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China's textile and clothing exports face a test

China's textile and clothing exports face a test

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Textile and clothing are two traditional labor-intensive export products in China, accounting for a large proportion of China's export products. However, since this year, China's textile and clothing export situation is not optimistic, from January to September, accumulative total export value of $211.33 billion, fell $10.42 billion, including textiles export value of $81.86 billion, fell 1.5% year on year. Clothing exports were worth $129.47 billion, down 6.7% from a year earlier. This is the first time in nearly five years that there has been a cumulative negative growth.
The labor-intensive industries represented by textiles and clothing are facing four major tests:
1. Reduced cost advantage and reduced corporate profits
In the past, China's labor-intensive products had a great price advantage in the international market thanks to abundant and cheap labor advantages. However, since 2010, the growth rate of the total number of migrant workers in China has continued to decline, resulting in difficulties in employment. Meanwhile, wages for migrant workers have continued to rise, rising 19.3 percent, 21.2 percent, 11.8 percent, 13.9 percent and 9.8 percent from 2010 to 2014. Labor costs in China are 2.5 to 5 times higher than in countries such as Vietnam and Bangladesh, according to the survey. Labor costs have been rising year by year, squeezing corporate profit margins and lowering the gross export interest rate of some companies to less than 1%.
2. The overseas consumer market is weak and the external demand is declining
At present, the global economy is still in the depth adjustment after the financial crisis, the economy is relatively weak, especially which accounts for nearly 30% of China's textile and apparel industry exports the European Union and Japan's economic malaise, so sharply reduce our order. In the first half of 2015, China's textile and apparel exports to the European Union and Japan dropped by 8.6% and 12.5% respectively year on year, slowing the export growth of the industry by 2.5%.
Emerging economies are emerging and international competition is intensifying
As the price advantage of China's labor-intensive industries has weakened, some overseas orders have been transferred to emerging economies with lower labor costs, such as Vietnam, India, Indonesia and Cambodia. From 2010 to 2014, China's textile and clothing exports grew at an average rate of 12.6 percent, while Vietnam's average growth reached 18.3 percent over the same period. Vietnam has become the second largest textile source of the United States. At the same time, Vietnam and other countries attach great importance to international trade policy. In May 2015, Vietnam signed a free trade agreement with South Korea, which reduced tariffs on Vietnam's goods with 95.43% of the tariff, including textiles. Recently, Vietnam has completed and all countries associated with the TPP negotiations, the agreement was signed, textiles, clothing enjoy zero tariff, far below the current tax rate of 17% to 32%, the export market share is expected to increase.
4. The original industrial model cannot be sustained, and transformation and upgrading are imminent
Labor-intensive industries in our country have long lineage low-cost expansion, quantity of the generation of labor growth model, is given priority to with low-end products and processing generation do, low technology content and added value, less independent brands. With rising labor costs and other factors, the labor-intensive industries in some low-end markets are losing their original competitiveness, reversed transmission it towards the direction of the technology content, higher productivity and quality upgrading, the enterprise will be facing huge capital investment and operating risk, evolution could be worse.
According to the above situation, weihai in shandong inspection and quarantine bureau suggestion: export enterprises should strengthen the product, technology and service innovation, by creating a brand, innovation, technology to enhance competitiveness, change the strategy of low price competition and dependence on market driven, promote transformation and upgrading of industry to the high-end, intelligent; Make full use of "all the way along the" national strategic opportunities, such as conditional enterprises can effectively, the reasonable international allocation of resources, actively and steadily "going out", the location of the increase in the global industry value chain. At the same time, relevant departments should also give enterprises better policy and financial support, guide enterprises to analyze international market conditions, seize international market opportunities, and help enterprises improve export efficiency.