Each year, Mongolia harvests 2900 tons of raw cashmere from 13 millions goats, and produces 25 percent of the total raw cashmere of world. The fiber length of Mongolian cashmere is the attribute for the premier quality cashmere products and produces yarn with the best spinning ability. The processing industry consists of wool, cashmere, leather, wood, metal, textile, and food production.
The main cause of continued decline over the past decade was in industrial production. In particular the agricultural raw materials processing industries had a shortage of financial resources. These financial constraints led to the inability of enterprises to secure raw materials, resulting in an under utilization of capacity. A number of measures were taken by the Government to support industrial development. Several programs are under implementation. The processing of animal-originated raw materials such as leather, cashmere and wool is playing a dominant role in the processing industry.
Mongolia processes about 3.0 tons of cashmere, about 20 tons of sheep wool, around 2.0 tons of camel wool, more than 7.0 million skins in kind and produces more than 30 types of products and supplies to the domestic market as well as exporting dehaired cashmere, scoured wool, processed leather, knitwear, blankets, and carpets to more than 40 countries such as the USA, European Union, China, Russian Federation, and Japan. One of the biggest companies of the wool and cashmere-processing sector is the “Gobi” Shareholding company. This company manufactures and exports more than 60 per cent of the wool and cashmere in the processing sector. Textile production and its exports have been increased in the last years and it shares more than 10 percent total exports.
Favorable trade conditions given to Mongolia from international organizations encourage the exports of textile products. As a result, the export of knitted products has been increasing steadily. Around 20 percent of knitting product exports are cashmere knitted products.The new metallurgical manufacture of products of international quality was established in 1995 with an annual production capacity of 140 tons. Although Mongolia is considered a country with scarce timber resources, the Government makes an appropriate effort to efficiently utilize these scant resources. The Gobi Cashmere Company is the largest Mongolian producer of dehaired cashmere, cashmere fabrics and apparel, and other luxury fibers such as camel and yak wool. Mongolia is the second largest producer of cashmere in the world and Gobi Cashmere owns over 21 per cent of the world’s cashmere processing capacity. The Gobi Cashmere Company was established in 1981 with investment provided by the Government of Japan. Currently, 74.9 percent of the company is state-owned and the remaining 25.1 percent is traded on the Mongolian Stock Exchange. The company has the capacity to process 1,000 tons of raw cashmere. The Gobi Cashmere company produces garments and fabrics and has the capacity to produce 68 tons of cashmere and camel wool tops, 120 tons of cashmere yarn, over 350 thousand pieces of knitwear and more than 153 thousand meters of woven fabrics. In recent years, Gobi Cashmere has maintained double-digit growth rates in both productivity and export revenues. The company consists of six major interconnected manufacturing processes and employs 1941 people. In recent years, the company made significant investments to upgrade its cashmere technology and equipment by installing Japanese fully automatic knitting machines and cleaning and shrinking equipment for knitted garments. On May 28, 2003 the Government approved a decision to privatize the state owned 70 percent shares in the Gobi company and released a resolution.