Positive outlook for China textile and apparel industry

In recent years， Haian， Jiangsu Province， has guided the upgrading of traditional textile industry and encouraged Haian textile industry to gradually develop from traditional industry and characteristic industry to dominant industry and strong industry.

Since 1994， Chinas textile and apparel exports have ranked first in the world. As the “leading brother” for more than 20 years， the cost of domestic production in China has inevitably increased. At this time， Vietnam， India and other countries began to show their cost advantages. Thus， just as China undertook the industrial transfer from the NIEs more than 30 years ago， now the global textile industry has opened a new round of transfer to South Asia and Southeast Asia. As a pioneer in opening up， how will Chinas textile industry evaluate the new changes it has encountered， and how can Chinas textile in-dustry find a new development path？ This reporter interviewed the China National Textile and Apparel Council.

There are pursuers behind， but its still a long way off

The rise of textile industry in Southeast Asia has caused many people to feel anxious： will Chinas textile industry be threatened？

In response， Hua Shan， vice president of China Textile Economic Research Center， said that at present， Chinas textile fiber processing accounts for more than half of the worlds total， textile and garment exports account for more than one third of the worlds total， and has the complete modern textile manufacturing and service system in the world. “At this stage， Chinas textile industry still has obvious advantages in terms of development scale， supply chain system and international competitiveness， and has not yet been threatened by all-round threats from any country or region.”

Hua Shan pointed out that we still need to face up to the reality and trend of the rapid development of textile industry in Southeast Asia， South Asia and other countries. “Take Vietnam as an example， their textile and garment workers monthly wages are about RMB 2，000， about one third of the Chinese workers in the same industry， the average price of industrial electricity and water is only half of the domestic price， the VAT tax rate is only 10%， and they can enjoy tax exemption or half preferential treatment when the local employees reach a certain number.” Hua Shan said that some countries in Southeast Asia and South Asia， relying on cost advantages such as labor， raw materials， electricity prices and tax rates， have good international competitiveness in cotton textile， knitted garment processing and other fields. Although their products are mainly concentrated in the middle and low end， they still have a direct competitive relationship with some domestic textile enterprises.

According to WTO data， although China still ranks first in the world in the international market of textiles and apparel， its export share has declined since 2016， with 34.8% in 2017 falling by 3.1 percentage points from 37.9% in 2015. In contrast， India， Vietnam and Bangladesh have increased their share of textile and apparel exports. Vietnams export share increased by 4.6% in 2017， 0.9 percentage points higher than that in 2015. From 2010 to 2017， Vietnams export of textiles and clothing increased by 17.4% annually， while Chinas annual growth rate was only 4.4% in the same period.

“Although these countries are in a competitive relationship with China in the international export market， they have also formed a close cooperative relationship in the development of the industrial chain，” Hua Shan said. On the one hand， influenced by the limited carrying capac- ity of Chinas resources and environment， the rise of production costs and the need of domestic enterprises to accelerate international development， in recent years， some Chinese enterprises have invested in the construction of a number of spinning and garment processing production bases in Southeast Asia and South Asia， forming a supporting industrial chain cooperative relationship with domestic upstream and downstream enterprises， and “China + Southeast Asia” has gradually become the new international layout model of China textile manufacturing industry. On the other hand， the industrial system of these countries is still imperfect， especially the weak links of chemical fibers， dyeing and finishing， equipment and so on. They need to import a large number of chemical fibers， fabric accessories and textile equipment from China， which is an important growth force to promote the export of textiles and textile machinery in China.

Overall， although the share of South Asia and Southeast Asia in the international market has increased rapidly， there is still a big gap with China. Even as the second largest exporter of textiles and apparel in the world， Indias export share in 2017 is only 4.7%. But the present situation is not equal to the trend. For Chinas textile industry， we still need to face up to the increasingly severe international competition situation.

Technologies and brands should develop together

With the participation of more developing countries， it becomes more difficult for Chinese enterprises to make profits in textile and garment manufacturing and processing. Chinese enterprises have to leave the comfort zone and extend to the upstream and down-stream of the industrial chain. On the one hand， they should develop high-tech raw materials and highend equipment， on the other hand， they should create fashion brands and expand sales channels. However， it is clear that these two areas with higher added value are dominated by developed countries. Chinas textile industry， which has just stepped out of the middle and low-end market， finds itself competing with developed countries again.

How did Chinas textile enterprises break through？ Hua Shan shared with reporters the story of Ruyi Group in Shandong Province.

Ruyi Group has now leapt to the top of Chinas top 500 textile and apparel enterprises， ranked among the worlds top 100 luxury brand companies， with the worlds largest cotton spinning， wool yarn manufacturing and even clothing brand of the complete textile and apparel industry chain. The foundation of successful development is to insist on scientific and technological innovation and overseas mergers and acquisitions.

Ruyi Group has R&D personnel from 18 countries. Its annual investment in science and technology reaches 5% of sales. Its R&D expenditure is not less than 300 million yuan per year. At Shandong headquarters， they have invested another 700 million yuan to establish a global R&D center of 70，000 square meters. It is reported that this is the most advanced research and development center in the global textile and garment field. By increasing R&D investment， the added value of the Ruyi products has increased by 35%， by virtue of core technology and high-tech products， they avoided the disorderly competition of domestic middle and low-grade products and successfully entered the international high-grade fabric club.

At the same time， Ruyi is actively implementing overseas brand M&A strategy. Ruyi has invested about USD 4 billion in acquisitions of more than 20 luxury fashion brands in France， Britain， Japan and other countries. The development of Ruyi is a microcosm of Chinas textile and garment industry. In recent years， the market recognition of Chinas independent textile and apparel brands has steadily improved. In the top 50 list of Chinas textile and apparel brand value in 2018， nine enterprises have brand value of more than 10 billion yuan.

With the weakening of human cost advantage， Chinese textile and apparel brands can also obtain strong market premium ability， which is the return of insisting on scientific and technological innovation for many years. At present， the domestic market share of textile machinery products has reached 80%， and some products have been able to compete with international advanced machines.

Continuation of legend in textile industry

On March 25， Miao Wei， Minister of Industry and Information Technology， proposed at the China Development Forum in 2019 that China would liberalize its general manufacturing industry in the future. As an important sub-category of “general manufacturing industry”， Chinas textile and garment industry shows more confidence in opening up. According to the relevant person in charge of China National Textile and Apparel Council， Chinas textile industry has a high degree of marketization， the number of private enterprises accounted for more than 95% of the industry， after years of transformation and upgrading， has a considerable ability to adapt to the environment and resist risks. But at the same time， we should keep sober. There is still room for optimizing the future development of Chinas textile industry.

After 40 years of reform and opening up， Chinas textile industry has changed its old appearance. Yesterdays labor-intensive industry has a new label of “science and technology， fashion and green” today. In the future， there will be many new stories to be written in Chinas textile industry between the transformation of old and new kinetic energy.