The time when the largest and the greatest production activities in textiles were assumed to be in North America or West Europe, is changing since the emergence of China as an industrialized nation.
Referring to the figures of the World Trade Organization (WTO) China was the fifth largest merchandize exporter, with $325.6 billion in 2002.A Chinese public source states that China will become the world’s fourth largest trading nation this year, following the US, Japan and Germany.
The production and delivery, performance in quality, quantity, price, proficiency and competency are appearing at the level of acceptance in the variety of textile and clothing products. The share retained by the developing countries in the international market of textile and clothing trade prior to January 1, 2005, will not be in the same position in future. The less competitive exporters are likely to lose the market, or at least, a reduction in export, provided they are not the preferential exporter through any other agreement. Identification, addressing and overcoming the weaknesses in trading, technology, quality, marketing and management should be addressed prior to 2005, and strengthening the business relationship with the major international buyers.
The commodity type cotton apparel market is expected to be dominated by large producers. The current growth in the textile and clothing export of China is significant and the European Apparel and Textile Organization considers that it would take over a growing number of developing countries if its growth rate in import continues.
The high number and low cost labour power, domestic policies, technological growth in manufacturing and processing capacities, working for improved standards, encouragement to research and innovation, market control, management initiatives, exploring and meeting the opportunities are continuously helping the Chinese exports to dominate the markets of Europe, America and Canada. The textile and clothing exporters from India and Pakistan are the main affectees in Asia as a result of the growth of China.
However, factors like the shares taken from other, competing in the market, setting value chain, product diversity, exploring the market domestic policies, trade structural reforms may safeguard the position of Pakistan and India in competition with China. China generally has shown the highest predicted growth. Considering its capability for higher utilization of several quotas, and the important production capacities, the estimated rise is 150 per cent in the overall export of textile and clothing, this is about half of the world market in post January 1, 2005.
This estimation is supported by the evolution of Chinese imports into the European Union (EU) in 2002 (under product the 3rd Stage of the ATC). In 2002, within the specified product categories of the ATC, there is an increase of 53 per cent by value, and 164 per cent by volume.
However, there is a reduction of 42 per cent in unit prices with only one exception; the European Union imports from all other countries is almost reducing, therefore, the question of looking for competing countries is insignificant.
The appearance of China on the scene of ‘global textile and clothing market’ is not sudden or by chance, it has a long history of top executive drives reflected by the measures at public and private sector levels. The plants working in these sectors are effectively contributing in country export. For example, the garment plants owned by state and private sector with associated production share are shown in Table 1.
Chinese investment in the textile processing and manufacturing machinery indicates its aggressive rise in textile and clothing market.
France is the 5th largest exporter of textile machinery in the world. The excellence of French machines is reflected by the export to several developed countries, that are already major manufacturer, including Germany, Italy, the US, Spain, the UK and Japan.
However, China and Hong Kong provide the largest market (more than $100 million) for French textile machinery.
The German textile machinery export in 2002 has shown an increase of 5 per cent by the previous year. China has provided No.l market for the German textile machines.
It is believed that the Chinese textile industry invests considerable means and money in expansion and change. This trend provides continuous improvement in the product quality along with technological advantage. This results in the controlled and an expanding market share of textile and clothing product by the suppliers of China.
In Italy there are 350 companies producing textile machines. The companies are geared to adapt ever-changing market conditions that enable them to become leader in textile machines production.
These machines are known for the value of production and technological quality. All these advantages linked with the Italian machine technology are manipulated in China, a major consumer of these machines. The turnover, in 2002, in the Chinese market was worth of $422 million for Italian machines.
However, the other significant Asian players Korea, Pakistan, Indonesia and Iran are its followers. Quality should compensate for the price, this is placing the changing quality demand on priority. It is another indicator of the Chinese textile industry to strive for meeting the market demands.
This Idea is guiding the industry to invest and upgrade the production technology. A recent textile market survey from Stork Prints, the world market leader of rotary screen printing technology, reports over 80 per cent of the Chinese respondents consider the changing quality demand as the most important development in textile printing business.
Once again, the Chinese market offers the largest consumption in Asia to Dutch machine producers. Stork Prints, Vald. Henriksen (manufacturer of atmospheric and high temperature Jiggers), and VANWYK (manufacturer of automated dispensing system), all consider China as an expanding and principal market for their products. Vald. Henriksen expect to see a rise from 40 per cent to 75 per cent, and VANWYK from 10 per cent to 50 per cent in their total turnover based on the growth of Chinese textile industry. All this high quality Dutch technology will add into an already growing textile and clothing business of China.
