Exhibitions
conference
Speech at the first Global Textile Economic Forum
Du Yuzhou , born in 1942 in Qiqihaer of Heilongjiang Province, is a senior architect and professor. Graduated from
Preserving Market Access in the Post-quota World, Political Storms and Legal Battles of 2004 and Beyond in Textile Trade
By----Mr. Donald Johnson, Vice Chairman of Fleishman-Hillard Government Relations
(Former Chief Textile Negotiator at USTR)
It is a pleasure to be with you at the first Global Textile Economic Forum and to discuss effect of the new liberalized trade period beginning at the end of this year. The year 2004 is of critical importance for two important reasons to the textile trade world. First, this is a presidential and congressional election year in the
The first anticipated consequence of the elimination of quotas is a significant contraction in the number of countries exporting textiles and apparel to the
Another anticipated economic effect of ending quotas is the elimination of the very substantial quota costs resulting in significant world-wide price reductions. In order to maintain market share in this new unlimited, competitive market, the small suppliers may be forced to lower their prices even further, often with the support of government subsidies. The net effect on the
Of course, there are some who would like to keep the quotas on for a longer period. In fact, the American textile industry, led by the American Textile Manufacturers Institute (ATMI), has just this month joined with the textile associations in Mexico, Turkey, and 13 Sub-Saharan African nations to call on the World Trade Organization to extend the quota phase out until 2008. The basis for their demand is their claim
The
With the removal of the quotas and the lack of success in safeguard actions under Article 6 of the ATC in recent years, however, they will have no alternative but to seek relief through antidumping cases, as well as safeguard sanctions. In fact, ATMI has expressed its intention to do so in recent Congressional testimony and has urged the President not to agree to weaken U.S. anti-dumping laws in the Doha round citing the need for this remedy in "the free-for-all that is sure to ensue after all quantitative restraints on textile and apparel imports are abolished."
The textile industry will always try first for the political remedy rather than the more expensive antidumping case. As the steel industry did in pressuring the Bush Administration to initiate the safeguard cases against steel imports, the textile industry will also seek low-cost political relief. For example, ATMI has called for the Bush Administration to initiate antidumping cases against Asian textile and apparel imports based upon currency devaluations. While this is not considered a valid basis for an antidumping case, it offers a justification for political attention. The result might be some legislative relief along the lines of the Byrd Amendment (which has been ruled illegal in the WTO) providing compensation for successful trade remedy petitioners. Furthermore, one has to assume that the Bush White House will be very focused on the Presidential elections and key battleground states, as was the case in steel. The textile producers will be well-positioned to leverage trade policy concessions from Presidential candidates in 2004, the final year of the quotas. In fact, it would be surprising if they did not make an effort of this type. It is clear that politics, for example, played a major role in the current
It is generally assumed that
In the view of
Notwithstanding the likely use of the special safeguard provisions affecting
The key conclusion to be drawn from this analysis is that the year 2004 is the beginning of a multi-year offensive of protectionist forces against Chinese textile exports in the
Prospects for the International Textiles and Clothing Trade from a German Perspective
By---- Mr. Josef Albert Beckmann, President of Confederation of the German Textiles and Fashion Industry
1. Introduction / Greetings
2. Expiring quotas and the corresponding impacts on supplying and importing countries
Since
In the EU, as in the
With the gradual fall in quotas, import competition will further increase for the textile and clothing industry in the industrialised countries. But, import development as regards quantity ought to remain within limits since these markets are, comparatively speaking, saturated in the area of standard goods. In
In this way, some suppliers can be forced out of the market, leading to larger gains in market share for others.
An argument frequently put forward in favour of a faster abolition of textile quotas is that the developing countries should no longer be robbed of their comparative advantage in the manufacturing of textile products and the resulting export chances. In principle, there is nothing against this argument. However, the quota system enabled some countries to build up a comparatively strong position. Up to now, there are still certain advantages for some small suppliers: Either they are themselves not subject to quotas, or, they profit from the fact that larger competitors have to operate with relatively large quotas. If these advantages no longer exist, some suppliers will not be able to hold out against price competition. It will therefore depend on as to whether the supplier can also offer, besides price, further arguments in order to influence the buying decision.
Given the very limited potential for growing demand in the traditional buyer countries, smaller suppliers or even newcomers will have great difficulty in gaining a foothold in the market. Instead, established, high-volume suppliers with a long tradition of textile manufacturing will be able to strengthen their position. Smaller countries will not be able to hold their own in competition with giants such as
As is generally known, consumer behaviour has changed noticeably in the world's highly developed countries. This phenomenon may, in the meantime, also be observed in threshold countries, indeed, even in less developed regions. Not only luxury segments are expanding. The more strongly the living standards of emerging middle-class sectors grow, the greater their desire for differentiation via up-market consumption. Easier access to information speeds up this trend. Price no longer stands alone in the foreground. Values such as quality, fashion, innovation or brand name prestige gain increasingly in significance.
The textile and clothing industry in the industrial countries can indeed therefore overcome the disadvantage of the expensive location in that it uncouples itself from the pure price argument through qualitatively high-value products, innovative solutions, modern logistical organisation and technical know-how. Enterprises who continue to concentrate on the production of mass goods and labour-intensive products will, as against this, be exposed to even tougher competition than before. The relocation process of these segments to more cost-effective sites will thus continue.
However, no matter how competitive and innovative an enterprise may be - sales success finally depends to a decisive degree on the openness of potential sales markets. Improved access to third markets which are up to now strongly protected must therefore enjoy highest priority in trade policy. A fair and level playing field is therefore our first objective in international textile and clothing trade.
3. Current developments in Sino-German trade in textiles and clothing
At the same time, however,
In the wake of its accession to the WTO,
Given the strong economic growth seen in the most populous country in the world, an ever larger group of consumers with high disposable incomes is on the rise, interested in high-quality clothing products and home textiles. Infrastructure projects, industrialisation and construction work in towns and cities are all leading to increased demand for technical textiles. How strong this demand is can be seen from
Particularly when it comes to technical textiles - which require high expertise and are capital intensive - German companies have a clear lead in quality and technology over their domestic competitors. Increasing demand from automotive construction and in medicine provides good sales opportunities. Moreover, demand is being boosted by a growth in statutory regulations covering the protection of persons, goods and the environment, not to mention huge road and railway projects, and building plans for the Olympic Games in 2008.
Compared with Chinese exports to
As a location for investment, too, the People's Republic has become distinctly more attractive.
These latter findings strongly indicate that a win-win-situation is indeed feasible.
4. Nevertheless, with ongoing liberalisation in the tariff and non-tariff area, a trend to New Protectionism is visible. On the one hand, there are fears that, after the abolition of quotas, unfair trading practice will be increasingly applied in battle of market shares. On the other hand, one assumes that increased protective instruments could be adopted world-wide.
Efficient instruments are needed in liberalised world trade in order to put a stop to unfair trading practices. In so doing, one must take care, of course, that the instruments cannot be abused for protectionist purposes. Otherwise there is a danger that the liberalisation success achieved is again annulled by the inappropriate application of protective instruments and that spiral of protective measures is set in motion.
The protocol on
Contrary to widespread belief, these safeguards are not a tool - as are anti-dumping regulations, for instance - to combat unfair trade practices. Safeguards are designed as temporary protection should fair competition lead to a jump in imports, thus threatening the existence of the home industry. The use of such protective clauses is normally only authorised by the WTO if they are non-discriminatory, i.e. if they are directed against all countries equally. The special regulation for
Given the strong growth of imports from
However obvious the use of the protective clauses may seem, the application of safeguards means interfering in a complicated web of trade relationships, in the course of which a series of unpleasant side effects would be inevitable. To begin with, importing countries would certainly incur the charge of wanting to prolong the quota system through substitute tools - and with the intention of specifically disadvantaging an individual, particularly competitive country. After all, the
Quota liberalisation is an irreversible process.
Given the saturated home market, it is vital to have international markets for the sale of high-quality products.
5. Building up Partnerships
Because German exports are being increasingly successful and because investment is growing, many businessmen consider it time to establish a partnership with
To represent the economic interests of German textile and clothing companies in
6. To conclude, please let me add some words with respect to the significance of continued liberalisation.
Trade with textiles and clothing has, over decades, been distorted by massive trade-political interventions. Here, I do not only mean the quota system. ATC liberalisation is not an obligation for the industrialised countries alone. In Art. 7 ATC, all signatory countries undertook to dismantle entry barriers to their markets. Unfortunately, in several important supplier countries little has been done about improving conditions of access to their own markets. Up to today, some large textile exporting countries protect their own markets through high customs walls and further barriers. As long as this continues, completely false incentives are set up in international trade. Enterprises and consumers in these countries cannot decide freely on the purchase of certain products, competition in quality cannot take place and technology transfer is arrested. The protective walls thus injure not only those who would like to supply to these countries but also these countries' own economy.
