A Chinese view of the actual and future textile world
At the ITMF Annual Conference 2013 in Bregenz (A), Sun Ruizhe, Vice Chairman of CNTAC China National Textile & Apparel Council, gave a speech on China’s Textile Industry – Today and Tomorrow , starting and ending in a philosophical way
At the beginning of Sun Ruizhe’s speech, he selected an almost philosophical approach: “China & World : Consensus “; “One swallow does not make a summer “; “Hasty climbers have sudden falls” and he concluded his sights of the actual and future textile world “Constant dropping wears away a stone”, as well with some contemporary interpretation of Confucianism.
The position of China’s textile and clothing industry in the world
Packed in his speech were figures, facts and predictions. First of all he evaluated the Position of the Textile Industry in China’s National Economy (1980 – 2012), shown below in Table 1
The second issue of his speech was elaborating on the Position of China’s Textile Industry in the World in 2012. The China’s mill fibre consumption stood at 45.4 million tons translating into a world share of 57 %, the rest of the world consumed 33.97 million t or 43 %. China’s textiles and garment exports reached USD 262.6 billion or 36 % of world exports, the rest of the world had a share of 64 % or USD 466.8 billion. China’s manmade fibre production was 38.0 million t or a share of 73 %, the rest of the world produced 14.03 billion t or 27 %. China’s cotton production reached 6.84 million t or 26 %, the rest of the world produced 19.06 million t or 74 %.
Ruizhe classified China’s textile industry as a pillar industry of the national economy, and an important industry for people’s livelihood, as well as a competitive industry in international markets. He envisioned an extended boundary of the industry as an integral part of strategic emerging industries, and as an important driving force for the fashion industry.
He named export – as well as imports, domestic market, performance, labour productivity and the extension of the industry chain, emission reduction and industrial migration – the challenges for sustainable development. From January to June 2013 China had an export market share in both textiles and clothing in the U.S. market of 36.92 %, or a slight decline of 0.44 %, as against the first half of 2012. The value was USD 154.87 billion (+12.7%), Vietnam hold rank two with a share of 8.37 % (+0.79 %), followed by India with a share of 6.61 % (+0.01 %), then Indonesia with a share of 6.62 % (+0.05 %) and Bangladesh with 5.32 % share (+0.24 %).
China’s share of the EU markets in the first half of 2013 is 34.96 % (-2.18 %), followed by Bangladesh with 10.66 & (+1.43 %), then Vietnam with 10.50 % (+0.71 %) and India 8.29 % (+0.14 %) and in rank five we find Indonesia with 2.11 % (+0.01 %).
China’s share of Japan’s market reached in the first half of 2013 70.58 % (-1.60 %), followed by Vietnam with 6.57 % (+0.75 %), then Indonesia with 3.51 % (+0.42 %) and Bangladesh with 1.50 % (+0.21 %). Rank five takes India with 1.47 % (-0.07 %).
The challenge of the domestic market is that garment retailing entered a slower growth pace than social consumer goods. In 2012 online spending topped CNY 130’4 billion, or 6.2 % of the total. The 2012 online shopping of garment amounted to CNY 318.88 billion or around 24.45 % of total online spending and is expected to reach CNY 920 billion by 2016. The gap between urban and rural clothing expenditure was 3.05 times in 1980 and 4.60 times in 2012.
Per Capita Clothing Expenditure of Urban Residents can be had from Table 2
Table 3 pictures Per Capita Clothing Expenditure of Rural Residents
The profitability of China’s textile Industry
China’s textile industry realised in the first half year of 2013 total profits of CNY 158.65 billion (+15.53 %). A survey conducted among entrepreneurs reveals caution in view to the future operation, because only 24.5% of the respondents were optimistic, but 32.4 % were pessimistic and 44.1 % bet on a stable development.
In 2013, labour cost in China continued to be on the rise. The margin of growths per capita salary in the textile industry is estimated at 10 to 15 %. The cotton price gap between domestic market and overseas market is creating problems, these damage the competitiveness and benefits of Chinese cotton textile enterprises.
