China’s textiles industry faces challenging year

09 September 2008 12:15  [Source: ICIS news]

SINGAPORE (ICIS news)--China’s textiles industry is facing a series of challenges this year, which is expected to keep margins squeezed and exports slow, a veteran market watcher said on Tuesday.

 

However, he added the country could take steps to rectify the problems.

 

“The textile industry this year is facing a bleak time, because of credit controls within the market and the appreciation of the [yuan], making Chinese exports less competitive,” said Sun Huaibin, the chief analyst from the Chinese Textile Industry Institute, speaking at the ICIS/CBI International Fibres and Feedstocks conference here. 

 

“This year in the past six months, only the European Union is importing more textile products from China, the rest like the US, Hong Kong, Japan all saw a decrease of buying between 5-15% at least,” said Sun, referring to the total value of Chinese textile exports to these markets.

 

The EU’s increased imports were mostly due to the strong euro, however, rather than strong demand, Sun added.

 

“How has the situation become like that, we must ask ourselves,” said Sun, adding that increased operating costs, inflation, power shortages and environmental controls had made China less competitive.

 

There were measures the country could take, he said.

 

“For example, we can move from the coastal areas to the inner areas such as Hunan, Sichuan and Hubei to produce the textiles, that would save on manpower costs,” Sun said.

 

He also urged the Chinese government to adopt some new policies to help the industry to grow, such as the recent increase in export tax rebates.

 

“Finally, we can try to move up the value chain and also have more quality checks

 and hopefully we will be able to compete not only in pricing but also in quality,” Sun said.

 

The two-day conference ends on Wednesday.

 

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By: Salmon Aidan Lee
+65 6780 4359



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