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Rethinking the future

By Jiang Wei (China Daily)
Updated: 2008-05-12 14:29

Chinese textile exporters used to be busy collecting orders for the whole year during the spring.

Related readings: Textile industry fights in gloomy Worry creases in textile industry Textile firms turn wary on fixed asset investment Chinese textile firms struggle to survive in 2008 Yuan appreciation dampens textile export prospects Textile exporters drop dollar pricing to offset yuan appreciation Textile firms moving to reform amid falling orders Cotton imports seen lower as textile industry stagnates

But rather than sealing contracts from the US market, what they are facing this spring is uncertainty surrounding the slowdown of the US economy and the yuan's appreciation.

Li Lingming, chairman of the board of Chinatex International Apparel Co Ltd, says the company's exports to the US in 2008 have declined compared with the same time last year. Exports to the US account for about 40 percent of the company's total exports.

Like many Chinese textile makers, Li had expected to transfer the cost hikes resulting from the yuan appreciation, the removal of an export tax rebate and increased labor and material costs to the buyers. But instead, he finds they "may have to decrease the prices instead of increasing them" just to attract enough orders.

"Some US clients now ask for postponement of payments, whose risk is exaggerated by the yuan's increase against the US dollar," he says.

Their US buyers, however, are complaining at the same time.

Jeffery S. Hochster of the Texas-based Westmoor Mfg Co, says the company's business has been affected by various elements, ranging from inflation and the weakness on US dollar to the Chinese government's removal of the tax rebate.

"We've seen prices (of Chinese textiles) going up. Since December, prices have gone up substantially," he says, adding some factories even raised the prices by 15 to 25 percent. "It is a lot."

At the 103rd China Import and Export Fair or Canton Fair, which concluded in Guangzhou at the end of April, the contracted value of textile exports to the US declined by 25.49 percent from the previous session in last October. The decline is the largest among China's major export markets.

The event used to a spending spree for international buyers and a barometer of the country's foreign trade during a year.

China's textile exports to the US market have been decreasing since last October, according to the statistics from the China Chamber of Commerce for Import and Export of Textiles.

Monthly exports declined for five months in a row till February. The Chinese mainland's textile exports to Hong Kong, which is a hub for Chinese textile products to the US and European markets, also declined almost 15 percent year-on-year in the first two months this year.

"And we also found the decline of US textile imports from China surpasses the decline of its imports from the other markets," says Cao Xinyu, vice-chairman of the Chamber of Commerce.

He attributes the condition to the fact that the yuan has increased about 18 percent against the US dollar since the central government decided to raise the exchange rate in 2005.

This forced many Chinese textile exporters to seek a larger presence in some other markets, including the European Union and South America, Cao says.

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