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| Issue date:08/04/2010 |
| ATA Journal for Asia on Textile & Apparel - Apr 2010 Issue |
| Source:Journal for Asia on Textile & Apparel |
| by Michelle Phong |
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| The global and domestic environment for China's textile and apparel industry in 2010 is expected to substantially improve compared with 2009. Despite uncertainties especially in export markets, the industry is heading for a steady recovery, largely due to the positive domestic demand, according to a high-ranking official at the national textile industry association. |
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| Domestic sales accounts for nearly 80% of China textile and apparel industry (photo: Youngor) |
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At the 5th China Textile Round Table Forum 2010 early this year, Xu Kun-yuan (許坤元), vice president of the China National Textile & Apparel Council (CNTAC) (中國紡織工業協會) commented that considering a smaller base number of 2009, the Chinese textile and apparel industry is expected to register a positive growth in 2010, although at a slower pace than the pre-global-financial-crisis level. Textile and apparel exports are estimated to increase 4% in 2010.
The modest export growth projection is made, taking into account that the economic outlook of developed countries in North America and Europe remains cautious. The World Bank forecast this January that the global gross domestic product (GDP), which declined by 2.2% in 2009, to grow 2.7% this year and 3.2% in 2011. World trade volumes, which fell by a staggering 14.4% in 2009, are projected to expand by 4.3% and 6.2% this and next year respectively.
Mr Xu believed that China's economy will continue its expansion in 2010, and the domestic textile and apparel industry will be one of the beneficiaries, thanks to a growing domestic demand and an improvement in the living standard of urban and rural residence in recent years.
In macroeconomics, demand comprises investment, consumption and export. Domestic demand refers to the sum of pubic and business investment and personal consumption within the country, Yao Jing-yuan (姚景源), Chief Economist of National Bureau of Statistics (國家統計局) explained at the forum.
Domestic demand has become a key driver of China's textile and apparel industry these few years. In 2009, domestic sales accounts for nearly 80% of China's textile and apparel industry, fueling the industry growth in spite of the weakened export demand after the global financial crisis that broke out in late 2008.
The stabilized employment in the country, recovered market confidence and the rising living standard of the Chinese people are favorable factors in China to sustain the growth of domestic sales for China's textile and apparel industry this year, said Mr Xu. Hence, the sales of locally made textiles and apparel in China will climb to a higher level this year, he believed. Further, the RMB 4-trillion economic stimulus package of the Chinese government will continue in 2010, supporting investment and growths in agriculture, public housing and automotives. The livelihood of rural population of China will see more improvements (see table on the bottom left). These measures will offer more opportunities for textile players operating in related fields of technical and home textiles in China, he said.
Downside factors
Although the upside factors are there, the Chinese textile and apparel industry players are advised to be aware of possible risks in these areas:
Price for production materials
As the world anticipates some economic recovery, the price level of production factors, especially raw materials and energy like cotton and crude oil, may increase, pushing up prices of chemical fibers, textile materials, labor, energy and power. Higher costs of production will then exert pressure on the profitability of Chinese textile manufacturers.
Financial credit
Early this year, the Chinese government reaffirmed that its moderately loose monetary policy will be upheld at an appropriate level. In the meantime, fine-tuning measures slightly tightening liquidity have been introduced to avoid over-lending. For instance, the People's Bank of China, the central bank, announced in February to raise the deposit reserve requirement ratio (RRR) by 0.5 percentage points. Chinese textile entrepreneurs therefore may face greater difficulty to secure finances, Mr Xu added.
Export environment
Trade conflicts and protectionism may cast a shadow on the performance of Chinese textile and apparel exports, which witnessed a decrease of about 9% to about US$171 billion last year.
Exchange rates of renminbi
The Chinese currency, renminbi, is under pressure for further appreciation, adding uncertainty to industrial exports, including textile and apparel products.
Despite the above challenges, China's sizable textile and apparel enterprises (with an annual operating revenue of at least RMB5 million) are projected to increase the total industrial output and the gross profit at a double-digit rate, he said.
Areas of industry optimization
Moving forward, the CNTAC kept on advocating optimization in the Chinese textile and apparel industry, said Mr Xu. He outlined a number of key tasks the industry needs to address. Among them are:
1. The development of industrial and technical textiles is vigorously supported by the authorities, especially high-performance fibers and products for applications in the areas of civil engineering, automobiles, medical care and agriculture.
2. The markets of functional and eco-friendly textile and apparel products are believed to be promising in China. A number of critical textile technologies and machinery development are encouraged by the CNTAC.
3. Textile entrepreneurs need to produce their goods with lower energy and materials consumption to meet the more stringent regulations relating to environment protection at home and abroad. New technology and machinery ensuring reduced carbon emissions are increasingly sought after in the industry.
4. Geographically, China maintains its policy of developing the central and western parts of the country. Public services are also being upgraded to facilitate trade and development of the textile and apparel industry, in particular, the small and medium-sized enterprises.
China targets 8% economic growth in 2010
In the National People’s Congress of China (全國人民代表大會) early this March, Premier Wen Jia-bao (溫家寶) reported that the government targeted an economic growth of 8% in 2010 and the consumer price index (CPI) is projected to rise 3%.
The Chinese authorities introduced expansionary policies to keep the economy running last year, so that the "cake" did not quickly constrict. Premier Wen said, equally important this year will be to better allocate the“cake”to enhance social harmony and equality. Zhang Ping (張平), Chairman of the National Development and Reform Commission (國家發展和改革委員會), explained that it is crucial to improve the general public’s income level in urban and rural areas. The wage system (including that of the minimum wage) should be ameliorated to allocate incomes more appropriately. |
China's textile industry in 2009: a year under policies of boosting domestic demand
In spite of the global economic downturn, the Chinese textile and apparel industry performed encouragingly last year. The total retail value of apparel consumer goods in China rose 18.8% in 2009, the Chinese customs statistics showed. With a buoyant domestic market, Chinese sizable manufacturers sold domestically about 80% of their textile and apparel products at a total value of RMB 2,971.2 billion in 2009, up 14.69% year-on-year. China's total textile and apparel exports declined 9.65% y-o-y to US$171.332 billion in 2009.
Production and sales pick-ups thus were seen in the Chinese textile and apparel industry last year. Enterprises were able to make profit and continue investing amid the weak global economy, observed the CNTAC.
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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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