The shift from exports to home market isn't easy
Source: CNTEX Date: 2008-11-25
Experts forecast gloomy exports growth
China export figures released by the customs show that during the first nine months of the year 2008, China's textile and garment total exports was 140.285 bilion USD, grewing by 8.03 percent, its lowest level since 2003 (See chart 1). Experts predicted single -digit growth for the fourth quarter.
From January to September, textile and garment total imports increased 1.13 percent from a year earlier to 14.194 billion USD. Among them, textile imports decreased by 1.28%; Garment imports increased sharply by 22.07%.
Chart 1 The growth rate of imports and exports value of China��s textile and apparel (2003-Sep., 2008)
Markets shrink in economic turmoil
United States which stands as the major market for Chinese textile and garment exports, accounting for 15 percent of the country��s overall export market, has become gloomy under the expanding impact of subprime lending crisis. Its economy shrank at a 0.3 percent annual rate in the third quarter, its sharpest contraction in seven years as consumers cut spending and businesses reduced investment in the face of rising fears that recession was setting in. Consumer spending, which fuels two-thirds of U.S. economic growth, fell at a 3.1 percent rate in the third quarter - the first cut in quarterly spending since the closing quarter of 1991 and the biggest since the second quarter of 1980.
Resembling their counterpart in the US, the economy of Japan, Korea and EU have also retreated owing to weaker consumer spending and easing export growth.
Chinese textiles losing cost edge
China's textile and apparel industry is reeling from an nearly 18 percent rise in the value of its currency since 2005, as well as higher costs of labour, fuel, electricity and chemicals, and pollution curbs. China's textile industry, after surging to domination of world markets, is losing its competitive advantage (See chart 2 ).
Chart 2. 2008 China textile and apparel export price indexes ��%��
The shift from exports to home market isn't easy
More and more Chinese textile and garment enterprises have felt the chill and decided to turn their eyes away from European and American markets and focus back on the domestic market. However, sales in domestic market will not always enjoy a royal road. According to some knitwear exporters, to sell products in the home market their business had to go through complex examination and approval procedures to change from its previous corporate identity of an enterprise dedicated to processing materials supplied by overseas clients to a common domestic market oriented venture. The price hike of raw materials and the nation's tight monetary policies in the past year were also cited as negative factors.
Moreover, China's consumer confidence index (CCI) shrank slightly in September amid the global slow-down in economic growth. China's gross domestic product (GDP) grew by 9.9 percent year on year in the first three quarters of this year. The growth rate was 2.3 percentage points lower than the same period last year. The CCI fell 0.3 points in September from August to 93.4 (See chart 3). It is fair to say, the shift from exports to home market isn't easy. Analysts suggested the textile and garment enterprises forge ties among themselves to seek for more survival room in the industrial chain.
Chart 3 CEI, CCI and CSI in China
By Gracie Guo
