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The Presentation on China's Textile Industry (2004)

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1/ The Status on China's Textile Industry

After entering the post-quota era will Chinese textile constitute a threat to other countries because of its large export to the international market. It is true that the Chinese textile has not been walking toward marketization.

 

Development is driven mainly by domestic consumption

 

The textile industry operated well in 2004. Sales of the whole industry reached 2.64 trillion yuan in 2004 increasing by 22.79 percent year on year. The development of the textile industry was still driven by domestic consumption. According to statistics export of textile and apparel accounted for 30.25 percent in 2004 while domestic sales represented 69.75 percent. Export of processed fiber contributed to 24 percent while domestic sales accounted for 76 percent. Chinese are becoming increasingly rich and spending more on the consumption of textile and apparel. The development of textile industry is driven by the development of the national economy.

 

The opening up and development of China's textile industry also creates opportunities for the global textile industry. According to statistics in 2003, of the capitals actually received by textile companies of scale in China foreign investment and investment from Hong Kong and Macao accounted for 33.6 percent. Within the growth of textile export the proportion of foreign investment was also very large. Statistics from the customs in 2004 show that of the textile export the three forms of foreign-invested enterprises accounted for $33.5 billion, which was over a third - 34.4 percent.

 

On the other hand, China imported large amounts of products such as textile raw materials and machinery. For example, import of chemical fiber exceeded 10 million tons last year. Cotton import reached 1.8 million tons. These were in addition to other imports such as dyeing chemicals and textile machinery etc. Particularly, China imported more than $12 billion worth of textile machinery each year during the three years spanning from 2002 to 2004, which accounted for 50 percent of domestic investment in equipment. Many of the textile industries need large amount of import.

 

The textile industry has been fully marketized

 

The textile industry was among the first to be marketized in China and is also among the most successful. That this is true is shown by: first, the textile industry was among the first to be opened in aspects ranging from products to the prices of capital goods. Since the resources have been allocated by the market rather than by administrative orders the non-state-owned economy in the textile industry developed rapidly. State-owned capitals actually received by enterprises of scale were 13 percent in 2003. Each year the proportion of state-owned enterprises is declining. Among small enterprises 100 percent is of non-state-owned capitals. Now textile enterprises are no longer protected and subsidized by the state and has been fully marketized.

 

Second, the regional distribution pattern of China's textile industry is developing according to the laws of market and is concentrating in regions where the conditions of market resource allocation are relatively good. For example, textile and apparel industrial concentration zones have formed in the southeast coastal regions, from Shandong to Guangdong, from the Bohai Sea region to the Yangtze Delta and Pearl River Delta. Output value from these regions accounts for 80 percent of total production of the textile industry. This is different from the pattern in the planed economy, which was formed according to regions and required each region to form a complete set. Now the pattern is formed according to the laws of market. This is a manifestation of marketization.

 

Providing high-quality products to the world

 

China's textile industry would put emphasis on industrial upgrade depending not on expanding market share with quantity, but on adapting to the market through improving quality, increasing its original technologies and brands and establishing rapid response system. Therefore it would guide large textile companies to the establishment of research centers and the increase of independent patent products and exclusive technologies. The small and medium-sized companies would continue to do a better job in works such as industrial innovation. In a word, the goal of the Chinese textile industry is to turn all the companies' attention to industrial upgrade and brands development.

 

For instance, China cotton output in 2004 was 6.32 million tons, reflecting year-on-year increase of 1.46 million tons, up by 30.1%. The 2004 cotton output makes new record in history. In 2004, China cotton planting are was 5.69 million hectares, increasing by 580,000 hectares on previous year, with the growth rate of 11.3%. The following regions saw the rapid planting area growth. Shandong grew by 178,000 hectares, Hebei by 88,000 hectares, Xinjiang by 81,000 hectares, Hubei by 53,000 hectares and Jiangsu by 40,000 hectares. The unit output increased greatly. In 2004 China average cotton unit output was 1,111 kg per hectare, up by 160 kg year on year (16.9% up).

 

Since January 1st 2005, China has started to levy export duties on some garment exports. According to the latest statistics from the Shanghai Customs, it has processed 12,580 items of taxable garment exports within a week, with a total tax levy of 21.89 million yuan, since the export duties were imposed. The quota abolishment is absolutely not a good chance for China to blindly expand the existing processing scale. The conflict of supply over demand in the world market will be obvious after Jan. 1, 2005. The risk of over competition is very dangerous for the low and medium products manufacturers. The winners are not those who have low-cost labor, but those who have core technology and products of high quality, high taste and credit.