My appeal to all international representatives present today is therefore to make use of the opportunity of the Doha Development Agenda in order to massively push forward the world-wide opening-up of the textile and clothing market. Only in this way can we ensure that trade and competition develop in a sound manner after 2005.
Japanese Textile Industry and Future Regime of World Textile Trade
By----Mr.Kunio Yagi, Secretary General of
Ladies and Gentlemen,
Today, I would like to speak about two subjects, namely the present situation of the Japanese textile industry, and the dominance of the Chinese textile industry in recent global textile trade and future regime of the world textile trade.
Regarding the present situation of the Japanese textile industry, I will talk about:
1) Current situation of Japan's textile industry and its foreign trade,
2) Structural reform of the Japanese textile industry and new report on the "Vision of Japan's Textile Industry and Policies for the Industry", and
3) Characteristics and technical advantages of the industry.
After that, I will talk about the situation in view of the present dominance of the Chinese textile industry as well as the prospect of a new order for international textile trade.
Please understand that what I will say here today is fully based on my personal opinions, and is not necessarily the official view of the Japan Textile Federation.
1. Present situation of Japanese textile industry
Firstly, I would like to explain the present situation of the Japanese textile industry.
(1) Both the number of establishments and the number of employees involved in the Japanese textile industry have reduced to less than half of their early-80s level. During the past 20 years, we experienced a decrease in exports and a sharp increase in imports because of the appreciation of the yen after the Plaza Accord of 1985, which caused our foreign trade to plunge into a huge net deficit and accelerated hollowing out in the textile industry. To cope with this situation, enterprises took desperate measures such as "selection and concentration", which downsized loss-making businesses and gave priority to their strong areas, relocating factories overseas, shifting their businesses to high-quality and/or differentiated products, shifting to producing non-apparel products, scrap & build of production capacity, bankruptcies, closures and withdrawals of small and medium-sized businesses, and rationalization in distribution systems.
(2) Even so,
(3) Looking at the current situation of
(4) Now I will move on to talk about the transition in the production capacity. Regarding the capacity to produce man-made fiber in 2004,
Also in the apparel industry in particular, it is said that the number of industrial sewing machines in operation in
2. Structural reforms in Japanese textile industry and new report on the "Vision of Japan's Textile Industry"
(1) In recent years, we have been making efforts to compete with Korea and Taiwan, and China, the textile giants, through producing higher quality and differentiated products, downsizing of and withdrawal from basic products, and plant relocations to ASEAN nations and Chinese coastal areas.
(2) The latest version of a report on the "Vision of
1) To promote further reforms in the structure of the industry,
2) To encourage exports as well as improvements in the textile trade environment,
3) To emphasize research and development in technology and design, and
4) To create excellent human resources.
For implementation of these strategies, the significance of prompt action is stressed in the report.
(3) I would like to report that instead of regarding
(4) For these purposes, the latest version of a report on the "Vision of Japan's Textile Industry and Policies for the Industry" suggests that the industry should further promote exports of the Japanese made textile and apparel products by producing higher quality and differentiated products.
3. Characteristics of the Japanese textile industry and its technical advantages
(1) Let me say that the Japanese technology in fiber and related areas is regarded as the best in the world. We take pride in this and feel aware that we should try to maintain our status by emphasizing research and development. We also need to take measures to protect intellectual property rights, and so on.
(2) I will now summarize the characteristics of the Japanese technology in fiber and textiles. First of all, we have made remarkable progress in the development of high-function fiber. Higher value-added products with fiber structure control and/or textile surface control by nano-technology, and various types of biodegradable fibers are the examples. Also, companies in spinning, weaving/knitting and dyeing sectors have come together to make use of new materials and produce various kinds of new textiles.
(3) Secondly, the Japanese textile industry has been developing new products continuously in various fields with its advanced processing technology, such as hygiene products including microbial control products, safety products including flame-retardant products, high functional products with cold protection, warmth retention and/or another excellent function for sportswear, and beauty and nutrition products.
(4) Besides, the Japanese textile industry has been developing so-called "super fibers" such as high-strength fibers and carbon fiber, and by utilizing such "super fibers", new products for new industrial applications such as geo-textiles for new construction methods in civil engineering and construction industries, materials for new energy, and materials for global environmental protection with recycling technologies are coming onto the market.
(5) Moreover, many Japanese textile companies, especially companies engaged in man-made fiber products, are challenging to enter into various kinds of chemical fields by utilizing high polymer chemistry originated from textile technology. These fields are various films, seawater desalination with membrane technologies, medical and pharmaceutical fields, and bio- and nano-technology fields.
4. Expansion of Chinese market shares in world textile exports and prospects for new future regime of world textile trade
(1) As aforementioned, China has shown remarkable development in recent textile production and trade in the world, and especially in recent 2 or 3 years, China has been only one winner in the industry. Now
(2) It should be taken notice that the following concerns are rising among related countries proportionately:
1) Chinese textile production and exports are growing prominently in the world. There is a possibility that Chinese prominent growth over the long term may trigger objections from other countries, as the exports from other countries have been on the decrease.
2) Chinese companies have flexible and multi-level energies and their remarkably speedy and prompt readiness for change of situations in the world textile trade, and many other countries, especially developing countries, can hardly follow
3) Other textile exporting countries, especially developing countries, are mainly specialized in apparel manufacturing industry, since they do not have diversified and multi-level textile industries as
4) Many textile exporting countries including developing countries are beginning to have a sense of crisis that only China will be benefited from the removal of quantitative restriction on imports by quota under ATC (the Agreement on Textiles and Clothing) by the EU and the USA effective 1st January 2005, judging from the market trends after the 3rd integration in 2002.
5) In the case of Japan, where there is no quantitative restriction on imports by quota and tariffs on textile products are the lowest in the world, the import penetration ratio of textiles and apparel on the volume basis are more than 70%, and 80% to 90% of the imports come from China. There is rising a concern among the
6) Furthermore, the
(3) I think it is very timely that the 1st Global Textile Economic Forum is held on the theme of "Post Quota Times: Creating the Corporate-Win Future" here in
Thank you for your kind attention.
Post Quota Times: New Challenges and Issues for Global and Bilateral Textile Links--France/China, a Bridge to Build
BY--- Mr. Thierry NOBLOT, CEO of Union des Industries Textiles
1. Hello everyone. My name is Thierry NOBLOT, and I am CEO of the Union des Industries Textiles, French counterpart of the CNTIC which has invited us today. UIT gathers 1,200 French textile firms with a turnover of 16 billions euros, employing 120 000 people and with exports of 9 billions euros. UIT is founding member of EURATEX. We have come from
2. With my French colleagues here, I have come to spend a week in your country. I am stunned and really impressed by your development and dynamism. Confronted with your presence, our "old"
3. We immediately accepted your invitation because our sector is undergoing a real revolution, a real "big-bang":
1. The WTO's textile quotas will disappear at the end of the year after nearly 40 years of existence.
2. The European Union is expanding to the East and South: we will be 25 member countries in the
3. Your country, leading textile power, became a member of the WTO on
4. One is talking of the possibility that
4. First of all, our market priority is
5. But it is not enough to speak about volumes. We also have to speak about prices and currencies, when one sees an 18% decrease year over year (2003/2002) in the price of a kg of clothing imported from
I can tell you that this is a major problem! A market economy cannot function this way.
If this collapse in unit prices is compounded by an artificially low yuan/dollar exchange rate, there is a second major problem.
My second message is the following: One doesn't conquer a market with such sales arguments. Either else one kills the market! Or else one commits suicide because the real production costs are not transferred to the market.
We want to understand because one can't explain, in an economically rational way, that from one year to the next Chinese textile prices drop 50% and, in addition, your currency is devalued 40% compared to the euro (i.e.; as much as the US dollar vs. the euro).
