China’s once-booming textile along with clothing industry faces tough times

At the bustling Canton Fair in southern China, second-generation textile company Pan Jing has drastically marked down her prices.

The sign at her booth says the idea all: “Stock very cheap, factory for sale … stock clearance.”

the idea wasn’t an easy decision for Pan’s family to sell the 32-year-old cotton mill began by her father in 1986, a time when China was emerging as the global centre for textile along with clothing production.

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For years, they have been generating household cotton products – via pot holders along with oven mitts to dishcloths along with towels – along with exporting them to the United States along with Europe.

More recently they tried to upgrade their product lines at the 40,000 sq m factory within the southern Guangxi region, adding recycled cotton shopping bags along with pillows within the shape of emojis in a bid to bring in more customers. although rising labor costs along with slow growth in overseas demand left Pan with no choice although to sell the business to a bigger textile company which has a domestic focus, within the desire which brand new capital can keep the idea afloat.

“I don’t see a future in continuing to sell these low-value goods,” said Pan, who has been attending the Guangzhou fair for over a decade. The trade fair, which runs until May 5, is usually the country’s oldest along with biggest export-oriented event.

China’s textile along with apparel makers are going through a painful industrial restructuring. While the country is usually still the globe’s largest clothing exporter with enormous production capacity, oversupply at home, high labour costs, along with rising global protectionism have all eroded its competitiveness.

Pan’s company brochures for the trade fair through the years reflect the alterations within the industry. Six years ago, the tag line was “To be proud of Made-in-China”, while last year’s was “Low-carbon along with environmentally friendly cyclical development”. This specific year they just had a flier made to advertise the stock clearance.

China’s market share by value within the global textile along with clothing industry fell via 38.6 per cent in 2015 to 35.8 per cent in 2016, which has a downward trend in major apparel importing regions such as the US, European Union along with Japan.

Since 2014, exports of Chinese textiles along with clothing have declined sharply via about US$236 billion in 2014 to US$206 billion in 2016, according to the globe Trade Organisation.

Chinese customs data showed exports of clothes along with accessories fell by 0.4 per cent last year via 2016, while textiles exports saw annual growth of 4.5 per cent last year.

Meanwhile, labour costs in China have been rising steadily. The minimum wage within the southern boomtown of Shenzhen is usually today about US$336 per month – more than double the rate in some Southeast Asian countries.

Hit by the industry restructuring, some of the big clothing brands have struggled to make a profit along with secure finance. Revenues have been sliding at Fuguiniao, a Hong Kong-listed menswear along with shoe company based in Fujian province, since 2015. The company had a net loss of 10 million yuan (US$1.57 million) within the first half of last year, a bond default This specific year, along with the idea has racked up debts of at least 3 billion yuan.

Although analysts say Chinese textile along with clothing makers are at low risk via the looming trade war between China along with the US, given which they export so little to America compared to additional sectors, US brands are starting to diversify their sourcing.

A survey of 34 executives via leading US fashion companies last year found which, for once, fewer US brands were looking to China for products, even though the country remains the top sourcing destination for the industry worldwide.

“US fashion companies are not ‘putting all their eggs in one basket’, along with the most common sourcing style is usually shifting via ‘China plus many’ to ‘China plus Vietnam plus many,'” according to the US Fashion Industry Association, which conducted the survey.

For many US brands, a third of their products today come via China, a third via Vietnam, along with the rest is usually via additional countries, the survey found.

although Sheng Lu, assistant professor of fashion along with apparel studies at the University of Delaware, said “made in China” products were not losing their cost competitiveness because of the overall supply chain efficiency.

“the idea is usually also important to recognise which China is usually playing an increasingly important role as a textile supplier for apparel exporting countries in Asia,” Sheng said.

According to Sheng’s research, Bangladesh’s textile imports via China, measured by value, rose via 39 per cent in 2005 to 47 per cent in 2015, along with similar trends could be seen in Cambodia, Vietnam, Malaysia along with additional developing countries in Asia.

“A meaningful indicator to watch within the future is usually the value of “made in China” goods within additional Asian countries’ clothing exports to the globe,” he said.

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