 

2/ The Expotr & Import in 2004

Reported by Statistic Center of China Textile Industry Council, China gross imp. & exp. value of textile and apparel in 2004 reached 114.189 billion dollars, increasing 18.86% compared with the same period of last year, and taking up 9.89% of China gross imp.&exp. value of foreign trade. Gross export value of textile and apparel in China was up to 97.385 billion dollars, increasing 21.01% compared with the same period of last year, and taking up 16.41% of gross export value of foreign trade in China. Among them, textile export was 35.769 billion dollars, increasing 25.21% compared with the same period of last year; and apparel export was 61.616 billion dollars, increasing 18.69% compared with the same period of last year. Gross import value of textile and apparel reached 16.804 billion dollars, increasing 7.81% compared with the same period of last year, and taking up 2.99% of gross import value of foreign trade in China. Among them, textile import was 15.273 billion dollars, increasing 7.69% compared with the same period of last year; while apparel import was 1.531 billion dollars, increasing 9.07% compared with the same period of last year. Through Jan.-Dec., favorable balance of textile and apparel trade reached 80.581 billion dollars.

 

Among main export countries and areas of textile and apparel, Hong Kong, Japan and U.S. became top three. Through Jan.-Dec., China export to Hong Kong reached 17.379 billion dollars, increasing 12.95% compared with the same period of last year; export to Japan was 17.153 billion dollars, increasing 12.70% compared with the same period of last year; export to U.S. was up to 11.786 billion dollars, increasing 21.92% compared with the same period of last year. Total value of export to the three countries reached 46.318 billion dollars, taking up 47.56% of total export of textile and apparel. Export to EU reached 12.146 billion dollars, increasing 12.05% compared with the same period of last year. Export to restricted countries reached 25.815 billion dollars, increasing 17.12% compared with the same period of last year. Export to non-restricted countries reached 71.57 billion dollars, increasing 22.47% compared with the same period of last year.

 

Among main import countries and areas, Japan, Taiwan, and South Korea become top three. Through Jan.-Dec., import textile and apparel from Japan, Taiwan, and South Korea was 3.506 billion dollars, 3.298 billion dollars, and 2.600 billion dollars, increasing 12.77%, 3.15%, and 3.60% separately. 

 

The levying export duties starting from 2005 on certain textiles & garment exports was a significant step that China has taken towards the globalization of the textile trade. It was also a clear signal to enterprises that China was encouraging exports of high-quality products and promoting a change in the pattern of its textile exports growth.

 

Based on the experts' analysis, from January 1st this year, with the abolition of the global textile quota system that has been in place for many years, China's textile products and garments could have free access to international markets and enjoy a bigger slice of these markets. Although China's textile exports are competitive in terms of pricing, they are mostly exported under designated brands or by original equipment manufacturers (OEM) and lack independent branding. As the biggest textile exporter in the world, simple quantitative growth should not be the major objective for China's textile exports. By way of levying export duties on certain garments, China intended to raise the prices of its textile exports accordingly to prevent and avoid the scenario of having an increase in textile exports and a drop in prices at the same time. It also hoped to raise its international competitiveness by accelerating technology reforms and structural adjustments within the textile industry.

China, approved by State Council, will levy export tariff on some textiles since Jan. 1, 2005. The taxes levy covers 148 products in 6 categories of coats, skirts, trousers, non-knitted shirts, knitted shirts, nightwear and underwear. The table below shows the products and tariff rate.

 

No.

Tariff Number

Products

Unit

Tariff rate (yuan/unit)