6. My third message concerns your market. We are literally fascinated by it: 1.4 billion residents, three times
We have to establish ourselves for the long-term. But how should we proceed? We are tens of thousands of small and medium size textile manufacturers in
7. This is my fourth message: We need to organise ourselves to pool our respective ressources. From this point of view, I propose to Mr. Du, President of the CNTIC, to open a new chapter in Franco-Chinese textile cooperation. I clearly see six areas of application:
1. Innovation: the sciences, techniques and technologies that our textile industries will have to work on to prepare the textiles for the next 10 to 20 years. On my return to France, I will ask the Institut Fran?ais du Textile et de l'Habillement (IFTH) to get in touch with selected Chinese research centres and universities, based on Mr. Du's recommendations, to develop scientific and technical cooperation.
2. Cooperation between companies: our two organisations can implement the means so our two countries' textile companies are able to more easily identify the ways and means to work together.
3. Intellectual property: we will implement the resources so our respective rights are better protected in your country. Innovation and creation are two of our major strengths in global textiles. Thus you can surely understand our desire to protect them much better than is the case today.
4. Economic information and regulatory monitoring: we can work together, with our respective means, to better understand the trends and major changes in our respective industries and markets.
5. Professional tradeshows: we can also organise our cooperation in the field of the major textile tradeshows in our two countries.
6. Professional education and training: I will ask the Institut Fran?ais de la Mode (French Fashion Institute) and our best engineering and textile fashion schools to develop Franco-Chinese textile cooperation in terms of initial training. The Union des Industries Textiles is also prepared to initiate work with your best continuous training organisations to move forward together.
8. F. Liebert, who is here with us, represents the entire European textile and clothing industry. Our organisation for
1. EURATEX on behalf of the Euro-Mediterranean textiles
2. The Union des Industries Textiles on behalf of French textiles
EURATEX and UIT will work hand in hand to improve the quality of our exchanges and our collaboration.
9. Times change. The borders between trades, cultures and peoples become blurred. Be active participants rather than passive observers. This is why we are among you today. And this is why we hope Mr. Du and the members of his team will accept our invitation to come to
Thank you for your attention.
Adhere to Technological Innovation, Enhance International Cooperation, Build an International Famous Business
By-----Mr. Yafu Qiu, Board Chairman of Shandong Ruyi Group
Ladies and gentlemen:
The beginning of a good year lies in its spring. In this fresh and energetic season, I feel honored to stand here, to discuss with you the development of textile and apparel industry.
Shandong Ruyi Group focuses on the production of wool textiles and apparel, but also have business in the field of cotton dyeing and printing, rabbit hair spinning, knitting, chemical fiber, jean fabric, real estate and education. The company holds the total assets of 1.6 billion yuan and has over 10 thousand employees and nearly one thousand technicians. The company has set up a state-level technical center and enjoys advantageous technologies and innovation capacity. The company's strength at products development tops the country in the sector of wool textiles. It has achieved the certifications of ISO9001 and ISO14001. Its brand of Ruyi is well known in
SOEs Reform Opening a
Since the reform and opening-up, the spring tide of building socialist market economy keeps on rising. Transforming the operation mechanism of state-owned enterprises and setting up modern corporate system, just as a prairie fire, spread fast and wide. The reform unwraps itself with the emphasis on the clear ownership and separation of enterprise from administration. The ownership of the state property in enterprises belongs to the state, but enterprises, with all their assets of legal persons, make their own management decisions, take full responsibility for their own profits and losses and pay their taxes as required by laws. Reforming large and medium-sized SOEs by standard corporate system will enable enterprises to become legal and competition identities adapted to market.
Up to now, with the withdrawal of state capital from competitive industries, most state-owned textile and apparel enterprises in
Target at International Position Introduce Advanced Equipments Supported by technological advancement, Ruyi Group increases its input in technological transformation and development, implements technological innovation and promotes industrial upgrade. Early in 1998, we suggested the concept of " Strive to build top international brand, and to become top international business" within two to three years. In order to realize this goal, the company has sent successively over ten groups of engineering and technical staffs to
Early 1998 is just the time when domestic wool textile industry was at its lowest ebb, the company made a bold decision, it invested190 million yuan to introduce technological transformation project of 1.5-million-meter top-grade western-style clothes product lines, and, backed by equipment introduction, we improve our hardware basis and boost our ability to make further advances. When fixing the project, the company always has international level as its starting point, makes sure that after the accomplishment of the project, we can produce first-class international products and make
Believe Technological Innovation Cultivate Core Competitiveness (Some voices are saying that
Our company emphasizes much effort on the intellectual property protection and specially assigns a manager to administrate the work. The company cooperates closely with research institutes at home and abroad, signs the agreements with them for the use of their technologies and brands and pays the charges or allows them to buy shares as defined in the agreements. Taking the joint-venture with Nogara Italy for example，Nogara joined us as shareholder based on its brand and techniques. The brand and publications of Ruyi Group are under the administration of the specially assigned manager. The company also applies for the patents and takes necessary measures to protect its core technologies.
For many years, in consideration of our own reality, we have adopted advanced and applicable technology to reform the technology of traditional industry, completely reorganized our former arrangement of production equipments and technologies and optimized technological path, our technology has arrived at top international level, and we have basically realized the filtration and transformation from labor-intensive mode to technology-intensive mode. Since the beginning of the production, we have developed a series of new high-grade products rich in high-tech and high value-added.
As the bellwether of technological innovation in textile industry, Ruyi Group's
In recent years, the company aims at top international level, and with the support of high-tech product R & D, gets to make R & D be consistently in the advantage of " have what others have not, improve what others have and change what others improve." Since 1998, Technology Center has built up its cooperation and exchange with domestic and foreign research institutes, experts and scholars, and hired several hundred celebrated domestic and foreign experts and scholars to come to Ruyi to give technological consultation; we have sent successively dozens of engineering, technical and management personnel to Italy, France, Germany, Australia and other countries, to inspect and study their advanced technology and management experience; In order to quicken the step of technological progress, the company has also conducted full cooperation with Donghua University and Northwest Textile Engineering College in areas such as talent cultivation, scientific research and technological development, and has set up " Ruyi Scientific Research Base" and " Ruyi Training Center" respectively in two colleges. The two cooperating parties take advantage of their collaboration, to do joint study in apparel, woolen spinning and dyeing, product designing and development and application of new technology, and jointly tackle technological problems and makes the company consistently remain on the frontline of new product development and technological progress. The
The company has always emphasized the development of unique core technology and high-tech products. In recent years, with the introduction of modern high-tech into textile industry, world textile industry has undergone profound change, new textile materials and the development and utilization of new technology have broadly widened the development room for traditional textile industry. The Sirofil products developed in 1999, are to plant in the traditional woolen fabric a strand of soft "steel bar", use the super-thin chemical fabric thread as the " axis," and wrap the outside by knitting wool, thus weave the Sorofil fabric, which not only have the high-grade appearance of whole-wool products, but also have the merits which woolen fabric does not have, such as thin, light, washable in water, crease-resistant and easy of caring. This Sirofil technology receives third prize of State Science Progress. This is the highest award
Once the high-tech is planted into traditional industry, it will instantly turn this world richer and more colorful. The company uses industrial technologies, such as the cotton spinning, printing and dyeing and silk, and successfully transplants them to the wool spinning industry, and develops bicomponent fashion tweed with features of flocking, burnt-out print and dyeing, and enables the traditional wool spinning technology to have a fundamental leap and lead the consumption fashion. This series of products has been awarded the only design gold prize in the 2000 first National Textile Product Design Competition. A material developed in 2001, using even 170 counts and new spinning technology, has changed the physical and chemical functions of the woolen fabric and made it as thin, light, refined and soft as silk and with a leap has entered into world's leading position. Currently, 170-countd super-thin material can be manufactured only by few producers in
Due to our great advantage in the independent scientific and technological development and the ownership of core technology, in the overall appraisal of China National Textile Industry Council in 1999 and 2000, the fine-spinning woolen fabric obtained the highest total score. In 1999, the two products, Cashmere Roman Woolen Cloth and Sirofil, are among the top ten fashionable materials. The company has obtained notable result in using high-tech to transform traditional industry and has formed series of products with high technological content and distinct characteristics. With our high-tech advantage, our products has not only realized "self-production instead of import", but also successfully entered into middle and top-grade market of developed countries and become selected materials for famous international apparel brands. The average export price has increased to 12 dollars/M2 , from original 4 to 6 dollars/M2.
