China’s Textile Industry Becoming Less Competitive
Source: www.bloomberg.com Date: 2008-01-17
China’s dominance of the global garments trade may be eroded as rising labor and raw material costs are making it tougher to compete with rival Asian producers, a textile industry executive said.
"China is gradually losing its traditional competitiveness in production costs, while other Asian countries are speeding up development,"Sun Ruizhe, vice president of the China National Textile & Apparel Council, said at a conference in Beijing on Jan 8.
China accounted for almost a third of world garment exports last year, according to Sun. A slowdown in shipments may help to reduce the country’s trade surplus, which surged 52 percent in the first 11 months of 2007 from a year earlier to $238 billion. Textiles and apparel accounted for 15 percent of total exports.
"China will only be a textile export juggernaut for a fixed period of time, perhaps 10 to 15 years," Robert Antoshak, president of Nashville-based cotton information provider Globecot Inc. said at the conference.
Other Asian nations, such as Bangladesh, Pakistan and India, will take some of China’s business, while Vietnam and Cambodia may become apparel "tigers," Antoshak said in an interview.
China’s average wages have risen more than 50 percent in the past five years, while the yuan currency has gained about 14 percent against the dollar since the end of a peg in 2005. The government has also cut export tax rebates and tightened lending.
"Production costs have increased in terms of raw material, labor, energy and environmental protection," Sun said. "Rising interest rates and capital shortages also affect the industry."
China’s textile industry output in 2007 may reach 3.05 trillion yuan ($419 billion), a 22 percent increase year-on-year, according to a report released Dec. 27 by the Textile Industry Association, cited by Xinhua News Agency.
China exported $156.6 billion worth of clothing and textile products in the first 11 months of last year, up 20 percent from a year earlier, the top economic planning body, the National Development and Reform Commission, said Dec. 21.
China’s growth in exports of apparel may slow after 2010, and its purchases of shoes and clothing from overseas may rise as domestic consumers become more affluent, Antoshak said. The expected rise in China’s consumption may be offset by declines in developed countries, he added.
China’s cotton imports fell 37 percent to 2.14 million tons in the first 11 months of 2007 from a year ago, according to customs data. Cotton futures in New York rose 21 percent last year, trailing gains in grains and oilseeds due to lower-than-expected Chinese buying.
The March delivery contract rose 0.4 percent to settle yesterday at 68.95 cents a pound on ICE Futures U.S., formerly known as the New York Board of Trade.
