Michelle Phong

In a recent exclusive interview with Adsale Industry Portal 2456.com, Raymond Chu, Chairman of Chemtax Industrial, shared his views on how can the hard-hit textile producers in Guangdong regain the market position.

Headquartered in Hong Kong, Chemtax Industrial is an agent offering internationally advanced textile machinery and technology – in the areas of spinning, knitting and finishing – to customers in China and Hong Kong. The company represents some 20 brands of machinery systems, including Stoll and Santoni, in the Greater China region.

2456: Adsale Industry Portal 2456.com
Chu: Raymond Chu

2456: How do you see the Guangdong textile industry for this year?

Chu: The textile and apparel industry in the Chinese province is facing challenges, even without the (global) economic crisis. Here, we are mainly talking about manufacturers in Guangdong.

A number of US orders for knitwear have been shifted to Bangladesh, India and other Asian producing areas. In Bangladesh alone, there are about one million handlooms. This (shift of orders) has been acute during the long holiday of the Chinese New Year lasting up to one month. When workers return to the factory, mass production picks up again after the end of Chinese New Year by February or later. As a result, the production in the first quarter of the year is often missed out in Guangdong and these orders go to elsewhere in Asia.

More workers find the piece-rate salary less attractive as they earn meager during the long spring vacation. More factory owners are thus considering relocating their production facilities closer to the place of the origin of their skilful workers (e.g. Sichuan province), and offering them a monthly wage. Living at a lower cost in Sichuan and other inland provinces, workers are satisfied and they can meet their families around the year.

Secondly, integrity and trust is a concern between larger textile and apparel manufacturers and their out-sourcing partners, i.e. usually smaller processing units in Guangdong.

Chemtax’s orders are full until June or July this year, as manufacturers demand more machines.

Some knitwear manufacturers reflected their views that they boosted the productivity (in Guangdong), because they could not count on processing units in peak periods, for instance. As a consequence, knitwear manufacturers are expanding their own facilities to capture market opportunities.

2456: Why textile players in Guangdong seem to face more challenges than East China?

Chu: Guangdong textile manufacturers have extendedly depended on exports. Their competitiveness has slipped off without product development, design abilities, branding or domestic distribution channels. These original equipment manufacturing (OEM) players have been hard hit, lacking alternatives to turn to when export sales shrank.

In contrast, textile manufacturers in Jiangsu and Zhejiang provinces (Eastern China) are less impacted when facing the plunge in export sales. This is because on average, export represents approximately half of the sales structure of an Eastern Chinese textile producer. When they do not sell overseas, they have got more distribution options domestically. Some of them have their retailing networks across Chinese cities as well.

2456: Are there any remedies for Guangdong?

Chu: Vocational training in the Guangdong textile and apparel industry can help, since relevant skilful workers are demanded across the country.

With support of the local governments, we have opened a new design center at Dalang town, part of Dongguan city in Guangdong province.

Dalang is famous for its knitwear supply chain. This new center serves as a resource and information center, providing both knitting designs and commercial matching services. We hope to further upgrade its knitwear manufacturing know-how in designing and spark local production activities. Seminars in this respect are being organized.