The company now has the capacity to work out dozens to nearly one thousand designs each year and preview the fabric fashion in the following year. In this March 31, the company will cooperate with
Enhance international cooperation Create bright future
The development of
The raw materials
(Some voices are saying that Chinese market is not fully opened. In this matter, I would like to make it clear that we never cease our efforts to seek international cooperation.)
In recent years, Ruyi Group has, by many ways and in many areas, fully cooperated or jointedly invested with foreign businesses. Early in 1998, our apparel company formed joint venture with Nogara in Italy, uplifted Nogara's technology, recruited with high salary world's renowned designers, adopted advanced international marketing mode and tried to become China's best western-style clothes production base. Now, Group's subsidiary companies all formed cooperation with foreign companies, for the purpose of giving full play to their respective advantage and generating a win-win result.
(I'd like to correct the misunderstanding that Chinese companies' financing efforts were much resorted to the governmental preference. Such concept is groundless, especially for our company.)
With the increasing improvement of
The healthy growth of every industry and every enterprise in this world is inseparable from the collaboration from other countries. The time requires cooperation and the time requires that resource complement each other, closed-door construction will not have a way out. At the same time, only if we can play resource advantages of various parties, communicate and study each other, can we fulfill real a win-win result.
Innovation is the theme of the age, win-win is the call of the time.
2005 and beyond-a Positive Role for
By---Mr. Filiep Libeert, President of European Textile and Apparel Organization
SUMMARY
In September 2002 EURATEX organised a first international textile and clothing Conference in
·The need to open closed markets and remove non-tariff barriers
·tariff negotiations in the Doha Round to take place on a sectorial basis.
·the provisions of the TRIPs agreement be properly applied to ensure enforcement of intellectual property rights
·genuine cases of dumping and subsidy to be capable of effective remedy in genuine cases of unfair trade. Respect of social, ethical and environmental standards.
The accession of
After two years of WTO membership Chinese exports of textiles and clothing in liberalised categories have grown exponentially at the same time as prices have plummeted to levels which are substantially below those of other suppliers from outside the EU. Such prices seem inexplicable even in the light of the undervalued renmimbi and the end of quota rents. Where EU exports are concerned,
European industry accepts the principle of free but fair trade. It considers
Mr. Chairman,
Ladies and Gentlemen,
Thank you for this opportunity to share with you today a few thoughts on the future of textile and clothing production and trade as the end of the quota system draws near. This Conference comes at a most appropriate time to take stock of the situation and is thus a logical follow-up to the event which EURATEX itself organised in
· That there was a need to open closed markets and remove non-tariff barriers
· That tariff negotiations on textiles and clothing in the Doha Round should take place on a sectorial basis
· That the provisions of the TRIPs agreement should be properly applied, to protect brands, models and designs against copying and counterfeiting - without hampering moves to facilitate trade.
· That genuine cases of dumping, subsidy or other forms of unfair trade should be capable of effective remedy and that social, ethical and environmental standards should be respected.
These then were the ambitions in the autumn of 2002. Since then, as we all know,
The beginning of the year 2002 gave rise to a change in the pattern of textile and clothing trade internationally. The last but one slice of quota removals before
But membership of a rules-based body such as the World Trade Organisation imposes obligations, just as much as it provides rights. Among those obligations were a schedule of tariff reductions, coupled with an acceptance to remove non-tariff barriers, and a commitment to respect intellectual property rights.
I hardly need to underline how important it is for us as an EU industry to ensure that the commitments made by
If this amount is to grow over time, it will be crucial that WTO members and in our case the EU ensure that
costly and complex standards and quality controls which are more stringent than for domestic products; problems in distributing goods around the country; reluctance of some foreign companies to take part in investment projects for fear of lack of protection of their investment. We urge you to play your part in securing the removal of these barriers to trade before the end of this year.
It is just as important that the Chinese authorities should themselves take all appropriate action to stamp out any breaches of intellectual property rights in the country. If I may say so, it is not enough for Chinese legislation to conform to Article 25.2 of the TRIPs agreement, relating to textile designs and models, but at the same time there must be a genuine will in
What then of the performance of Chinese exports to the EU in the liberalised categories of products? A look at just a few liberalised but representative product categories tells very much the same story. Chinese exports have grown exponentially at the same time as their prices have plummeted to the point where they are not only substantially below EU producer prices but also below the prices of other non-EU producers.
Let me quote a few examples by way of illustration which cover the period to end October 2003:
Underwear and nightwear 20% below other suppliers to the EU market
Handkerchiefs 60% below
Anoraks etc. 50% below
Velvets and plushes 40% below
Work wear 60% below
And I could go on….
At the same time and not surprisingly the Chinese share of total EU imports has grown by leaps and bounds, to the obvious detriment of other suppliers.
With the best will in the world I find it somewhat difficult to understand exactly how these low prices have been achieved. We certainly believe, as do many economists, that the renmimbi is very much undervalued. We understand that your bank lending rates are extremely low and we accept that you have the benefit of the disappearance of quota rents. But I would have to say that
At all events it is certainly a fact that the sharp unit price drops and the expansion of market share, which in some individual categories has multiplied several times over with average unit price reductions of up to 75% deserve scrutiny as to the conditions under which such performance has been achieved. This last sentence is in fact a verbatim quote from the Communication of the Commission to the Council dated
Mr. Chairman,
As I understand it the purpose of a Conference of this nature is for businessmen to come together, to debate the issues of the day and to seek to find areas of mutual understanding and indeed to discover how best they can work together. I want to be very clear that this is what we Europeans are ready to do, but I would be doing your members and mine a disservice if I did not state with equal clarity that we will not stand idly by and allow large chunks of our industry to disappear as a result of predatory pricing by anyone. It is here that opportunity and threat come together in the term "challenge".
And here let me elaborate a little as I reach the conclusion of my address: the EU textile and clothing industry will always accept that in an ideal world trade should be free, and that it should be fair. I have been very open about the extent to which we see
It is my belief that
And where would
The Hong Kong 's Solution to the Post-Quota Era
By---Mr. Chan WingKee, Honorary Chairman of Textile Council of HongKong
Ladies and gentlemen,
It is my great pleasure to come to
The year 2003 is a testing time for
The year 2004 is also a significant year for the global textile and clothing industry. At long last, this will be the final year of the Agreement on Textiles and Clothing, the final year when exports to the
But of course, it would be too early to assume that we will have 100% free trade in textiles and apparels. Even without a crystal ball, I can foresee that the years ahead will continue to be bumpy. Tariffs for some countries are still far too high. Countries may resort to mechanisms like anti-dumping and countervailing measures, safeguards and other trade remedies, creating new barriers and uncertainties for the trade. This will be a whole new ball game. It also means that we will face increasing competition in the global textile and apparel market.
Significance of the Textile and Clothing Sector in
Although
How
While the lifting of quotas in 2005 will free our businessmen from a major constraint, our industry will have to compete head-on with other low cost production centres in the region. However, the cost factor is not the only important factor which a
Although production costs in
- The Government does not maintain any tariff or non-tariff barriers on imports. The industry is therefore able to get a stable supply of raw materials and semi-manufactures from other economies;
- We have an origin system which allows a portion of processes to be done outside
- Our workers are skilful, flexible and well-trained;
-
- We have a sound law system to provide for contractual certainty; and
-
These favourable factors enable
Moving Up the Value Chain
Our industry is also taking steps to further sharpen its competitive edge by moving up the value chain through upgrading product design, quality and other support services rather than competing solely on costs. Many producers are evolving from Original Equipment Manufacturing (OEM) to Original Design Manufacturing (ODM) and Original Branding Manufacturing (OBM).
Recognizing the importance of fashion as a creative industry, the Hong Kong Government is working in collaboration with the industry and has recently developed a series of proposals aiming to enhance manpower training, incubating designers, improve capabilities of enterprises, promote the image of
- to enhance the professional and technical proficiencies of students, to equip them with more knowledge about business disciplines, to provide more exposure and enhancement opportunities for them, and to nurture their creativity;
- to step up publicity of existing services currently provided by the Government and other supporting agencies as well as to introduce other support services; and
- to adopt a total concept approach in promoting the fashion industry by bringing out the uniqueness of Hong Kong fashion through the promotion of the products themselves and the bundle of related services.
