The International Cooperation and Development of Textile Industry
Source: GTEF Date: 2007-03-30
At 4th Global Textile Economic Forum on 23rd March 2007 in Beijing
Distinguished Mr. President, honored guests, ladies and gentlemen:
Good Afternoon!
First of all, I would like to thank Mr. President and the organization committee for giving me this opportunity. It's my pleasure to attend "The Fourth Global Textile Economic Summit Forum".
Now, I'd like to share with you the visions and the roles of a Third Party Organization in The International Cooperation and Development of Textile Industry. With the trend of economic globalization, every business is seeking for the opportunity of existence and development in this integrated environment, and the textile industry is of no exception. As a typical labor intensive industry, processes including procurement, production, sales and distribution to the entire supply chain have grown mature and open. Now, the global textile and apparel industry has reached a new developmental stage. When the integration of trade becomes a new trend, international production structure and the geographical distribution has been changing. The new trend is not only an opportunity, but also a challenge for every individual in the global supply chain.
According to the data from WTO, the global textile trade amount grew by 12% compared to the same period in 2004, but only by 5% in 2005. Although the total amount still keeps steady growth, the growth rate is decreasing. Nevertheless, the overall situation of "supply exceeds demand" would still exist, which in turns means more intensified competition.
This is a chart about the import trade proportion of the US and EU. For the major textile market, there is no great change in the overall situation. However, you can see that there is a distinct change in the supplier structure. Many developing countries in Asia like India has shown a rapid growth of market share. Since China's entry to WTO, China has maintained the rapid growth in the textile and apparel import and export, drawing attention from the whole world. According to the statistics of Office of Textile and Apparel of American Commercial Ministry (OTEXA), in 2006, the import amount from China grew by 11% compared to the same period, reaching 35.7% market share, while the import amount grew by 20.8%, with a market share of 29%. The success of Chinese textile enterprises in the world market is determined by many factors, like investment, efficiency and cost.
Free trade leads to the structure change and modification on the global textile industry. Horizontal development has brought more opportunities for international cooperation and development between developed countries and developing countries, as well as more challenges.
1. What we can see firstly is the change in the productivity.
Currently, the growth of international textile and apparel trade depends mainly on production capacity transfer and production outsourcing. The main cause for this shift comes from the great differences of labor costs between developed and developing countries. As indicated in Chart 4, the major difference, in the cost components index is the fixed cost, especially the labor cost. Therefore, many countries, including China, India, Vietnam, Turkey, Bengal, are experiencing a take-off of the export, and such momentum would be kept for a time in the future.
2. In the textile trade, consumption is the major factor on trade development. The US, maintaining the momentum of rapid growth, is still the major market for consumption. At the same time, we can also see from Chart 5 that the high speed of consumption growth of Chinese market invites more attention. It is forecasted that China would be listed in the top major global retail markets from year 2010. What customers demand is high-quality product with good service at reasonable price. Chinese textile industry has been an important part of international apparel industry. However, being the largest processing factory in the world is not the only choice, many Chinese apparel enterprises need to improve the ability to produce qualified goods in accordance with international standards during the international trade cooperation.
3. The development of globalization has also brought about technical and know-how communication amongst developed and developing countries. These involve best practice and bench marking quality requirement. Taking REACH for example, the new EU Directive for Registration, Evaluation, Authorization and Restriction of Chemicals, the continuous improvement on the technical level and environmental protection in developed countries represents the future requirement and development trend for the industry, which can positively improve the whole industry. As a result, enterprises should be well aware of these new technical trade policies. Such new policies rise the requirements for enterprise to enhance their technical standard and product quality. The open world market would push more textile manufacturers to accelerate their development, improve the product quality and added value, in order to fight for greater international market share.
4. As the cost for production and retailing becomes more and more transparent and with the rapid growth of the textile industry, comprehensive service (including design, technology, process, logistics, and after-sales service) will be the most important competitive edge for enterprises. Though a great challenge, it is an opportunity for the development of international cooperation.
