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Textile exporters take new approach

By Li Jing in New York (China Daily) Updated: 2015-08-06 08:09

Textile exporters take new approach

A booth of a high-end Chinese fabric producer at the apparel fair in New York. [Photo / Xinhua]

Jack Plunkett, CEO of Plunkett Research, based in Houston, the US, and a provider of market research and industry information, said that in many parts of China, manufacturers have had increasing difficulty attracting and retaining workers. Wages have climbed dramatically, and as demand for employees has increased, workers have been calling for better conditions.

He said that the apparel and textile manufacturing industry has historically been one with few barriers to entry, requiring little capital investment needed and a lot of low-skilled labor and equipment. A few sewing machines and some dim electric lights were enough to start up a factory.

"When China's wages were extremely low, the nation had a clear advantage in this industry, particularly in light of its tendency to cluster factories near shipping ports and logistics centers so that goods could be sent to customers with minimal delay," Plunkett said.

"Today, however, wages are climbing very rapidly as China's urban workers have many options in terms of places and industries in which to work," he added. "Demand for workers is high, and they expect much higher pay than those in less-developed nations."

Labor costs are not the only challenge. Figures from the China National Textile and Apparel Council show that the momentum of China's textile industry has slowed significantly since 2011. From 2000 to 2010, average growth was 18.8 percent, but that dropped to 12 percent during the past four years.

The price of high-quality cotton in China is about 30 percent more than elsewhere, which caused fiber processing in China to drop by 26 percent last year, the council said.

China customs figures showed that the country's textile and apparel exports from January to April decreased 2.5 percent to $81.9 billion, compared with the same period in 2014. In April, the export figure plunged 16.4 percent.

BMI Research forecast that in 2015, India, Bangladesh and Vietnam will be the main beneficiaries of the decline in the Chinese textiles business. Those countries already have experienced a sharp increase in cotton and textile exports, due to favorable government policies, a young demographic profile and competitiveness due to a low-cost production base.

The good news for Chinese textile makers might be that the US market offers opportunity.

Zhang Qiyue, Chinese consul general in New York, said that China's textile and fabric industries have seen a rise in business with the US. From 2000 to 2014, bilateral textile and apparel commerce grew from $6.2 billion to $46 billion.

Exports from China to the US increased slightly from January to May. In April, exports of textiles and apparel to the US increased by 7.8 percent, according to China's National Bureau of Statistics.

As the euro is sliding to a nine-year low against the dollar and European economies are slowing down, the US market is taking on more significance for Chinese textile and apparel companies.

"More Chinese brands are on display this year. Most of them used to focus on the domestic market but are now focusing on the US market," Sun Ruizhe, vice-chairman of the China National Textile and Apparel Council, said. "They are supposed to offer more good options for the US business partners."

Jiangsu Sainty Fortune, a state-owned company, brought its winter collection to the New York trade show. "As Europe's economy is going down ... and the US economy is picking up, the market is more significant for us," Wu Hui, assistant general manager at Jiangsu, said. "The US and Canada now contribute more than half of our business."

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