Our Financial Secretary just announced in his 2004/05 Budget Speech the Government's plan to launch a "DesignSmart" initiative with the creation of a $250 million fund to train up manpower in design and branding, as well as to promote and honour design excellence. This would encourage more product design activities in
Cultivating New Markets
Apart from moving up the value chain, another way for producers and exporting countries to cope with the challenge of globalization is to adjust their strategies and to find new markets, in addition to the established ones. Of course,
With the signing of the Mainland Hong Kong Closer Economic Partnership Arrangement (or CEPA in short), more manufacturers are looking towards the Mainland as a market with strong potential for their products. Starting from 1 January this year, about 90 types of
In addition,
I am aware that there is no lack of initiatives for closer economic integration and free trade agreements among leading economies in
Conclusion
We notice that some domestic industries in the
Thank you.
How the Wool Industry Responds to the Demands of the Consumers
By---Mr. Juan Casanovas, President of International Wool Textile Organization
The speech will discuss the fast and permanent changing of the consumer behaviour concerning fashion and textiles.
Each player within the demand chain has to act and react to survive in the industry. What are the needs and the actions which the wool industry has to do?
How is the wool demand chain responding to the challenge of changing consumer habits? Consumer focus, fastness, added value, precise segmentation, plans without limit, promotion, innovation, research & development etc…? What is the key of success for the wool industry in the future?
The presentation will give a strategic overview of the various activities of their players, the relation to other parts within the demand chain and the adaptation to the changing markets.
Ladies and Gentlemen,
My presentation, as the title self explains, will deal about the different initiatives that the Wool Industry, under the leadership of the International Wool Textile Organisation (IWTO), is developing in order to meet the actual and future demands of the consumers and, at the same time, help the retailers to better achieve their commercial interests.
The main discussions during the First Global Textile Economic Forum have been centered around the issues that post-quota is bringing in: competition, dominance, strategy, market share, globalisation, free trade, new opportunities and challenges, readjustments, co-operation and development.
But I have not heard the key word and the main reason for all our existence: The Consumer. The Consumer and his or her needs and desires.
It is precisely The Consumer that is making a big difference in our industrial and production strategies. And by learning their desires and reacting to their expectations we will better serve them, and better serve our own companies.
Consumers existed during quota times and will exist in the post-quota times. It is worth remembering!
The normal approach that the textile and garment industry does take when looking at the market is focused on the supply-chain concept, which has been common practice during the last decade and, which still dominates our minds and our industrial behaviour.
The supply-chain concept has several pre-established ideas in mind, being one of them the concept of economies of scale; low price focussing and, in consequence, re-localisation of production to low wages countries, and so on. But, price fighting has a limit, a limit that already has appeared in certain markets, like
In
However, when deflation appeared, the prices for suits declined at a fast pace until reaching the 10.000-yen price level. These suits were basically made in
But surprisingly, the Japanese retailers discovered that, at this price level, they were selling even fewer suits than before. They started figuring out what they did make wrong and, discovered that they misunderstood the needs of their customers. Customers, or a large majority of customers, where not looking for lower prices, customers were looking for technical and comfort features such as performance, or where requesting a clear product differentiation.
Now the pace has changed, and the suits are selling at higher prices, of course by offering some new attributes of performance and use to the garments. Certain garment makers, still pressured by the retailers for cost reasons, moved a substantial part of their production from
The main lessons to be learned from this little story are the following:
1. Lower selling prices do not mean necessarily that you will sell more.
2. When prices and sales turnover are both low, margins do not exist.
3. There is always someone that produces cheaper than you do.
4. There is room for higher priced products in all the markets, provided they include certain attributes.
5. Producing cheaper does not mean producing the right thing.
6. You have to understand what the consumers need, and not giving them just what you make.
My perception of the facts is that
This wrong belief misleads the different Chinese textile and clothing industries and regions towards a race of extreme investments, aided undoubtedly by the same central and regional Chinese Governments in the form of financial support and export subsidies, among other unfair trading practices under the WTO rules. Sorry to say it crystal clear, but these are the real facts.
This explosion of investments has brought an extreme problem to the entire world: an excess of production capacity that the world textile chain cannot longer digest, even with the natural growth of the population. Textiles and clothing are not buoyant anywhere, precisely because of this excess of production capacity. The severe fight that exists in the market to gain share, or just for survival reasons, is doing harm to all the players and nobody gets the benefits. There is only one solution, which is reducing production capacity, here in
There is only one market, with a certain capacity to buy a certain amount of products and services. The markets' growth depends on the economic growth that is associated to them. We have recently seen that the economies of
Who gets the benefits of it? Nobody does. Not even do the consumers, which are not getting what they want. They are only being offered lower prices as a means of attracting their attention. We are not asking us about their real needs and how to better serve them. We are loosing their loyalty for their future consumption.
We have to understand the lessons from the little story I told you before.
This is precisely what the Wool Industry is trying to do with the help of IWTO. The Wool Industry is not alien to this market situation of oversupply and excess of offer.
In 2003, in view of the changing facts that had been occurring at the world fibre consumption level, IWTO questioned itself the real sense and role that it had as an organisation. World wool consumption had been dropping in the precedent years. The whole industry knew that had to react, but did not know exactly how to do it. There was, and still exists, a fierce price fight for even a reduced market share. This is driving the whole industry nowhere. How do we change this situation?
IWTO understood that the industry did not belong any more to a supply chain. The Wool Industry is part of a Demand Chain. This is precisely the main issue. The Wool is not really sold until the garment is not sold in the shop. The Wool Demand Chain starts in the shop and not in the sheep.
The Consumer is the force that initiates the demand that makes the wool pipeline run. The "diameter" and the "speed" of the demand chain pipeline will depend only on how well we respond to the demands of the consumers. If we are able to meet their demands in a continuous way, the pipeline will contain more of our products, and the replacement will take place faster.
We therefore have to understand the Consumers needs and to develop the products and services requested accordingly, at the right time, at the right place and at the right price.
In order to discover the needs of the consumers, IWTO decided to start a broad world market research on the actual and future habits of apparel consumption. The importance and scope of the research led us decide to center the attention of the study to the following markets:
This study had been consigned to Kurt Salmon Associates on behalf of IWTO. We will have an official presentation of the Market Research during our next annual Conference in
The market research report will be presented to a large audience of retailers and garment makers. It will also be commented by a panel of world key retailers, such as: Aoyama from
During the same Conference we will present the latest products that our world wool producers have developed in order to respond to the new demands of the consumers, and explain the commercial advantages that those products and services can provide to retailers. One of our Associate Members, Australian Wool Innovation (AWI) will report to the retailers about the latest technical developments and findings applied to products that they are working on, in order to meet consumers needs. These features are going to cover areas like high-performance, nano-technology, Easy Care treatments, machine washable suits, etc.
Our member, The Woolmark Company (TWC) will explain the promotional activities that go together with the new developments and products. Promotion is a key service to retailers to ensure that the right communication to the consumer is being performed, in order to inform them about the availability of products that give response to their needs.
There will be a Press Conference to highlight the main findings of the Market Research Report and the conclusions of the Round Table and of the additional presentations. IWTO will also publish the Market Research Report on a later stage.
In case you would like to attend our Conference, or find out further issues of interest, I recommend you to browse our web site www.iwto.org , or the organizer's web site www.iwtoevian2004.com .
IWTO mission is to help our Wool Industry Members to understand the textile demands of the consumers, and to enhance to respond to them with products and promotional activities especially developed to meet their needs, with a fiber that is highly desirable for its social, technical, comfortable and sustainable values.
The expected outcome should be a better positioning of the Wool fiber on top of consumers' choices and preferences, and to bring a steady increase of wool sales and higher market share, and the maintenance of commercial advantages along the entire wool demand chain, from retailers to woolgrowers, all around the world.
For the next conferences to be held in future, like the one that will take place in May 2005 in
Hoping to have raised enough interest among the audience.
State and Development Prospects for
By---Mr.Boris Fomin, President of Russian
We see our objective in boosting further partnership and stepping up international integration. We are ready for a dialogue on setting up joint ventures and implementing new technical and investment projects.
The transition to the market-oriented economy called for innovative methods of promoting products on markets. The instability of the Russian market in terms of the inadequate supplier-buyer relationship is due to the weakness of wholesale links.
Today, you can count major wholesalers on your fingers, while the bulk of them are middle-sized and little wholesalers as well as own merchandise supply networks organized by manufacturers who set up trade representative offices and brand name stores.
According to polls taken among participants of federal and interregional fairs held by "Textilexpo" JSC, the manufacturers point out that on average up to 30-35 percent of annual sales accounts for new buyers.
This market situation compels the suppliers to follow tougher marketing policies in order to maintain their positions. At the same time, this makes the market more attractive for new participants.
