China's new five-year plan to guide industry expansion

Domestic market expansion, new materials development and the transfer of production bases are all priorities under the 12th five-year plan (2011 to 2015) for the domestic textile industry, released by mainland China's ministry of industry and information technology earlier this month.

According to its details, a potentially lucrative market for clothing and textiles lies in China's vast rural areas, where per capita spending on apparel only accounts for 18% of that in the country's towns and cities.

"As the progress of urbanisation continues to accelerate, there will be more spending on clothing," the plan says.

The Chinese government has been shifting its economic policies to take account of urbanisation since the 1990s. Indeed, the National Bureau of Statistics of China announced on 17 January that the country's urban population had reached 690.7m; accounting for 51% of the total population of 1.3bn. This marked the first time the urban population had surpassed that of China's rural areas.

And with continuing urbanisation in mind, the government's new five-year plan requires Chinese companies to develop new materials and build strong brands to attract more Chinese consumers.

According to the plan, the goal is for China is to have between five and 10 internationally recognised brands and 100 nationally renowned brands by 2015. Meanwhile, at least 1% of annual sales should be invested in research and development - a step up from the current ratio of less than 0.5%, according to the plan.

Currently, the Chinese clothing market is dominated by foreign brands such as Uniqlo, H&M and Zara, but some Chinese domestic brands are now starting to catch up. Among them are Shanghai-based urban casual wear brands MetersBonwe and Mark Fairwhale, which are working with foreign designers to compete with their international rivals.

Production plans
The textiles production element of the new plan focuses on chemical fibres, whose output is expected to account for 70% of all textile materials by 2015. The plan notes heavy investment is underway into the China-based manufacture of high-tech fibres (including carbon fibre), polyphenylene sulfide fibre and p-phenylene terephtalamides fibre (PPTA).

In 2011, for example, Shandong province-based aramid fibre manufacturer Yantai Spandex Co Ltd started a massive PPTA production project, aiming to reach an annual capacity of 1,000 tonnes of PPTA fibre - which China has long been buying from foreign companies such as the US-based DuPont.

The Chinese government's plan is also urging companies to move plants - 85% of which are in the economically advanced east coast areas - to the developing more rural regions to the west. For example, it suggests that Xinjiang province (a major cotton-producing region) should build a production base for manufacturing cotton yarn and clothing.

"The east coastal cities should act as a talent pool and innovative centre, while the rest of China is offering low cost resources, including labour, energy and industrial infrastructure," said the plan.

Export growth
Of course, exports will also continue to be important to the Chinese textile industry, as the global economy slowly recovers its continuing malaise.

While the US, Europe and Japan will remain the target markets for Chinese manufacturers, "the consumption ability in emerging markets will continue to grow," the plan says. It predicts the export value of all textile products will reach US$300m by the end of 2015, with an annual growth of 7.5% from 2011.

In fact, more and more Chinese manufacturers who used to serve foreign clients are now only looking for opportunities in China, such as Shanghai-based clothing manufacturer Sunzone Industrial Co Ltd.

"We started to work with Chinese clients after the financial crisis and this year, we will continue to explore opportunities in the domestic market," sales manager Leon Niu told just-style.

Meanwhile, though, the company has no plan to close the export business. "We have many clients in Germany and France, and we will be happy to get more orders from them if the price is good," he added.