1

61021000

W/G overcoats, wind-jackets, wool or fine animal hair, knitted or crocheted

piece

0.3

2

61022000

W/G overcoats, wind-jackets, cotton, knitted or crocheted

piece

0.3

3

61023000

W/G overcoats, wind-jackets, chemical fiber, knitted or crocheted

piece

0.3

4

61029000

W/G overcoats, wind-jackets, of other textile materials, knitted or crocheted

piece

0.3

5

61031900

M/B suits, of other textile material, knitted or crocheted

set

0.2

6

61032100

M/B suits, wool or fine animal hair, knitted or crocheted

set

0.2

7

61032200

M/B suits, cotton, knitted or crocheted

set

0.2

8

61032300

M/B suits, chemical fiber, knitted or crocheted

set

0.2

9

61032900

M/B ensembles, of other textile material, knitted or crocheted

set

0.2

10

61034100

M/B trousers, overalls, wool or fine animal hair, knitted or crocheted

piece

0.2

11

61034200

M/B trousers, overalls, cotton, knitted or crocheted

piece

0.2

12

61034300

M/B trousers, chemical fiber, knitted or crocheted

piece

0.2

13

61034900

M/B trousers, of other textile material, knitted or crocheted

piece

0.2

14

61041200

W/G suits, cotton, knitted or crocheted

set

0.2

15

61041900

W/G suits, of other textile material, knitted or crocheted

set

0.2

16

61042100

W/G suits, wool or fine animal hair, knitted or crocheted

set

0.2

17

61042200

W/G ensembles, cotton, knitted or crocheted

set

0.2

18

61042300

W/G ensembles, chemical fiber, knitted or crocheted

set

0.2

19

61042900

W/G ensembles, of other textile material, knitted or crocheted

set

0.2

20

61043100

W/G blazers, wool or fine animal hair, knitted or crocheted

piece

0.3

21

61043200

W/G blazers, cotton, knitted or crocheted

piece

0.3

22

61043300

W/G blazers, chemical fiber, knitted or crocheted

piece

0.3

23

61043900

W/G blazers, of other textile material, knitted or crocheted

piece

0.3

24

61044100

Dresses, wool or fine animal hair, knitted or crocheted

piece

0.2

25

61044200

Dresses, cotton, knitted or crocheted

piece

0.2

26

61044300

Dresses, synthetic fiber, knitted or crocheted

piece

0.2

27

61044400

Dresses, artificial fiber, knitted or crocheted

piece

0.2

28

61044900

Dresses, of other textile material, knitted or crocheted

piece

0.2

29

61045100

Dresses and divided skirts, wool or fine animal hair, knitted or crocheted

piece

0.2

30

61045200

Dresses and divided skirts, cotton, knitted

piece

0.2

31

61045300

Dresses and divided skirts, synthetic fiber, knitted or crocheted

piece

0.2

32

61045900

Dresses and divided skirts, of other textile material, knitted or crocheted

piece

0.2

33

61046100

W/G trousers, overalls, wool or fine animal hair, knitted or crocheted

piece

0.2

34

61046200

W/G trousers, overalls, cotton, knitted or crocheted

piece

0.2

35

61046300

W/G trousers, overalls, synthetic fiber, knitted or crocheted

piece

0.2

36

61046900

W/G trousers, of other textile material, knitted or crocheted

piece

0.2

37

61051000

M/B shirts, cotton, knitted or crocheted

piece

0.2

38

61052000

M/B shirts, chemical fiber, knitted or crocheted

piece

0.2

39

61059000

M/B shirts, of other textile material, knitted or crocheted

piece

0.2

40

61061000

W/G blouses, cotton, knitted or crocheted

piece

0.2

41

61062000

W/G blouses, chemical fiber, knitted or crocheted

piece

0.2

42

61069000

W/G blouses, of other textile material, knitted or crocheted

piece

0.2

43

61071100

M/B underpants and briefs, cotton, knitted or crocheted

piece

0.2

44

61071200

M/B underpants and briefs, chemical fiber, knitted or crocheted

piece

0.2

45

61072100

M/B nightshirts and pajamas, cotton, knitted or crocheted

piece ( set )

0.2

46

61072200

M/B pajamas, chemical fiber, knitted or crocheted

piece ( set )

0.2

47

61079100

M/B bathrobes and dressing gowns, cotton, knitted or crocheted

piece

0.2

48

61079200

M/B bathrobes and dressing gowns, chemical fiber, knitted or crocheted

piece

0.2

49

61081100

W/G slips and petticoats, chemical fiber, knitted or crocheted

piece

0.2

50

61081910

W/G slips and petticoats, cotton, knitted or crocheted

piece

0.2

51

61082100

W/G briefs and panties, cotton, knitted or crocheted

piece

0.2

52

61082200

W/G briefs and panties, chemical fiber, knitted or crocheted

piece

0.2

53

61083100

W/G pajamas and negliges, cotton, knitted or crocheted

piece ( set )

0.2

54

61083200

W/G pajamas and negliges, chemical fiber, knitted or crocheted

piece ( set )