We get convinced in staking on Federal Trade Fairs for Textile and Light Industry Goods and Equipment (Textillegprom).
Today's federal fairs are a constituent part of the program of forming the domestic market of textile and light industry goods "Russian Textile and Fashion Weeks"; leading exhibition centers from nearly 40 Russian regions are involved in the mentioned program.
Federal, international, interregional and regional fairs held under the project in combination with information expansion ensure maximum efficiency in promoting all types of commodity groups, while at the same time keeping the whole variety and polarity of consumer groups; these fairs provide the suppliers with an environment for filling all the segments of the Russian consumer market.
Over these past 10 years, such fairs have been traditionally held at the All-Russian Exhibition Center, Russia's main exhibition fairground.
The distinctive feature of the fairs is the fact that, along with textile and light industry goods, they display all groups of products, equipment and services used in the manufacture of said goods.
The past week saw the closure of the regular 22nd Federal Fair that brought together more than 2700 exhibitors from 42 countries thus becoming the biggest fair ever held in
The bulk of the foreign participants came from
The Russian enterprises represented at the fair account for over 93 percent of the total domestic output.
And now I would like touch on the participation of the People's Republic of
We were satisfied with our meeting in Moscow with a delegation of the China National Textile Industry Council headed by Mr. Du Yu Zhou held in May 2002 when we had an opportunity to exchange information of mutual interest. We think the meeting marked the start of our cooperation.
At the 22nd Federal Fair Chinese enterprises were represented by four delegations.
The delegation of
I take this opportunity to thank our Chinese colleagues once again for their cooperation.
As a matter of fact, federal fairs, called federal or national, are, in essence, international shows recognized abroad as well.
Starting from October 2004, a new project under the general title "ELITE SHOW" will be launched: it will rally several new exhibition events at a time.
The "Fashion Directory" exhibition is the first in the series of five fairs to be held under the ELITE SHOW project reflecting international trends of shaping the lifestyle of today's man. The ideology behind the project is the formation of mankind's system of ideas about the image and life in high quality. Within the general project, the Fashion Directory ranks first, thus reflecting the present-day man's outward appearance in all areas of his activity.
Its logical continuation is the concurrently held international MODERN HOME exhibition of goods and services needed to equip a modern house.
The fair covers all aspects of interior finishing and styling as well as the layout and design. The MODERN HOME exhibition, being one of the ELITE SHOW project components, is dictated by the demand of a modern Russian citizen for reaching international standards. It is precisely the systemic approach to the exhibition show, which requires the presence of the full range of goods and services and allows to provide the man's comprehensive habitat image, that sets this exhibition apart from many multi-purpose exhibition fairs held in this thematic series.
I would also like to draw your attention to an international exhibition of equipment for the textile and light industry scheduled for 2005. The show provides for a large-ranging international participation, specifically, that of Chinese manufacturers. Asian-made equipment is in special demand in
Summing up the coverage of the exhibition program, I can state with satisfaction that in this area
While expanding the structure of fairs, we are clearly aware of the fact that participation in fairs is a crucial yet insufficient element of product sales. To draw up and implement a marketing plan, we need a wide information spectrum and the application of advertising technologies.
This is why the creation of an information bloc is one of the elements of the Russian Textile and Fashion Weeks project.
This project is being implemented through the "Textile Industry" publishing house that puts out monthly editions: the "Textile Industry" magazine and the "Textile World" newspaper.
Since 2002, a unified information system of goods, raw materials and equipment of the textile and light industry has been in operation. The system's release parameters for access by suppliers and buyers are posted on the site www.textilemarket.ru.
Actually, it is
And in conclusion, I would like to discuss one more issue that has recently become extremely relevant for us in the business-government dialogue based on the development of self-regulated organizations.
In the Russian textile and light industry the Russian Union of Entrepreneurs of Textile and Light Industry I represent here is an example of such an organization. The
With the same purpose in mind, the Committee on Free Enterprise in the Textile and Light Industry, which I also head, was set up in 2002 at the initiative of the
I wish to once again express my gratitude to the organizers of this forum and particularly to Mr. Du Yu Zhou as well as to the participants in this assembly.
I hope in the process of our work here we will be able to discuss in depth the issues we are interested in and exchange more detailed information
Let me also express the confidence that the Global Textile Economic Forum find its continuation, specifically, on the territory of the Russian Federation.
Thank you.
Possible Impact of Quota Elimination in 2005 on Korean Textile & Clothing Industry
By---oung-Kie Ahn, Vice Chairman of Korea Federation of Textile Industries
1. Preface
Korea T & C industry is highly export oriented and it has recorded more than US$10 billion trade surplus for the last 16 years and has contributed to maintain its prestige as a largest job maintaining industry by recording 13.3% of total employment or more than 380,000 jobs, in 2002
However, due to shortage of skilled labor, labor-management dispute, rapid wage increases, and other issues, domestic importance of the sector has been in decline since the late 1980s and the production of all textile and apparel products declined significantly in recent years.
Now, it remains about 9 months until the end of current quota system. Although the elimination of MFA quotas is predicted to result in an increase in global trade, the impact is likely to differ among countries and regions. For each country, it is said that quota elimination represents both an opportunity and a threat: an opportunity because markets will no longer be restricted and a threat because other suppliers will no longer be restrained and major markets will be opened to intense competition.
2. Present Status of Korean Textile & Clothing Industries
1) Position
The Korean T & C industry is an export-oriented industry, as export accounts for 60% of sales. T & C accounts approximately 7.8% of the total national export.
< Table - 1 > Importance of Textile Industry in
2) Exports Fall, Imports Rise
Statistics show that for the past few years the import growth rate has dwarfed the export growth rate. Illustrating the trend, the industry covering the 12 months of 2003 showed that Korean T & C exports declined 2.7% year-on-year to US$15.3 billion. Despite the negative growth of exports, imports over the same period grew 3.7% to US$ 5.9 billion.
This situation is attributed to the economic recession in advanced nations, which demand shrinkage and stronger competition among
In 2003, Korean T&C were exported to the U.S. (19.5%), China(17.4%), EU(9.7 %), Hong Kong(7.5%), Japan(5.3%), Indonesia(3.6), etc.
At the same time, these were imported from China(20.5%), EU(5.1%), Japan(3.1%), Italy(2.9%), US(1.5%), etc.
Of total export, fabric accounted for 54.5%, textile products including clothing 30.2%, yarn 10.3%, and raw materials 5.1%. Of total imports, clothing accounted for 51.5%, fabric 22.9%, yarn 22.8%, and raw materials 2.8%.
< Table - 2 > Export and Import in Textile & Clothing Industry
(unit : US$ mn)
3) Export Trends for the Products Restrained by Quota in 2003 The export US$ 15.3 billion in 2003 consists of textile (70%) and clothing (30%). Among them, export restrained by quota is US$ 2.9 billion, representing 19% of the total T&C export.
- Export restrained by Quota accounts for 5.0%(US$ 540 million) of the total textile export in 2003 (US$ 11.1 billion). And clothing by quota represents 72%(US$ 2.38 billion) of the total clothing export (US$ 3.3 billion).
< Table 3 > Export of Quota products in T&C industry
(Unit : bn, %)
As to each export country, the
Considering the export trends of Korean quota products, the Korean textile industry doesn't seem to be substantially influenced in the Post-ATC period. But there would be substantial impact on the Korean clothing industry.
In the recent years, export's market share and export amount of quota products have shown gradual decline. It represents that the Korea T & C industry is losing its international competitiveness gradually.
3. Change of Market Shares in U.S. Affected by the 3rd Integration Phase
Since the 3rd phase of integration has commenced on
The changes of market share in
Apparel Market Share in the
Textile Market Share in the
4. Impacts of Quota elimination in 2005 on Korean T &C Industry
The impacts of Quota elimination will be unequivocally positive or negative for all countries. Others will differ in their impact depending on the countries' stage of development, current trade patterns, trade policies by major importing countries, and their comparative advantage.
Considering all of the facts indicated above, the possible impacts of the quota elimination on the T & C sector in Korea can be predicted as follows:
i. The Korean Clothing industry will lose its market share in global market
The Korean apparel industry predicts China will gain more market share in global market than so far in post quota regime at the expense of Korea and Taiwan. Competition with
The Korean apparel industry would have significant competitive problems. The production of apparel products declined significantly in recent years. The main reasons for such decline were the continued slowdown in
ii.
