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| Issue date:01/08/2008 |
| ATA Journal for Asia on Textile & Apparel - Aug 2008 Issue |
| Source:Journal for Asia on Textile & Apparel |
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| China's textile and apparel industry entered an era of industrial optimization after years of rapid development |
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| Labor costs in Chinese textile and apparel mills increasing sharply |
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by Staff Reporters
Fast growths of China's textile and apparel production and, in particular, export trade slowed down in the first quarter of this year, due to acute challenges of rising costs in the areas of labor, energy, raw materials and even corporate financing with banks. The country was thus described to have lost competitive edges, especially in terms of labor cost, prompting overseas buyers to turn to other low-labor-cost countries, including Bangladesh, Cambodia and Pakistan.
In spite of the down sides of rising wages, some economic experts explained that the Chinese labor finally started to share benefits brought by economic growths of the country. This has in turn boosted domestic consumption and Chinese textile associations are now promoting the development of domestic markets. A story in this issue's "Retail and Merchandising" column (on page 26) reports areas of concerns manufactures need to know when entering China's clothing retailing business.
According to industry players, labor is a major production factor, but other factors are also important.
At the recent China (Shenzhen) International Brand Clothing & Accessories Fair [中國(深圳)國際品牌服裝服飾交易會] held in Shenzhen this July, Hangzhou Zhongfang Printing and Dyeing (杭州中紡印染) told ATA Journal that it was able to maintain its orders amid the worsening business environment.
Hangzhou Zhongfang has an annual capacity of 100 million meters of printed and dyed fabric made of a variety of materials, from imitated wool, imitated suede and various blends of cotton, hemp and nylon.
"Our company, like others in the country, has faced a number of challenges since last year." Assistant General Manager, also Manager at the Trading Department, Meng Xuefeng (孟雪峰) continued, "the energy crisis has greatly impacted the textile industry, which is a large energy consumer. To cope with this challenge, we have established our own power plant to ensure electricity supply within our facilities and, hence, the quality of our products."
Building own power plant
Mr Meng explained that the building-up of a power plant was essential to ensure uninterrupted services to clients and good quality of goods delivered. However, it also tested the financial strength of enterprises in the industry.
The enterprise further upgraded itself with advanced printing and dyeing systems from such countries as Italy, Germany, Japan and Taiwan.
"Although the textile industry as a whole is sluggish this year, we have received even more orders than last year, thanks to the high quality of our products, in addition to good service," said Mr Meng.
Although profit margin got slimmer, Hangzhou Zhongfang maintained profitable operations with its differentiated products, whereas its counterparts producing commodity products were having hardships.
Talent is long-term asset
For product development, the enterprise had a long-term cooperation with the Zhejiang Institute of Engineering (浙江工程學院). It also recruited industry experts from the China Textile Academy (中國紡織科學院) for product research and development. It invested RMB600 million to erect a modern production site at Hangzhou Xiaoshan Linjiang Development Zone (杭州蕭山臨江開發區), which integrated processes of weaving, printing, dyeing, finishing and coating.
Players in man-made fiber segments, meanwhile, found rising raw material prices a pressure.
Taihua Specialty Textile (Jiaxing) focuses on higher value fabrics to survive |
Taihua Hi-Tech Dyeing & Finishing (Jiaxing) (台華特種紡織), a producer of higher end products, including metallic, stretchy and elastic fabrics, as well as polyamide and polyester taffeta fabrics, said it was not easy to remain in the industry for many smaller enterprises.
Manager of Trading Department Manager of Taihua, Wang Jin-rong, said a number of smaller textile and apparel enterprises had closed down, and there were used textile machinery being resold and transferred in the country.
"The hay days for the textile industry took place between 2002 and 2006, and many enterprises grew up quickly during that period of time. No sector, however, can be profitable all the time, and the textile sector is no exception. As a consequence, it is crucial for enterprises to endure both ups and downs of the textile sector's economic cycle. From the past experience, those could endure the bad times would be able to retain their clients and grow further when the environment turned more favorable," said Mr Wang.
At the moment, the enterprise aimed at staying in the industry by minimizing internal costs, as material costs kept increasing in the recent months. The prime concern was the rising costs of dyes and chemicals.
More expensive dyes and chemicals add costs
Mr Wang explained that some domestic dyes producers suspended their production due to the Olympic Games, which was held in Beijing this August, leading to more intense pressure on procurement costs. Nonetheless, the Olympic factor would be temporary, and he expected the supplies would improve before this year-end.
Locating in Jiaxing city (嘉興市), Zhejiang province, Taihua covers 230,000 square meters with a total registered capital of US$120 million.
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Copyright © Adsale Publishing Limited. Credit goes to Adsale Industry Portal when used.
We reserve the right to take legal action against any party who reprint any part of this article without acknowledgement. For enquiries, please contact the Editorial Department. |
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