0.2

55

61089100

W/G bathrobes and dressing gowns, cotton, knitted or crocheted

piece

0.2

56

61089200

W/G bathrobes and dressing gowns, chemical fiber, knitted or crocheted

piece

0.2

57

61091000

T-shirts and singlets, cotton, knitted or crocheted

piece

0.2

58

61099090

T-shirts and singlets, of other textile material, knitted or crocheted

piece

0.2

59

61101100

Jerseys and similar articles, wool, knitted or crocheted

piece

0.2

60

61101920

Jerseys and similar articles, rabbit or hare, knitted or crocheted

piece

0.2

61

61101990

Jerseys and similar articles, of other textile material, knitted or crocheted

piece

0.2

62

61102000

Jerseys and similar articles, cotton, knitted or crocheted

piece

0.2

63

61103000

Jerseys and similar articles, chemical fiber, knitted or crocheted

piece

0.2

64

61109090

Jerseys and similar articles, of other textile material, knitted or crocheted

piece

0.2

65

61121100

Track suits, cotton, knitted or crocheted

set

0.2

66

61121200

Track suits, synthetic fiber, knitted or crocheted

set

0.2

67

61121900

Track suits, of other textile material, knitted or crocheted

set

0.2

68

61122090

Ski suits, of other textile material, knitted or crocheted

set

0.2

69

61130000

Garments, made up of fabrics with coating treatment, knitted or crocheted

piece

0.2

70

61141000

Other garments, wool or fine animal hair, knitted or crocheted

piece

0.2

71

61142000

Other garments, cotton, knitted or crocheted

piece

0.2

72

61143000

Other garments, chemical fiber, knitted or crocheted

piece

0.2

73

61179000

Parts of garments of clothing accessories, knitted or crocheted

Kg

0.5

74

62021100

W/G overcoats, capes and similar articles, wool or fine animal hair

piece

0.3

75

62021290

W/G overcoats, capes and similar articles, cotton

piece

0.3

76

62021390

W/G overcoats, capes and similar articles, chemical fiber

piece

0.3

77

62021900

W/G overcoats, capes and similar articles, of other textile material

piece

0.3

78

62029100

W/G anoraks, and wind-cheaters, wool or fine animal hair

piece

0.3

79

62029290

W/G anoraks, and wind-cheaters, cotton

piece

0.3

80

62029390

W/G wind-cheaters and similar articles, chemical fiber

piece

0.3

81

62029900

W/G wind-cheaters, wind-jackets and similar articles, of other textile material

piece

0.3

82

62031990

M/B suits, of other textile material

set

0.2

83

62032100

M/B ensembles, wool or fine animal hair

set

0.2

84

62032200

M/B ensembles, cotton

set

0.2

85

62032300

M/B ensembles, chemical fiber

set

0.2

86

62032990

M/B ensembles, of other textile material

set

0.2

87

62034100

M/B trousers and overalls, wool or fine animal hair

piece

0.2

88

62034210

M/B Arabian trousers, cotton

piece

0.2

89

62034290

M/B trousers and overalls, cotton

piece

0.2

90

62034310

M/B Arabian trousers, synthetic fiber

piece

0.2

91

62034390

M/B trousers and overalls, synthetic fiber

piece

0.2

92

62034990

M/B trousers and overalls, of other textile material

piece

0.2

93

62041200

W/G suits, cotton

set

0.2

94

62041990

W/G suits, of other textile material

set

0.2

95

62042100

W/G ensembles, wool or fine animal hair

set

0.2

96

62042200

W/G ensembles, cotton

set

0.2

97

62042300

W/G ensembles, synthetic fiber

set

0.2

98

62042990

W/G ensembles, of other textile material

set

0.2

99

62043100

W/G jackets and blazers, wool or fine animal hair

piece

0.3

100

62043200

W/G jackets and blazers, cotton

piece

0.3

101

62043300

W/G jackets and blazers, synthetic fiber

piece

0.3

102

62043990

W/G jackets and blazers, of other textile material

piece

0.3

103

62044100

W/G dresses, wool or fine animal hair

piece

0.2

104

62044200

W/G dresses, cotton

piece

0.2

105

62044300

W/G dresses, synthetic fiber

piece

0.2

106

62044400

W/G dresses, artificial fiber

piece

0.2

107

62044990

W/G dresses, of other textile material

piece

0.2

108

62045100

W/G skirts and divided skirts, wool or fine animal hair

piece

0.2

109

62045200

W/G skirts and divided skirts, cotton

piece

0.2

110

62045300

W/G skirts and divided skirts, synthetic fiber

piece

0.2

