China'S Textile Exports To The United States Increase Negatively, Expand Production Capacity Cautiously

"This year, many garment factories in Jiangsu are short of orders, and businesses are struggling."

Jiangsu SOHO International Group is responsible for garment export business, general Hui told reporters that the company is one of Jiangsu's major textile exporters.

According to the latest data report, the total export volume of textiles and clothing in China reached 8.19% in 1-2 months, 30.9 percentage points lower than that in the same period in 2007.

The industry said: "this year's Chinese textile industry, who expand capacity is like suicide."

The chamber of Commerce has just arrived at several major textile production bases to investigate, "10 enterprises have 9 enterprises to complain."

Export growth decreased by 30%

"This year is the most difficult year for China's textile industry. Labor costs, exchange rate changes and raw material prices have greatly increased the cost of enterprises. The total cost of enterprises has increased by 20% to 30%."

Gao Yi, the head of the import and Export Department of Zhejiang Textile Co., Ltd., said that only a little profit during negotiations would be depleted with the appreciation of the renminbi in a few months' time, sometimes even at a loss.

The US market was worst performing due to the subprime crisis. It continued its downward trend of growth from the three quarter of last year, from 31.39% last July to 11 and December last year, -5.85%, 23.97%, and -17.60% until February. The report points out, "this shows that the impact of the US slowdown on China's exports is constantly emerging."

Because of the depreciation of the US dollar, China's dollar denominated exports have been overestimated. After excluding the exchange rate factors, China's exports to Europe, the United States and Japan have maintained a downward trend.

In February 2008, China exported $1 billion 386 million to the US textile and clothing industry, with a negative growth of -17.60%.

Exports of textiles and clothing were US $524 million and US $862 million, respectively, which declined by 8.23% and 22.41% respectively compared with the same period last year.

Judging from the export areas of several major textiles, Guangdong and Shanghai have the largest decline, with the growth rate falling by -23.81% and -23.69% respectively.

At the same time, China's clothing export is growing rapidly, and has been pported to Vietnam, Laos, Kampuchea and other places around China.

Currency dispute

Before 2004, China's textile export stock was huge, and net foreign exchange earned the highest priority in various industries. The development of foreign trade in the textile industry has accumulated a large amount of foreign exchange for the country, making an important contribution to stabilizing the RMB exchange rate and increasing foreign exchange reserves.

After 2004, the proportion of textile exports to the whole country began to decrease year by year.

The key factor contributing to this change is the dollar price.

"We now require salesmen to ask customers not to pay in US dollars as far as possible."

Hui general told reporters.

However, the result of the depreciation of the US dollar is obvious to the other side. The European and American Importers "one or two of the 10 guests agreed."

Ms. Hui said.

"Nowadays, even Europeans are reluctant to settle in euros, asking for the US dollar."

A senior Chinese textile industry said.

The profits of the import and export enterprises in Jiangsu and Zhejiang are usually around 3%, but the exchange rate loss of a delivery period of 3 months or more usually exceeds 3%.

The risk of settlement is increasing, and many export enterprises have no choice but to abandon the order.

Hold out

However, there are also exporters who are worried about losing important customers and risk losing money and keeping businesses.

"The appreciation of the exchange rate will always be over, but you have lost an important customer, and you may not be able to recover it in 5 or 10 years."

Hui chief told reporters.

Despite the decline in European and American markets, China's textile exports are expected to grow slightly throughout the year.

Experts predict that "after all, China's capacity stock is still huge." at least 3 to 5 years, Southeast Asia will not pose a substantial threat to China's textile industry.

The processing advantages of Chinese textile enterprises are still ahead of Southeast Asian countries, which gives them only a portion of low-grade orders.

In addition, Chinese enterprises still have obvious advantages in the export to the Japanese market, and now they account for nearly 90% of the Japanese market.

Stable supply capability, flexible handling of small orders and low freight to Japan make Chinese textile enterprises unable to shake easily in this market.

//cn.