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| Issue date:16/04/2009 |
| ATA Journal for Asia on Textile & Apparel - Apr 2009 Issue |
| Source:Journal for Asia on Textile & Apparel |
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| Featured company: Jiangsu Sunshine |
Jiangsu Sunshine Group (江蘇陽光) is a leader in China's wool textile industry. The group's chief, Chen Lifen (陳麗芬), said that Jiangsu Sunshine would like to contribute to building strong Chinese clothing brands for the domestic and overseas markets
CTA: With currency appreciation, material price rises, increased environmental cost and manpower cost, China's textile companies have been under great pressure. How does Jiangsu Sunshine cope with these challenges?
Ms Chen: In fact, all these issues you mentioned did not affect Sunshine in the first half-year of 2008. The rise in material cost was transferred to our customers, but problems surfaced after last October -- we experienced changes in market demand. The textile and garment market, as you know, is influenced by the rotation of seasons. The global market witnessed a softening purchasing power since last autumn. In particular, some customers placed orders in smaller batches, and often requested for price reduction.
The rise of VAT rebates for textile and garment last August and November helped a lot in stabilizing exports. We estimated in early 2008 that RMB/USD exchange rate would drop to 6.5:1, but such rate hit 6.83:1 in the late 2008, which was less steep than we expected.
Venetia, Jiangsu Sunshine's own brand |
For our company, the export market hits 70% at its best. Export of our fabrics and our garment accounted for 60% and 53% of our total export respectively last year. We continue to review such ratio in an attempt to balance our export and domestic sales, hoping to divide them equally. Under the financial crisis, we will constantly innovate and streamline our management at a faster pace.
Financial crisis is a "two-sided sword" -- On one hand, market demands drop and enterprises suffer. Retailers will lower their product prices to maximize interests. On the other hand, such unfavorable factors may turn out favorable if we manage to transform pressure into drive.
For example, Sunshine is reviewing the structure of our product segments. We used to include full range of products with different grades, but we are more than happy to invest on top-grade products. Prior to the crisis, top-end overseas garment brands purchased fabrics from Italy, now they are looking for Chinese suppliers as well. They want quality assured products and Chinese fabric manufactures, with relatively lower labor cost, enjoy comparative advantages in price.
Ms Chen, General Manager of Jiangsu Sunshine Group |
This gives us new opportunities. Additionally, many textile technicians are unemployed after the closure and bankruptcy of the textile enterprises that they worked for. So it costs less to hire these talents, including designers, salespersons and brand planners. Sunshine this year will employ overseas experts to help create our own brands. They are very experienced in brand building and management.
CTA: Being China's or even the world's top manufacturer of woolen materials, how will Jiangsu Sunshine continue with its development? Compared with imported woolen fabrics, what are the company's competitive edges?
Ms Chen: To stay competitive, we need to review the existing product structure. Firstly, we will introduce more high value-added products, as well as focusing on products of our own brands. At present, 44% of our products are sold directly in our own brands, we hope the proportion will increase to 70% in three years. We hope that we can contribute to improving China's reputation in clothing brands other than mass production. Compared with foreign woolen fabrics suppliers, we have price advantage, and our company has well-established flexible operation system.
CTA: Jiangsu Sunshine is a leader in R&D in China. How much money is spent on this area? What's your R&D direction in wool spinning technology?
Ms Chen: Jiangsu Sunshine boasts a comprehensive innovation system and has established the "one station, three centers" concept based on well-defined division of work. There are wool spinning technical development center, which is equipped with computer design system, electronic color-determining and solution-preparing system, woolen textile tester and other advanced equipments imported from Europe.
The R&D costs of Sunshine each year account for not less than 3% of its sales income. What we do mostly is to improve technically, e.g., development of functionality, diversification of raw materials and application of new materials.
CTA: Many of your spinning, weaving and dyeing equipments are imported and they are quite expensive. Has the economic downturn affected your investment decision?
Ms Chen: More than 95% of our machines are imported from foreign countries. Regarding the difficult market situation, we think that we are capable of ensuring a stable investment in hardware. Fortunately, China has taken supporting measures to push up domestic demands, emphasizing on the enhancement of technical innovation of the textile industry in particular -- such measures have just balanced out the negative effects of the financial crisis. Therefore, we will continue to improve the level of our technical equipment and to perform our technical innovation.
CTA: It is now a difficult time for the textile industry. What advice would you give to the textile enterprises? What do you expect from this year's domestic market? When do you think the textile industry will regain its confidence?
Ms Chen: Each enterprise has its own problem to solve.
This year, the domestic textile market is definitely better than the overseas. Firstly, China is comparatively less affected by the financial crisis. Secondly, China has taken measures to counterbalance the adverse effects of the crisis. I visited Chengdu, Changsha, Nanchang and some other Chinese cities earlier this year and found that the consumer market and the textile consumption did not decline. Some data demonstrates that the average fiber consumption per capita in China is only half of that in developed countries. This means that China's textile market still has space to grow.
Spinning and weaving workshops equipped with advanced equipments |
Regarding the issue of confidence, I think the confidence of the textile industry is back already. Since China introduced the measures to increase domestic demand for many industries (e.g., steel, automotive, infrastructure, etc.), the influence of such policies is gradually taking effect. The number of employees and the income of workers have not decreased. Therefore, we can see that the market of daily necessities remains fine.
CTA: The latest decision made to boost the textile industry is to raise the rate of export rebates to 15%. How can such measure help the export enterprises?
Ms Chen: It will certainly help but I hope the rebate rate can increase further to 17%. If so, the effect would be more obvious. China's enterprises can compete with their competitors from neighboring countries, for instance, Vietnam, India, Cambodia and Bangladesh, which, like China, have lower labor costs.
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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