China’s garment export orders fall 9% at trade fair

30 October 2007 08:50  [Source: ICIS news]

SINGAPORE (ICIS news)--China’s export orders for garments fell almost 9% to $3.02bn (€2.08bn) due to government efforts to curb the trade surplus, according to data released by the Commerce Ministry on Tuesday during a major export fair in southern China.

The China Import and Export Fair, which takes place twice a year, is a barometer of export orders from China in the coming months.

The impact of the Chinese government’s decision to cut export tax rebates came home to roost, with overseas orders from the event totalling $3.02bn compared with $3.31 bn at the previous China Import and Export Fair five months ago.

“The reduction of our export tax rebates coupled with the yuan’s appreciation means that our profit margins will take a beating if we continue to export. This is why we opted against a presence at the China Import and Export Fair this year,” said a source from textile producer Fuzhou Zheng Tai Spinning.

Some manufacturers are shifting their attention to domestic markets.

The export tax rebate for Chinese textile and garments was cut by 2 percentage points to 11% from 1 July by China’s Finance Ministry in a move aimed at tackling the country’s surging trade surplus - a source of friction with the US and Europe.

In contrast, upstream polyester fibres and yarns fared better than their downstream counterparts by enjoying a 6% increase in orders from the previous year.

Statistics from the Commerce Ministry showed that export orders for polyester fibres and yarns from the China Import and Export Fair came up to $2.96bn compared with $2.79bn in May.

“A lot of the garment and textile players have relocated to other Asian countries such as Bangladesh and Vietnam as it is cheaper to operate there,” said a Taiwanese trader of polyester fibres and yarns.

"These facilities would have received orders for consumer goods due to the winter peak season and need to top up their inventories to ensure that they achieve speed-to-market."

The China Import and Export Fair which is also known as the Canton Fair, is held twice a year in the southern province of Guangdong. Other Chinese major exporters of consumer products also head to the fair, which is considered one of the world's biggest.

However, Chinese toy manufacturers were said to be conspicuously absent, possibly due to the recent product recalls on China-made toys.

The 102nd edition of the event started on 15 October and concludes today.

($1 = €0.69)

By: Hong Chou Hui
+65 6780 4359

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