Textile & apparel exports up 25.73% yr-on-yr in H1

The Running Situation Analysis of China Textile Industry for the First Half Year of 2011 and the Trend Forecast Report for the Whole Year, which was released by China National Textile and Apparel Council (CNTAC), showed that the export volume of textile and apparel from January to June rose 25.73 percent year-on-year to US$ 111.725 billion, and the growth rate increased by 3.69 percentage points year on year. During the first six months, the export volume of four individual months exceeded US$ 20 billion.

According to the forecasting of China National Textile and Apparel Council, from January to May, the export price of textile and apparel increased by 21.49 percent, the export price index of textile rose by 24.91 percent, and the export price index of apparel rose by 18.91 percent.

From January to May this year, the export price of China textile and apparel increased by 21.49 percent. This over 20 percent increase is especially outstanding since China textile and apparel export industry has, for a long time, been winning the market with price competitiveness. In particular, under the influence of various factors such as unstable international market demand and appreciation of the RMB exchange rate against the U. S. dollar, the result is undoubtedly a piece of exciting news.

Factors such as the rising cost of cotton and chemical fiber raw materials and the soar of labor cost are one of the reasons for the price hike of textile and apparel. However, after deep analysis, we see that rise in cost can't support price hike. Searching for the root, it's found that the main reason is that the structural adjustment of enterprises in textile and apparel industry in China has begun to take effect in recent years. In the middle of the year with prospects of more complicated international market in the next half year, how should we look at the export price hike of textile and apparel?

First of all, it's noticed that, through technological innovation and brand cultivation, China textile and apparel have preliminarily obtained bargaining power in the international market.

Textile and apparel trade is the most fundamental and active part of the world economy, and China textile and apparel is the main impellor of the world textile and apparel trade. In the past 20 years, the world economy has increased by 1 percent, the world textile and apparel export expressed in US Dollars has increased by 2 percent, and China textile and apparel export has increased by 4.86 percent. In recent years, the growth of China textile and apparel trade has obviously accelerated compared with the world textile and apparel trade.

The perfect export data indicate that China textile and apparel is doing better in terms of export and its industrial competitiveness and ability in sustainable development have been further enhanced. The main reason lies in that textile and apparel enterprises in China, faced with fierce competition in domestic and international markets, are attaching more importance to product upgrade, technology upgrade, equipment replacement, and brand cultivation. A great number of large and modernized textile and apparel enterprises have survived the fierce competition.

These enterprises are close to or have reached world-class level in terms of technical equipment, productive technology, production management, and product design, and their competitiveness and bargaining power in the international market have been considerably enhanced. An analysis report from the website "China Customs statistics" also points out large enterprises tend to have stronger ability to work under pressure, and many large export enterprises report that they have abundant orders this year and are ready to expand production.

Secondly, we should notice that emerging markets are pulling export dramatically but remain to be further developed.

According to customs statistics, China textile and apparel export to markets worldwide is comprehensively rebounding, and export to emerging markets such as Latin America has increased considerably. From January to May, China's export volume to all the continents maintained double-digit growth. The export volume of China apparel to European Union, America, and Japan continued to grow year-on-year by 29.12 percent, 16.07 percent and 21.44 percent respectively. Total value of export to those traditional markets reached US $ 33.162 billion, accounting for 64.66 percent of the total China apparel export, a year-on-year increase of 21.54 percent. Total value of export to emerging markets such as Latin America, Africa, ASEAN (Association of Southeast Asian Nations), and Russia reached US $ 8.143 billion, accounting for 15.88 percent of the total China apparel export, increasing 36.53 percent compared with a year earlier. Apparently, export growth to emerging markets exceeded that to traditional markets. Statistics indicate that emerging markets have huge potential and enterprises should exert more efforts to further develop them and cultivate them into new growth points.

Thirdly, we should also notice that price hike also brings deep influence on China textile and apparel industry.

Price hike has aggravated the polarization of China textile and apparel export. Textile and apparel has entered the era of high cost. The rising cost of raw materials, labor forces, and physical distribution has brought huge pressure to enterprises to survive. With small profit margin and weak bargaining power, the medium and small size enterprises are on the weak positions in the industry, and it is hard for them to cope with various impacts because they also face the problem of difficult financing. At present, medium-sized and small enterprises constitute the main part of the textile and apparel industry in China, and they mainly produce medium- and low-end OEM products. Under the context of industrial structure adjustment, industrial resources flow to large enterprises at a higher speed, so industry reshuffle is inevitable.

Price hike will also accelerate the trend of outward transition of China apparel processing industry. Southeast Asian countries can enjoy GSP (Generalized System of Preference) when they export to Europe and America, and these counties give foreign enterprise considerable preference in terms of tax policy. With the increases of labor cost in China, some labor intensive and low-value links in the production chain such as garment processing are gradually transferred to Southeast Asia, but the links with much technology content such as textile shell fabric still remain in China. Since this year, domestic and overseas branded apparel enterprises have strengthened their efforts in overseas OEM. Some textile shell fabric is exported to Southeast Asia from China and made into ready-to-wear garments there, which are then distributed to Europe, America, Japan, and Korea. Insiders believe that China's position in the industrial chain of textile and apparel export is gradually changing, and the trend will be more obvious in the future.

Although China textile and apparel export has achieved favorable and continuous development since this year, there are still many factors that restrain the development of the industry. Besides the possibility of export orders might reduce, enterprises are also faced with the upsurge of cost of production factors such as raw materials, labor forces, and energy and the restraint from appreciation of the RMB and environmental protection. Textile and apparel enterprises in China should catch the market opportunity and further explore and deepen emerging markets by increasing technology content, improving quality, and promoting additional value of original brands, so as to achieve better long-term development.