Korea Textile Industry maintains the international competitiveness at present in the world market fortunately.
However, the Korean textile producers would not be competitive in common products and should pursue higher technology, niche markets with high quality items targeted to customers' needs, and relocation of production overseas. Otherwise
iii. Large scale labor market adjustments are predicted
Fierce competition will lead to unit price declines and this will lead the apparel industry with less comparative advantage to be restructured.
The number of employees engaged in the clothing industry of
In post ATC era, it is forecasted that the Korean employment market would be unstable due to the increased unemployment in apparel industry unless the unemployed be absorbed in other industries in short terms.
iv. De-industrialization of Korean textile and apparel industry will be accelerated
The significant increase in foreign investment by the Korean textile industry in recent years is a response to many factors, including increasing wage rates and labor shortage in Korea, increasing competitiveness of China, and the eventual phase-out of the quota system.
The industry had invested a cumulative US$2.6 billion through the end of 2003, compared with a cumulative US$ 2.1 million 15 years ago.
However, despite the fact that an increasing number of companies are relocating to overseas not only in apparel sector but also in the sector of textile and dyeing & processing, the domestic facilities investment is decreasing significantly. Therefore, there are rising concerns that hollow-out, not de-industrialization that the advanced countries have experienced, could take place rapidly.
5. Conclusion
After 2005, the trade order in this sector will be changed significantly by the liberalization of textile trade, individual country's trade policy, regional agreements, WTO/DDA, etc. The structure of Korean textile and apparel industry will also be altered considerably.
Taking these circumstances into consideration, Quota elimination is expected to strike a negative impact on the Korean textile industry in a short term;
Today's theme, "Cooperation" and "Development" urges me to make the following remark. If
When it comes to new global trade order in this sector, Cooperation is achieved on the principle of mutual reciprocity, and Development is maximized on the basis of mutual cooperation. The complementary relations between the two countries' T & C industry have been a lasting one so far. I hope it will continue to be a mutually advantageous enterprise for many more years to come.
A New Business Model for the American Textile and Apparel Market
By----Mr. Howard Li, Chariman and CEO of Waitex Group of Companies
I am very honored to participate in the Global Textile and Apparel Economic Forum. All individuals here today are prestigious government leaders, entrepreneurs and of the textile and apparel market and it is a unique opportunity for me to learn from all of you.
I have been involved in the textile and apparel industry in the
Current Conditions in the American Textile and Apparel Market
1. When the remnant quotas are being eliminated, supplying countries are expanding their exports of textiles and apparel to
By now,
2. With the phasing out of all quotas in January 2005, this year's 2004 will be the most unstable and dramatic year for the textile and apparel markets on a global scale. The
3. For year 2004 there will be a shortage of 6% of quotas. The reason for this is that customarily "carry forward" was permitted in which at the end of every year it was permissible to borrow up to 6% from the following years' quotas for use in the current year. This year, however, with the quota system phasing out in 2005, there is nothing to borrow against and the 6% carry forward is eliminated. Recently, the
4. After the quota is eliminated, who will be the winner and who will be the loser?
(i) The biggest winner will be the American consumer. Particularly, the middle and low income American family. The duty and quota policies have already been in existence for the past 40 years. Today Americans spend US $315 billion on apparel and shoes. Quotas and tariff policies increase the price of goods by 12% for duty and 23% for quota costs. That would add onto American families US $80 billion annually for the cost of apparel and shoes. In fact, quotas have not protected US jobs, which have fallen steadily over the past decades, and have only increased the burden on American families. Last year American consumers paid over US $1 billion in quotas for Chinese apparel exports to the
(ii) Chinese textiles and apparels enjoy a conspicuous advantage in
(iii) The major suppliers of American textile and apparel are about 40-60 countries. A report issued by the US government predicts that in 2005 and 2006 this number will drop to 20-30 countries and by 2010, the number of countries will continue to drop by 1/4 - 1/3 of the number of countries. Unless sourcing efficiencies are developed, regions that lack market competitiveness and depend on apparel manufacturing as a major source of income will face huge unemployment and social problems.
5. No quotas mean big markdowns in the American textile and apparel markets. JC Penny's CEO Peter McGrath, a large
After the quota is eliminated, competition will force efficiency to be greater and at the same time the cost of goods will be reduced.
6. After the elimination of quotas in 2005, the new outlook on American textile and apparel market will be different
(i) Factories will consolidate and be large with labor force of 5000-10,000 workers.
(ii) New factory locations will be linked closely to the supply chain.
(iii) Mills will become vertical apparel manufacturing.
(iv) The big department stores in the
(v) Sourcing decisions will be focused on the most efficient supply chains.
(vi) There may arise new barriers such as anti-dumping procedures
(vii) From 2005-2006, the cost structure will drop 15% or more.
In the history of our industry, the elimination of quotas is unprecedented and will result in fundamental changes. The global business model for the American textile and apparel market is changing - fast. It is vital to adapt to the
As we enter the 21st century, increasing globalization is an unstoppable phenomena. There is no doubt that technology will continue to change and improve, information will be delivered amazingly fast, conducting business will have almost no national boundaries and China will become the world's factory.
There is a great opportunity for Chinese entrepreneurs. It is time for
In a few years, the business model in the
Chart 1. In order for one unit of product to travel from manufacturing to the retailer, it must pass through many links in the supply chain with many of people involved throughout the entire chain.
From Retailer - Wholesale dealer - Importer - Foreign firm (agent) - Domestic import and export company - Factory - Material supplier, and also involving Transportation - Warehousing - Customs - Government inspection - Financial institute and Accounting. With all these many links in the chain involving people communicating with people, many obstacles and miscommunications arise which increase costs and wastes a lot of time.
Chart 2. Recently, more than 60% of US retailers such as Walmart, Kmart, Sears, Federated Department Stores, Target, JC Penny and hundreds of retailers request that vendor suppliers have EDI, ASN, UCC 128 capabilities to process their orders. If you are not compliant with all these requirements you may not get their orders. Within a couple of years, we believe that all retailers will demand this requirement. Why? Because information is the key to gaining competitive advantages. With this new technology, when the consumer pays and buys merchandise from the store or when they pay with a credit card and scan the bar code - that exact second - the retailer creates consumer product information and accordingly that information is used to select what they need of the product. The information captured will go through each link in the supply chain enterprise causing a series of reactions. The factory will buy material for production and arrange import and export. The factor will check retailer credit, the bank will make the transaction, the management will make decisions based on product flow and financial performance and the distribution center will scan each bar code of the product -- all the information will be in the information system. After that whatever link you are in the supply chain, you can get all the information from the system directly. Paper exchange is reduced and less communication by phone and fax is required. This is efficient to manage the processing of the delivery of the product and also at the same time to handle the money transaction. Management can act according to the available information and can fully utilize its capital, reduce inventory, make the perfect business decision and increase the profit. The key is the information platform.
The merchandise gets into the market through three different channels: from the manufacturer to retailer, wholesaler to the retailer, and mail order and e-tailer on the web - all those different channels of the companies will be integrated in the information platform to go forward together and increase business. As soon as you have one marketable product, you immediately put the products information such as pictures, description, and inventory pricing to the information platform. You can sell globally, including wholesale, mail-order and internet sales. The money will be automatically registered to your account.
The supply chain means the information flow, money flow and product flow. When you do business overseas, selling your goods is not easy. How would you ensure getting your payment? This is the most worrisome aspect to business. United State has the most complete and secure credit system and credit insurance compared to
In the future, manufacturing and sales will be integrated, and the supply chain is the vital connection between them. Through this integrated and interlinked supply chain system, you can develop product, increase efficiency and save money. According to the Federal Reserve board, this new business model and e-commerce will be increase GDP 15 times and save 25% of the costs in the next five years.
In this information century, technology will change everyone's work and life. In order to manage their business, every industry must utilize information technology. Computerized information platforms will increase the efficiency and achieve the economic goal. Since
Chart 3. Twenty years ago I established the Waitex Group of Companies in
I look forward to Chinese business enterprises get into world market.
The Shifting World Fiber Market
By---Mr.Mark Lange, President and CEO of National Cotton Council of
The world's textile manufacturing operations are in the midst of a change that is comparable with the introduction of mechanical looms at the onset of the industrial revolution. Today's revolution has been spawned by 2 conditions. The first is the ready availability of communications technology that enables retailers to continually search for ever lower cost products. The second facet is the expected elimination of textile and apparel quotas by the United States (U.S.) and the European Union (E.U.) by
For the last 25 years much of the developing world has sought the elimination of textile quotas under the Multi-Fiber Arrangements (MFA).
