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Golden era of Chinese textile and apparel exports

source: china textile 2010-08-10  

In the first half of this year, China's textile industry still reached a 22 percent growth in exports year on year, despite facing heavy pressures, this proportion is significantly higher than the expectation of the industry at the beginning of the year.

Experts believe that textile exports will be similar to the overall performance of China's foreign trade, that is, export growth will maintain the trend of " higher in the first half but lower in the second half", meanwhile, low value-added OEM products mainly based on collection of processing fees as profit source will start a gradual shift.

Customs statistics show that China's total textile and apparel exports reached US $88.88 billion from January to June this year, up 22 percent over the same period of 2008. Of which, textile exports were US $35.65 billion, up 32.3 percent year on year; apparel exports were US $53.23 billion, up 16 percent year on year.

Industrial insiders point out that growth rate of textile exports in the first half was higher than market expectation, reflecting multiple factors about warming demand from overseas market, but mainly due to rebuilding inventories of Europe, the United States and other developed countries, overall export growth is expected lower in the second half, annual performance of textile exports will be "higher in the first half but lower in the second half".

Processing business is the early development model of textile exports, mainly concentrated in Guangdong area, mostly are done by Hong Kong and Macao enterprises, value-added of products is relatively lower, profit source is limited to OEM part. As China's labor costs are increasing in recent years, exports in this model have been gradually shrinking, relative enterprises are slowly transferring to Southeast Asian countries, which will become a trend.

Relative analysis even believes that the golden era of Chinese textile and apparel exports is over, production base of global textiles and garment has gradually shifted from China to India, Pakistan, Southeast Asia and other countries, the process has already started around the year 2005, and proves to be irreversible.

Exporters are less optimistic towards export situation in the second half. Many enterprises believe that export profits will be increasingly tiny in the second half due to changes the RMB exchange rate, rising wages and other factors. Exports are likely show "polarization", some large enterprises with greater bargaining power and anti-risk capability will feel relatively easy to achieve price increase, while some small and medium enterprises will face risks of expanded losses, if they can not raise prices.