VALUE-ADDED CASHMERE PRODUCTS FOR ECONOMIC DEVELOPMENT
The government of Mongolia has been striving to make tourism and agricultural sectors the main engines of the national economy to diversify the economy away from mining in recent years. If we execute smarter policies to develop these sectors, there are ample opportunities available as Mongolia has vast resources such as agricultural products and nomadic culture and lifestyle, which could attract investors and tourists.
The national development policy and strategy on tourism and agricultural industries should move forward hand in hand as agriculture is the main pillar of Mongolia’s tourism sector.
The cashmere industry is a crucial part of the nation’s economic development as it has already progressed to maturity, with consumers all over the world and global cashmere manufacturers recognizing Mongolia as a key producer.
Mongolia produces nearly 40 percent of the world’s raw cashmere output, which means it is the second largest supplier of raw cashmere after China, and makes 300 million USD to 400 million USD a year through the industry. Last year, over 6,000 tons of cashmere was cleaned and exported (worth nearly 200 million USD) and around 800 tons of cashmere were manufactured into value-added products (worth 80 million USD). While these figures are respectable, Mongolia still has tons more potential in this industry.
Only 10 percent of Mongolia’s annual cashmere production becomes value-added products, and experts note that Mongolia is able to exploit this opportunity further and gain a footing in the international market.
Mongolian companies exporting cashmere overseas set a goal to make the country the world’s leading producer of pure cashmere overcoats by 2021. These companies have made technological reforms to improve the quality and standards of their products, which will help them produce more overcoats and increase their exports.
Some companies have been hiring experts and designers from countries which have developed cashmere and fashion design industry. This trend is believed to be one that will bring most profit and brand recognition throughout the world.
Entering foreign markets is a challenging task for Mongolian cashmere companies due to difficult customs requirements. The government of Mongolia needs to negotiate with other governments to deal with this challenge, but finding a better solution is not easy. Representatives from the cashmere industry criticize that the government is not making effective initiatives to develop this important industry, which is based on a national valuable resource.
Some Mongolian businessmen point out that collaborating with countries with developed cashmere industries such as Italy and China through joint ventures rather than competing with them is a smart option for Mongolia.
They say that establishing joint companies with these countries will be the first step to providing favorable conditions for trading with them as China and Italy have large markets.
Tourists visiting Mongolia buy cashmere to take home as a gift because purchasing products made by super fine-micron cashmere with high quality at a low cost is a wise choice for them, but companies need to focus on the design of their products as there are limited options in the market today.
Mongolian goats produce blue-gray cashmere, which is considered rare in the world, and experts agree that the combination of steppes, deserts and mountains with extreme climate conditions help improve the quality of Mongolian cashmere.
Mongolian cashmere producers also need to utilize e-commerce technology, which is available to a great number of consumers worldwide, and this system should be provided to customers with a wide range of choices with attractive designs. Offering high quality garment with reliable and accessible services is key to growing a business.
The government should look to promote long-term soft loan to assist national companies in producing value-added, high quality products that will compete in the international market. This in turn will also benefit herders who lack income resources by elevating animal derived raw material prices.