For the production of quality textiles, the Chinese industry seems to continue to rely on the European manufacturers. However, domestic policies coupled with market demands and an unlimited number of workforce are already the prime attractions to locate their production units in China. The year 2002 has shown an increase in sale volume both for the local and foreign machine manufacturer in China.
Most of the national machine manufacturers are state-run and mainly located in Jiangsu and Zhejiang. Over 70 per cent output of national textile machinery comes from five major state-run plants located in the two provinces. Privately owned and foreign funded plants are increasingly capturing the market in competition with the state-run plants. The output variety of textile machines and accessories of China can be rated as outstanding. The five biggest textile goods exporting provinces and their production shares are shown in Table 2.
A significant impact of the growth of Chinese textile sector is on the import of the US. The volume of textile products in the US market appears huge and diversed. One important segment of this market is knitted and woven apparel. The apparel market contains 57.3 per cent woven and 42.7 per cent knitted products. The variety of knitted and woven apparel is shown in Table 3.
The share of Asian suppliers in the US import market increases from 52.3 per cent in 2002 to 55.3 per cent in 2003, two-third of it comes from the increased Chinese supplies. However, the increased Chinese supplies do not necessarily mean an excessive presence in the US market.
This is evident by the export decline from 32.2 per cent of the total to 28.8 per cent of Nafta and the CBI countries, with Mexico facing two-third of the decline.
How does the increase in Chinese textile export to the US market is happening? This is something argued between the Chinese Textile Industry Association and the American Textile Manufacturer’s Institute (ATMI).
An explanation for the rise of the Chinese textile exports to the US market is the displacement of products of other countries. For example the drop of the US import from Thailand (53.1pc ), and Philippines (49.3pc) in the first six months of last year (2002) is seen as the 12.2 per cent up of textile luggage import from China by the US market. In addition, the US import is limited to five categories, and there are few makers of the products in the US, for these categories.
Therefore, no disruption is induced by the Chinese products to the US manufacturing industries. However, such explanation has been challenged by the ATMI.
A massive surge is sought by the American Textile Industry for Chinese exports to the US. The US textile, fibre and apparel industry and its nearly one million workers are on struggle for life or death, stated by the ATMI. The result of such observations by the representatives of the US textile industry has caused curbing measures by the US government for controlling and limiting the Chinese textile exports to the US.
The choice of the US foreign traders, sales people and consumers coupled with the enhanced competitiveness of Chinese textile products, are the main factors that dominate them in five categories (knitted fabrics, brassieres, gloves, night-wears and textile luggage).
The main importing regions of the Chinese garments are quota countries, non-quota countries, Asia, North America and Latin America, and the major importing countries are Japan (27.7pc), Hong Kong (18.9pc), the US (10.5pc), Korea (5.1pc) and Australia (3.3pc).
The rise in the export of finished textile and clothing products has caused an expanded consumption of chemicals. This would result in an increased chemical industry in China as estimated in five-year plan. China’s 10th five-year plan estimated that the chemical industry would increase at an annual rate of 6-7pc.
In 2002, China imported 47 per cent more inorganic raw materials, and 19 per cent more organic raw materials than in 2001.
The growth of textile trade (excluding clothing and accessories) of China at the global scene is significantly reflected with all the main importing countries between 2002-2003. The relevant percentage rise and capital volume ($million) are shown in Table 4.
The figure pertaining to the Chinese growth appearing at the global industrial trade and service scene since the last one decade, are the result of measures and reforms, both at private and public level, over the period of several past decades. Most importantly these are geared by continuous drive and willpower.
There are several areas in the field of textile and clothing industry and trade of China that can be taken as model for developing countries.
There are several guidelines that can be drawn from the growth of the Chinese textile industry, its competitiveness and volume of export, for the textile sector of Pakistan.
* Performance oriented infrastructure in public and private sectors
* Domestic policies
* Facilities, encouragement and security to foreign investment
* Low-cost labour force
* Skilled manpower
* Manufacturing plants
* Public initiatives and reforms
* Investment in research, training and innovation
* Development of industrial zones/city
* Drive for the technologically competitive industries
* Partnership and ventures with renown companies for research, manufacturing, training etc.
* Advanced academic programmes in most desired areas of science, technology and engineering.
However, the incentives, amenities, regulatory and controlling public measures, and conducive work environment etc., created in China for setting-up industrial zone, attracting foreign investors and manufacturers, high-tech and improved production machines and technology are all the factors to play a model role in vitalizing the textile sector of Pakistan.
Learning from the experience of others has several advantages including less cost and efforts.