Ruizhe adds also a profit comparison between domestic companies and Chinese operations moving within China, they can be had from Table 4
In 2012, the textile industry in western and central China amount to 19.9 % of gross value of the industry’s output. The moving pace from the east to inner land has slowed down. The absence of associated industries and social supporting systems render the operation of most relocated project unpromising.
Some light on Labour Productivity
Ruizhe voiced the opinion that China’s textile industry is quickly picking up in view to productivity, structure and competitiveness. He added that the per capita GDP Gross National Product is well in line with the rising of labour cost. The perspective and preference on employment of new generation of labour has caused labour shortage. The trend of an aging population is known, by 2030 China will become a country with the highest proportion of aging people in the world.
The labour productivity is illustrated in Table 5
The speaker underlines that in 2012 the rate of 0.43 % in R&D expenses of textile companies is beyond the industrial average of 0.71 % thus leaves some future potential.
Expanding Industry Chain
Ruizhe explains that at present and to develop a well coordinated industry, priority will be given to develop the upstream material industry.
In 2012 China produced 30.57 million t of polyester fibre, accounting for 80.6 % of the total production of chemical fibres and about 58 % of the mill fibre consumption in China. The demand for PX reached 14 million t, while production stood at 7.75 million t, thus 45 % or 6.30 million t depend on import. By 2014 the production of polyester fibre in China is estimated to reach 39 million t. The production of PTA will be around 33.5 million t and the demand for PX around 22 million t.
In production capacity of PX China had 2012 a worldwide share of 24 %, of PTA 55 % and of PET 63 %.
The cotton market economy and political effects
Ruizhe is convinced that influence by the state policy, that there is no downward potential for domestic cotton price. He states that due to slow recovery of the global economy, cotton prices are unlikely tending upwards. He is also convinced that the price gab o cotton has damaged the competitiveness of the Chinese textile industry.
Emission reduction is a further goal to achieve
Ruizhe explained that the targets for Emission Reduction of Main Pollutants in the five year plan (2011-15) are set, and 105 out of 398 industrial wastewater disposal projects are related to textile and garment enterprises. He underlines that some of the national standards for pollutant emission of the dyeing and finishing and silk reeling industry exceed those adopted in developed economies. The first batch of companies, complying with the Permission Conditions of Printing & Dyeing industry (revised in 2010) is already announced. Product carbon footprint ISO 14067 is to be introduced during this year.
The outsourcing of production by Chinese textile firms
According to Ruizhe, more than 400 Chinese textile enterprises have outsourced production by setting up mills in Cambodia, further 100 are located in Bangladesh. However, he identified new challenges for going abroad, namely the lack of supporting industry and the cultural gap.
The details of companies, sectors, regions and type of investment can be had from Table 6
Chinese Market is a world of opportunities
To illustrate that the Chinese market is a world of opportunities, the speaker notes that it the annual growth rate of China’s urbanisation 2010-30 will be one percent annually, meaning that every year there will be 13 to 14 million people moving from rural areas to cities.
Considered to be a conservative estimate, by 2016 the ratio of households with annual income of more than USD 15000 will increase from 11 % i8n 2011 to 4 %. China is scheduled to become the largest retail market in the world with a total value of USD 4.2 trillion.
The projected ratio of China’s urbanisation can be had from Table 7
All of this will be supported by the growth of China’s GDP, per capita net income and retail sales of social consumer goods, thus a market with great potential.
China’s online shopping was up in 2012 64.7 % against 2011. The turnover of apparel shopping increased 44 %, growing much faster than offline retailing. Fast fashion brands continue to penetrate the Chinese market. These are consolidating their position in central cities, many fast fashion brands are expanding their business to medium and small sized cities, as TextileFuture has reported before. More fast fashion brands are establishing their marketing network in China, such as Forever 21, WE, UR and Marks & Spencer.
In 2012 the domestic sales of Chinese textile and apparel enterprises amounted to CNY 4.78 trillion (+12.3 %), growing faster than total sales (+ 10.63 %). Chinese textile and apparel sales accounted for 84.31 % of total sales value (+1.26 %).
