Taiwanese textile and clothing exporters look to mainland

Taiwanese textile and clothing exporters are hoping to take advantage of closer trading links with mainland now that relations with the mainland are moving slowly towards normalisation.

In particular, the Economic Cooperation Framework Agreement (ECFA) between Taiwan and mainland will provide the chance for Taiwanese producers to increase their share of the mainland's textile market significantly, according to a new report on 'Prospects for the Textile and Clothing Industry in Taiwan.'

The opportunities stem in particular from China's removal of tariffs on imports of 136 Taiwanese textile and clothing products in three stages over two years.

The first tariff concessions from both sides took effect at the beginning of January 2011. The second and third concessions are scheduled to take place at the beginning of 2012 and 2013 respectively. Before the agreement took effect, China imposed duties of 5% on imports of synthetic fibres and yarns from Taiwan, 10% on imports of fabrics and 14-18% on imports of clothing.

There are hopes too of enhanced international trade on a broader front as the global economy recovers. During 2010 there were encouraging signs of a sharp recovery in exports and there is an expectation that this trend will continue during 2011.

Taiwan's textile and clothing exports to mainland grew by 23% in 2010. As a result, China accounted for a 22.5% share of Taiwan's total textile and clothing exports, up from 22.1% during the previous year, and this is likely to increase further in the coming years.

Taiwanese textile and clothing sales to Hong Kong, meanwhile, increased by a lesser 15.1% and Hong Kong's share of exports dropped from 13.6% to 12.9%.

Reversing an industry declineTaiwan's textile and clothing industry has been declining over the past ten years - at least in terms of employment and output. As such, it has been following a pattern observed in Western developed countries where local manufacturers have been unable to compete with lower cost Asian producers.

In response, Taiwanese producers have focused on developing products of higher added value, and placing a heavy emphasis on product innovation and automation in manufacturing.

This will be an important means of ensuring differentiation and premium pricing compared with the industry's low cost Asian competitors.

There has also been a growing emphasis on environmental issues among producers.

Some companies have formed joint ventures for the production of organic textiles, a category which has expanded in recent years, and several well known companies have had their entire production processes certified by the Institute for Marketecology (IMO).

There are also opportunities for securing premium prices in international markets by offering high quality products and innovation in design.

This fits in with the general buoyancy of global markets for luxury goods - especially in China, where a new generation is eager to embrace the joys of consumerism.

Taiwan will need to invest heavily in brand development, though, to match European competitors - and this will take time.