111

62045990

W/G skirts and divided skirts, of other textile material

piece

0.2

112

62046100

W/G trousers and overalls, wool or fine animal hair

piece

0.2

113

62046200

W/G trousers and overalls, cotton

piece

0.2

114

62046300

W/G trousers and overalls, synthetic fiber

piece

0.2

115

62046900

W/G trousers and overalls, of other textile material

piece

0.2

116

62052000

M/B shirts, cotton

piece

0.2

117

62053000

M/B shirts, chemical fiber

piece

0.2

118

62059010

M/B shirts, silk or silk waste

piece

0.2

119

62059090

M/B shirts, of other textile material

piece

0.2

120

62061000

W/G blouses and shirts, silk or silk waste

piece

0.2

121

62062000

W/G blouses and shirts, wool or fine animal hair

piece

0.2

122

62063000

W/G blouses and shirts, cotton

piece

0.2

123

62064000

W/G blouses and shirts, chemical fiber

piece

0.2

124

62069000

W/G blouses and shirts, of other textile material

piece

0.2

125

62071100

M/B underpants and briefs, cotton

piece

0.2

126

62071920

M/B underpants and briefs, chemical fiber

piece

0.2

127

62072100

M/B nightshirts and pajamas, cotton

piece ( set )

0.2

128

62072200

M/B nightshirts and pajamas, chemical fiber

piece ( set )

0.2

129

62079100

M/B bathrobes and dressing gowns and similar articles, cotton

piece

0.2

130

62079200

M/B bathrobes and dressing gowns and similar articles, chemical fiber

piece

0.2

131

62081100

W/G slips and petticoats, chemical fiber

piece

0.2

132

62081920

W/G slips and petticoats, cotton

piece

0.2

133

62082100

W/G nightdresses and pajamas, cotton

piece ( set )

0.2

134

62082200

W/G nightdresses and pajamas, chemical fiber

piece ( set )

0.2

135

62089100

W/G singlets, vests, bathrobes and similar articles, cotton

piece

0.2

136

62089200

W/G singlets, vests, bathrobes and similar articles, chemical fiber

piece

0.2

137

62103000

W/G overcoats made up of fabrics with plastic or rubberized treatment

piece

0.3

138

62104000

M/B other garment made up of fabrics with plastic or rubberized treatment

piece

0.2

139

62105000

W/G other garment made up of fabrics with plastic or rubberized treatment

piece

0.2

140

62112010

Ski suits, cotton

set

0.2

141

62112090

Ski suits, of other textile material

set

0.2

142

62113100

M/B track suits and other garments, wool or fine animal hair

piece

0.2

143

62113290

M/B track suits and other garments, cotton

piece

0.2

144

62113390

M/B track suits and other garments, chemical fiber

piece

0.2

145

62114100

W/G track suits and other garments, wool or fine animal hair

piece

0.2

146

62114200

W/G track suits and other garments, cotton

piece

0.2

147

62114300

W/G track suits and other garments, chemical fiber

piece

0.2

148

62179000

Parts of garments of clothing accessories, non-knitted or non- crocheted

kg

0.5

 

 

 

3/ The Near Future

According to a new report published by Hong Kong-based Global Sources, more than 91 percent of summer garment suppliers in China are expanding production capacity in anticipation of increased orders following the elimination of textile quotas.

 

The report said among the 205 suppliers surveyed, 92 percent anticipate higher sales for the summer 2005 season compared to 2004. More than 60 percent of respondents expect sales to increase by more than 10 percent, with 24 percent preparing for increases of more than 25 percent.

 

More than half of the survey’s respondents indicated plans to increase capacity by 20 to 50 percent by hiring more workers, purchasing additional machinery and/or expanding existing factories. Additionally, one-third are currently planning or building new garment plants.

 

 

Seventy-five percent of suppliers see the European Union as a post quota growth market, while 68 percent regard the United States in the same light. As a direct result of increased concentration on Western markets, exports to Asian markets are expected to decrease.

 

The report includes manufacturers from the major production hubs of Guangdong, Zhejiang, Jiangsu, Shandong, Fujian provinces, and the Shanghai and Beijing/Tianjin municipalities.

 

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