China’s import of textile products, such as apparel, marks an increasing trend. The import of Textiles can be had from Table 8
The imports of garments can be had from Table 9
The overview of cotton, cotton yarn, wool and flax imports can be had from the following four tables
The overview of PTA, PX and MEG imports can be had from Tables 10-12
The imports of Textile Machinery
Table 13 shows the value of imported textile machinery from 1998 – 2012
Tables 14 show Textile Machinery by category in 2012 against 2000
Table 15 gives the breakdown of Textile Machinery’s origin 2012 against 2000
Declining exports of textiles and garments from foreign owned Chinese firms
The export of foreign owned Chinese manufacturers of textiles and garments accounted for more than 25 % over the past five years, but its share declined from 31.08 % in 2008 to 26.74 % in 2012. On the other hand the value of these exports increased from USD 610 million to USD 750 million in 202112, but declined to USD 695 million in 2012. The foreign paid in capital was 12 % in 2000, and 15.79 % in 2005 and declined from 15.39 % in 2007 to 15.17 % in 2010. The share of Hong Kong, Macao and Taiwan investment was 17.45 % in 2000 and increased by 2007 to 21.85 %, but declined 2010 to 20.48 %.
The planned future
The adopted targets in different areas and over five and ten years can be had from Tables 16-17
The development is generally based upon resources, eco-friendliness, productivity and trend setting underlined by major policy decisions to substitute raw materials such as super cotton-like fibre, differential, functional modified fibre, recycled chemical fibres; development of regenerated fibres based on environmentally friendly process; new spinning technologies such as compact spinning, low torque spinning, siro-spinning and embedded spinning technologies, as well as technical textiles. Clean dyeing and finishing technologies, digital controlled energy saving and environmental friendly printing and dyeing processes, high efficient three wastes disposal technologies as well as resources reclamation technologies. Further the establishment of textile industry related standards and improvement of testing techniques. It entails also the development of a creative industry and integration into the textile and garment industry. Another factor is brand building, including product, enterprises and industry brand of the textile industry.
All in all the focus is to be shifted from product to social value. The Chinese ideology for sustainability is Scientific Development & Harmonious Society that could be translated in a contemporary interpretation of Confucianism: Benevolence – Keeping the balance between economic development and social justice. Righteousness – Improving social security for disadvantaged people. Propriety – System specification and anti-corruption. Wisdom – Innovation driven and win-win development. Trust – Upholding integrity based business ethics.
The finally resulting responsibilities of the textile industry are: Responsibilities to labour and consumer (Labour rights, equal opportunities and dignity, and decent working conditions. This includes abundant quality products, with affordable price tags, and improving individual living standard as well as consumption quality. Further responsibilities to environment and society: Environmental friendly and effective yield of resources; sustainable industry order and social value, legislation and civilisation of market and society. The responsibility to the world: job opportunities, stabilising and optimising the international value chain.
The wastewater discharge of the textile industry in China has an increasing share of all industrial discharges. The share increased from 10.65 % in 2005 to 14.63 % in 2010, and the COD discharge from textile effluent accounted for 8.6 % of the one of 39 industrial sectors in 2005 and increased to 14.33 % in 2011.
Ruizhe concludes with some general comparisons: Human demand for renewable and ecological resources is actually the equivalent to that of more than 1.5 earths. Humanity is on track to require the resources of two planets before mid century. In 1961, human demand w met by the resources of just 0.7 planets. If everybody were to live like the residents of China and US residents today, it would take 1.2 and 4 earths respectively to support the global population. Japan residents consume the ecological resources of 7.1 Japan’s. It would take four Italy’s to support Italy and Egypt uses the ecological resources of 2.4 Egypt’s.
China’s Social Compliance Management System for the Textile and Apparel Industry CSC9000T is the first such system implemented by an industry in China and covers three major areas, care for the people, environment protection, and fair trade. From 2009 to now more than 50 textile and garment companies have released their annual CSR report.
All of that sounds very ambitious and dedicated. It leaves high hopes that the implemented or planned steps will lead to better conditions for all involved in these two industries. Anyhow, ITMF delegates will measure and witness progress when they attend the next edition of ITMF’s Annual Conference on October 16 – 18, 2014 in the Chinese capital of Beijing with CNTAC as co-host.