As the elimination of the MFA is completed, a number of countries have become concerned that the largely assured market access in the
Improvements in handling, transportation, and electronic document processes are reducing the time between orders and delivery as well as lowering direct costs of freight. This is changing the retail sourcing environment. As has been the case throughout mankind's history, uncertainty brings out entrepreneurial effort. In the face of concerns by many, there has also been the view that new opportunities are being created.
Regional Trade Alliances
The location of fiber production and textile manufacturing has undergone profound changes in the past decade. The final elimination of the Multi-Fiber Arrangements (MFA) and their replacement within the WTO promise further changes in trade patterns. While cotton yarn manufacturing is largely concentrated in cotton producing countries, major world textile and home furnishings retail markets are quite distinct from the location of the textile and apparel production facilities. Today, the
Both the E.U. and
These regional trading partners are now quite uncertain as to the future of their economic arrangements as
Already, many changes have swept the European and American fiber/fabric complex. In the last decade both regions have experienced a reduction in cotton yarn spinning by 50%. Today, 70% of all cotton textile products manufactured in the
Fiber Production and Apparel Markets
With consumption in excess of 35 million tons, manmade fiber is challenging cotton in every market. Between 1990 and 2000, cotton retail demand struggled with annual growth of less than one percent, while manmade fiber enjoyed growth of almost five percent per year. Even more striking are the double-digit growth rates seen in
In 1993, chemical fiber production was 19 million tons and 47% of the output originated in
In 1993, the
The location of textile manufacturing has changed dramatically in the last decade while the percent of cotton moving in the international market has shown greater stability. Annually, 30% to 33% of world cotton production moves in international trade as raw cotton. Although the general share of production moving into trade is stable, the participants have changed substantially in recent years.
Relying exclusively on imported raw cotton has not eliminated spinning in a number of countries.
There is also an important country that both grows and has imported cotton, as their raw material needs change over time. In the mid-1990's
Future Developments for
The Chinese textile industry is blessed with some natural advantages when it comes to textile and apparel production. Ample labor supplies, raw material production and steadily improving infrastructure have brought
The
While the
Despite the decline in domestic mill consumption, the
However, to insure a prosperous cotton industry for the future, more must be done to enhance cotton demand. Consider that the average consumer in
Consumer promotions of
The National Cotton Council of America (NCC) is fully aware of the changing nature of the world cotton complex, and as a result, is also aware of the important business generated by overseas customers. The NCC, in coordination with the U.S. Department of Agriculture, has been active in supporting a number of initiatives all designed to better partner with cotton importers around the world.
Specific to China, the NCC has a number of suggestions on how mutually beneficial cooperation between the U.S. and Chinese industries may be broadened and deepened: locating an intern from the China Cotton Association at the NCC, cooperation in CCI promotions and trade communications, seminars on the use of futures market in contracting and establishing transparent arbitration processes are only a few of our many common interests.
Conclusion
On
Fashion plus Function-Taiwan's Approach towards 2005
By---Mr.Roger J. Ho, Chairman of
A. Taiwan's exports
The main exports are fabrics and follow by yarn and apparel.
Due to the worldwide over capacity, the profit margin has not grown. The shift of fabric mills to offshore causes the growth of yarn and fiber exports.
Newly expanded capacity of fabrics in
Newly expanded spinning capacity in
B. Taiwan's home market
Strategy 1: To improve Business Operational Performance of Global Logistic management for International Big Names
Help industries be equipped with knowledge management system
Help industries be equipped with e-Commerce for speeding up business operations
Help industries develop verticalized supply chain management systems
Strategy 2: to Enhance Design & Manufacturing Capabilities of Functional Textiles
Enhance supply partnership with big names
Comprehend global fashion trends and competition between retailers
Renovate capabilities of technology innovation and design development for multi-functional textiles
Strategy 3: to Cultivate Fashion Design and Branding Capabilities
Acquaint
Cultivate the dynamics of research and development for functional textiles
Promote
Stimulate industries to develop branding and retailing strategies
D. Examples
How
Example 1: A Cultural Oriented Promotion Plan for Textile & Apparel Design Collaboration Making use of
Example 2: A Certificate System for Taiwan Functional Textiles Without a certificate issued by a neutral institute, it would be difficult for suppliers to effectively differentiate their functional textiles from those textiles of poor functionalities. 9 Functional Standards Announced are 1. Wrinkle Free Cotton Textiles, 2. Far Infrared Textiles, 3. Breathable-Waterproof Textiles, 4. Anti-Bacteria Textile for Apparel & Home, 5. Anti-Bacteria Textile for Medical Use, 6. Sun Protective Textile, 7. Moisture Absorbing & Quick Drying Textile, 8. Anti-Static Textile, 9. Electromagnetic Shielding.
E. Summary
A universal trade liberalization is still an ideal and not yet comes true.
Business sustenance is a "must" rather than a dream.
The reality is to make efforts on keeping businesses survived by facilitating client oriented management system.
To cope with dominant retailing powers is an essential step for all suppliers.
To Preserve the Vitality of the World Market by Sharing of Resources and Mutual Complement of Nucleus Ability
By----Mr. Zheng Yonggang, President of Shanshan Group Co., Ltd
Mr. Chairman, specialists,
Ladies and Gentlemen:
I am very pleasant to participate in Global Textile Economic Forum and give a subject speech. By holding discussions and conducting communications on the series of problems emerging in the global textile and apparel industry, economy and trade in the post-quota times among economic organizations, textile and apparel industrial organizations, top leaders of commercial chambers, famous enterprises and leaders of multi-national corporations at home and abroad, the forum will surely promote the industrial exchange and cooperation in a deeper level and with broader mind and courage , making an onward step on the road of "cooperation and development on the basis of equality and credibility". The forum will encourage the textile and garment enterprises to participate in the global industrial adjustments with more advanced duty and ideology, so that the enterprises can achieve a lasting, steady and healthy development, and thus push forward the progress of the global economy. So my subject today is "To Preserve the Vitality of the World Market By the Sharing of Resources and Mutual Complement of Nucleus Ability".
Under the international environment of peace and development, China has in the past 25years taken big strides in stepping into the outside world by taking full use of foreign capital and resources on the one hand; and on the other hand, it has opened China's domestic market in an all around way and provided equal opportunities of development for countries around the world by introducing foreign brands and enterprises home. By taking part in globalization and building an economy with Chinese characteristics independently,
As the global incorporation of
The localization of international brands and the internationalization of
It is unprecedented either in the way or in the mode of development of
As one of the representatives of China's local-run enterprises, Shanshan Group takes apparel, high technology and capital as its three plates for development in the new century, among which the apparel plate sticks to the strategy of "international multi-brand" with an aim to turn Shanshan a first-class enterprise and increase its brands to 30 by the year of 2010, among which 60% will be international brands. The high technology plate will focus on the exploration for its own intellectual property and the projects listed in the National 863 High-tech Project that are still blank in domestic China but leading in the international world. And it will strive to become the first-class supplier of special products in the new material and environmental protection field that represents the future development of science and technology. By the effective operation of the capital, it will set its foot in the development of international trade, finance, real estate and culture publishing, etc.. Shanshan's international cooperation plate, taking it as an example, has 6 large-scale import & export enterprises, and the annual total import & export volume is about 4.5billion yuan, with 2.2 billion of import and 2.3 billion of export and thus a balance is achieved. Shanshan Group takes capital as its link and the three-level-structure of share-holding companies, industrial groups and industrial corporations as its mode of organization to ensure the effective operation of each plate respectively.
I firmly believe that the holding of this Global Forum will help us in reaching new common understanding for the development of the world apparel industry and in realizing better balance between equality and efficiency. And in the aspect to achieve win-win by cooperation, we are surely to get more opportunities and accomplish greater development. Thank you!
By--- Conclusion by Mr Xu Kun Yuan, Vice President of CNTIC
Although we have different opinions in today’s forum, we are friendly cooperation partners. We believe that only through cooperation, could we win and make progress. The Global Textile Economic Forum is a communication place for textile sectors and non-government organizations of different countries. In the post-quota era we may face lots of problems, while if we could cooperate and complement each other, we should meet a win-win result. Thanks again for all the friend from various countries and areas here. ！
Thank you. It is the end of first Beijing Globe Textile Economic Forum！
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