Two Factors on China's Textile Industry: Tech Update & Brand Proprietary
Source: CCPIT TEX Date: 2007-01-19
By present, more and more companies in Chinese domestic market are getting to know that both technology updating and brand proprietary will play more important role in the competitive industry.
The updated official report from China Customs shows that the exports of textile and clothing reached US$144 billion in 2006, up by 22.51 per cent year-on year. Textile exports were US$ 48.8 billion while clothing exports amounted to US$95.2 billion.
But many would attribute the success of China in international textile trade to the low prices it offers. In fact, Chinese textile manufacturers, in aquest for a higher position in the global value chain, are moving towards technical improvement and branding. Numerous facts and examples can be given to demonstrate Chinese textile manufacturers' devotion to technology upgrade, and here are just two of them. Firstly, about half of the total amount of the country's textile investment is spent on imported equipment. Secondly, about 70% of the fabrics used for making export-oriented garments are produced domestically. Branding is also emphasized, with "proprietary brand" being the latest buzzword in the industry. At the moment, some manufacturers emphasize the philosophy of corporate social responsibility, and some attempt to get "modernized" through quick market response, innovation, business restructuring, and a better information system in the system.
Thinner profit margins drive the move despite a huge trade surplus on an overall level, Chinese textile manufacturers are under great pressures on profit, which may partly explain their strive to reach a higher position in the value chain. Externally, protectionist measures from the US and the EU have cast dark shadow on the Chinese textile industry. Internally, Chinese manufacturers have faced an increasing cost of production. It is estimated that an appreciation of RMB of one percentage point leads to a drop of the corporate profits by 2% to 6%.What's worse, the Chinese authorities have planned to gradually remove tax rebate for textile and garment exports, and even levy a new export tax. Meanwhile, the labor cost has been steadily increasing. To increase the profit margin, there are also Chinese textile manufacturers which try to lower their production costs, shifting their production to cheaper regions in western China.