We can find from the above situation that challenge and opportunity coexist currently in the textile globalization process. While the international cooperation and development is intensified, from a third party’s perspective, the following three aspects are rather explicit: global quality standardization and cooperation; environmental and health protection , enhancing the corporate social responsibility. These trends bring in positive and conducive influence on the industry development. Compared to the developed countries whose technology and creativity is fairly advanced, the production-oriented developing countries are facing the demand to manufacture products that comply the corresponding standard, requirements and regulations on environmental safety and health of the consumer. At present, these policies have gradually become the major difficulties confronted in developing countries However, looking in a positive way, it represents the future requirements and trend, benefiting the improvement and development for the whole industry. In addition to coping with these technical trade policies positively, a lot of developing countries are speeding up in structure modification to enhance its competitive edge on product quality, added value, service level, design and development, professionalisms, international management, brand building, sales capability and social responsibility, to promote a sustainable and healthy development for the whole industry.
Then, as an international third party organization, to promote the sustainable and healthy development of the whole global textile industry, we are in a position to bring our ability into play in the textile globalization process.
1. We can help the local enterprise upgrade the product quality so as to reach international standards and meet customer requirements.
.As the regulations and technology develop continuously, local textile enterprises need to acquire themselves with various international technical standards, regulations, testing methods, and quality control solutions, so as to enhance the overall product quality, and the standardization level of the local textile industry. Therefore, as an international third party with global network, we are capable of helping enterprises to know various international standards, regulations, and technical requirements through training, seminar and consultation, etc. We are here to help clients to solve technical problems, boost quality inspection and management, so as to avoid and minimize trade risk due to inadequate information and quality problem level.
.It often happens that, a new regulation is issued without any corresponding testing standard. As a third party organization, we can make use of our strength and identity to discuss with the regulatory authority to formulate testing methods in accordance with the industrial requirements. This makes the implementation of the standards and regulations more practical. The impartiality and professionalism of the international third party organization can help local enterprise to know more on new regulations or statutes and response quickly. This will not only protect the enterprises themselves, but also customer benefits through the implementation of regulations.
2. SGS can provide an information communication platform for the cooperation of textile industry
.The impartial position, international identity and professional strength, enables us to participate actively in the formulation and update of standards, and get the first-hand information quickly. For example, many senior experts in SGS has been invited to join international organizations such as AATCC, ASTM, SDC, ISO etc. participating in the formulation of many standards for the textile and apparel industry. The third party organization can take the applicability and acceptability of the standards into account from enterprises’ perspective. On the other hand, it can consider the market demand and customer’s benefits from authority perspective. Hence it can also enhance communication and mutual understanding to promote the development of industrial standard.
Right now, developed countries had released a series of “Eco textile standards”, requiring the garment products should not bring any adverse effects to the health of the wearers and the environment during usage. Such requirements lay serious restrictions on the usage of harmful chemicals, in terms of chemical varieties and quantities. The release of such standards would directly impose influence on enterprises’ business and competitiveness. As a third party inspection, testing and certification organization, we will help clients to learn the latest international requirements by seminar and training and provide all possible testing methods and services to make them "go global".
.The international third party organization is responsible to promote corporate social responsibility standard, creating fair and harmonious trade environment. Nowadays, more and more buyers, governments of imported countries, and ultimate customers begin to pay attention to the production process of the products in accordance with the corporate social responsibility standard. As a result, standard such as SA8000 has been developed. SA8000 aims to inspect the production environment in the factories worldwide, such as forbidding textile manufacturers to employ child labor for production, inspecting the working condition and welfares for the labor etc.
.Other initiatives and international good practices are caring the industry in different aspects such as environmental management, occupational health and safety, information security management and trade partnership against terrorism. The third party organization offers a good information platform, balancing the effort between the restriction and development from different parties. It does not only help enterprise to understand international standards and minimize the risk in facing new challenge but also contribute to the enhancement of product quality, protection of customer benefit, promotion of corporate social responsibility and fair trade competitive environment and the enhancement of international cooperation and development for textile industry.
The globalization of textile industry is conducive for the efficient resources allocation, reform of production technology and structural modification. With its impartiality, integrity and professionalism, an international third party organization, would provide timely and thorough information for local textile enterprises, promoting the communication between local and international market. Moreover, by means of inspection, testing and certification services, we would help enterprises to enhance product quality, optimize production process, minimize trade risk, create free trade environment with fair competition and ultimately promote a healthy and sustainable development of the global textile industry.
Thank you very much!
By Spencer Yeung, Vice President of Consumer Testing Services of SGS Group and Executive Director of SGS Hong Kong Ltd.
