you try it the other way around. >> the very latest technology is required to produce a reversible cashmere fabric so only a limited number of factories can fulfill such requirements. that's why the company currently collaborates with factories in japan but by 2020 it hopes to develop the ability to make the products in-house. >> translator: chinese consumers are recently sensitive to trends. i think this will be a very popular product. >> translator: the design is great, too. >> translator: you can wear it quite casually as well. >> translator: i think it would be great to combine this product
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design with a thinner material for the japanese market. it should do well. >> translator: do you have any other requests? >> translator: over in japan, many people wear a cross between a coat and a cardigan. these are called coat-i-gans, long cardigans and in mongolia they would be called a coat. i think we should make one. >> translator: that's fine, let's design one. >> following the meeting the design team immediately gets started on the proposed new ideas. >> translator: she said that cardigans designed to fit like a coat are popular in japan. perhaps we can create something that looks like a cardigan from the front but is long at the back, so it would look like a coat, and keep the wearer warm. >> translator: with thicker material it could also be worn as an overcoat. >> translator: we could add something else here.
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>> translator: let's make it a little thicker, add a collar and make it look more like an overcoat. >> the production line will start rolling in two months. the brand will be launched in september of this year with plans to open stores in mongolia and moscow. in the leadup, the company intends to create nearly 100 new products. >> translator: compared to our rival companies in china and italy, we are unfortunately still operating on a small scale with low productivity. as a mongolian company with access to raw materials, i want to improve our productivity. i also want to develop more efficient management so that we can become a company that will be competitive in the international market. >> in mongolia, approximately
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100 companies manufacture cashmere garments. however, there are only a few companies that can handle the entire manufacturing process from procurement of raw materials through to the processing of a finished product. many of these manufacturers face obstacles to ramping up production. the principle obstacle is the sourcing of raw cashmere. building on the outskirts of ulan bator. inside are stockpiles of raw cashmere. this factory washes and prepares newly harvested fibers ready to be processed into yarn. the majority of raw cashmere purchased from herders is brought into small factories like this for cleaning. there are 25 such factories the. however, the majority of these facilities are financed with chinese capital. in 2003 china banned import of
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unwashed raw cashmere to prevent the spread of disease leading to many cleanup operations setting up inside mongolia. huge volume of raw cashmere passes through these factories, destined for export to china. one of the owners who runs the cashmere factory says that the chinese companies are also able to set the purchasing price. >> translator: although the market price changes every year, there's generally set by the major chinese manufacturers of cashmere garments. two years ago the number of cashmere goats in the inner mongolia region was cut. reportedly due to a lack of grazing pastures.
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i don't know the exact figure but i think the number of goats was reduced by around 30%. because of this, the white cashmere on sale in china this year was now selling for between 50% and 100% more. there is an extremely fierce rivalry between the chinese companies. they have the funds, and it seems that they want to purchase as much mongolia raw cashmere as possible. >> for cash-poor smaller companies in mongolia that has become difficult to source the cashmere they require, since 2011 the government has been offering loans to companies wishing to buy raw cashmere, but the screening process is very stringent and it is still difficult for small companies to acquire financing. >> translator: to purchase raw
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cashmere, a large amount of capital is required over a short period of time which makes life very difficult for the manufacturers in mongolia. we need to provide them with more support. >> this small company in the cashmere business, each year the company produces around 20,000 cashmere products, around 30% of these garments are produced on contract for overseas companies. the company president established the company in 2006. she currently employs 45 people and the company's annual revenue of $1.5 million. it produces both cashmere and wool products but this year tu to a shortage of capital the company will only be able to source half its usual volume of raw cashmere and instead will increase production of cheaper
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wool products. >> translator: i've heard from neighboring herders that many buyers employed by chinese companies are coming here to purchase raw cashmere at high prices, so even if they say that they will sell to us, it is they that determine the marketplace. we can't really ask the herders to sell more cheaply to us because of the money problems since cashmere is the future of their labor. we have no choice but to follow the market. >> this company has been in business since the emergence of the market economy in the early 1990s. over time they have forged close ties with local herders, enabling them to purchase raw cashmere directly. but due to market prices dictated by chinese buyers, they're finding it increasingly difficult to continue to acquire raw cashmere locally. this has led to smaller companies encountering various issues in the manufacturing of finished cashmere garments.
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today she is being visited by the president of another small company. although she runs a factory that produces yarn, she's hoping the company can help profitable by using it to produce gloves and other finished products. however, because she does not have a loom, she has contracted the company to manufacture the gloves. >> translator: we do not have any of the equipment required to make these products, so we've placed an order with this company to manufacture the gloves. i've come here today to collect them. the equipment is far too expensive for us to buy ourselves. we manufactu . >> translator: we manufacture products for her company.
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as they're skilled at primary processing we ask them to manufacture yarn for us. in return we take orders to manufacture products for them. small companies like us must work together. >> small mongolian companies are now beginning to help each other out and cooperate in many ways, including the offering of deferred payment and holding joint exhibitions. cashmere is a natural asset, fostered by mongolia's rich, natural environment. efforts to bring the finest mongolian cashmere garments to the world have only just begun.
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hello there, welcome to nhk "newsline." it is thursday september 22nd. i'm catherine kobayashi in tokyo. shinzo abe delivered a speech at the u.n. general assembly in new york. it was his fourth speech at the annual gathering of the world body since he took office in december 2012. >> translator: north korea has now manifested itself directly before us as an open threat to peace. what can we do in response? the united nations

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