Dragon Elephants In Textile Industry

Is the production cost of India really lower than that of China?

Will China's textile orders go to India in large quantities?

In the near future, will there be a "dragon elephant competition" in the textile industry?

This reporter in-depth investigation, to tell you the answer.

Now it seems that the Chinese factory is complaining that the low-cost factories, including India and Vietnam, have taken their orders.

"At the recent Canton Fair, the customers basically asked the price and did not have the patience to talk seriously. They felt the offer was too high."

He told reporters in frustration that he was the manager of a clothing trade company in Zhejiang.

He was worried that some customers threatened to pfer orders to lower cost India. "I don't know if this is a trick or a real price."

On the second day of the Canton Fair, one thing was not a big blow to the old week, but one of the three connected clothes stalls did not receive a business card one day.

This year, the business volume of Lao Zhou company has been reduced by at least 15%, and the large orders of several existing customers are still at a loss.

"Now is a relatively difficult day, and the profitability of enterprises is getting worse and worse."

The pressure of RMB appreciation, labor cost rise and price rise of raw materials has made Chinese textile factories in trouble.

Taking the exchange rate as an example, this year's Canton Fair is embarrassed because the exchange rate movements are unpredictable, and enterprises can not accurately quote the price.

In addition, labor cost has increased by nearly 100% since 2006, and the average wage of workers has risen from 800 yuan / month to 1500 yuan / month now.

Chinese factories are forced to raise prices to their customers.

"Now the price is very difficult to talk about, this time the majority of customers at the Canton Fair have no interest in talking about the offer."

A clothing trader reluctantly said that he will increase the price of 3 months' orders by 3% this year, and increase the order by 6% in 6 months. In the past year, he has already increased the price by more than 10%.

The direct consequence of the increase resulted in the loss of orders in Chinese factories.

Ming Liang, a clothing supplier of WAL-MART, told reporters that the loss of his orders in the past 90% was due to the fact that customers did not accept the increase.

Cao Xinyu, vice president of the China Textiles Import and export chamber, who has studied the India market, believes that the India government's long-term plan for the textile industry and the recent consideration of a series of subsidy measures will enhance the competitiveness of the factory. "India may become a potential textile industry in China."

When Chinese factories asked for price increases, WAL-MART increased its search for suppliers outside China, including Vietnam and Kampuchea.

Lou Mingliang also feels that orders are shifting: "almost every American importer I contacted has gone to Southeast Asian countries to investigate, and the pfer is gradual, and it may not be reflected for a while."

The pfer of Chinese orders is undoubtedly a good opportunity for India.

Because the competition between Chinese and Indian textiles is obvious, exports are concentrated in low-grade and labor-intensive products.

Because of the needs of overseas buyers, the B2B website has set up the India station.

Its customer tracking records show that although most of the purchase orders for textiles are currently in China, they have shifted from 10% to 20%.

However, unlike many people, the textile industry in India is experiencing the same disease as China. The rupee appreciation and the soaring cotton prices make India's textile industry difficult.

India textile minister Shankersinh Vaghela said in an interview that between April 2007 and March 2008, the rupee appreciated 8% against the US dollar, which directly led to the weakening of India textile competitiveness and the decline in exports.

In addition, India's raw material advantage is also regressing, and cotton prices have risen sharply.

In the 2007~2008 fiscal year, India's textile exports amounted to US $20 billion 500 million, down 18% from the target of US $25 billion.

However, the good news is that the India government intends to introduce a package of policies to help textile enterprises, including a substantial reduction in cotton import tariffs, simplification of export procedures and interest subsidies extended for one year.

The government of India predicts that textile exports will increase by 15% over the previous year.

"This makes India a potential destination for China's textile industry."

Cao Xinyu believes that in the middle and low grade products, India has more advantages than China because of its low cost, thus obtaining more low price orders from China.

For this topic, Fang Fang, manager of the Shandong Foreign Trade Department of Shandong St. Hao home textile factory who visited India and set up a factory in India, believes that this is impossible in the short term.

"I have also encountered such a situation. Some customers threatened that the things of St. Hao's home textiles were too expensive and he wanted to buy them in India."

But Fang Fang believes that many products in India factory can not be done, especially in the middle and high grade products.

"To India is the wishful thinking of buyers, unless it is willing to reduce the quality and grade of products."

It is learnt that although buyers are always talking about how cheap India's work clothes are, they do not mention casual wear or women's clothing, because in these categories, India's advantages are very limited.

In fact, most of the orders pferred from China by WAL-MART are products with quota in China, or basic sweaters and T-Shirt.

Lao Zhou's orders for high-end clothes have not decreased.

But Fang Fang also said: "though India can not replace China at present, no one can say what the future will be like."

The reason why she dare not come to a conclusion is that Chinese enterprises are not aware of the grim situation.

In the case of almost no profit making, there are still many Chinese enterprises pressing each other to beat the bill.

Some foreign trade companies reflect: "some peers take these low order orders, so that they can not find suitable production plants, resulting in losses and claims and even death orders."

The problem behind this is that most factories in China are doing simple OEM processing, without brand, technology and R & D capability. When the traditional labor force advantage is fading away, they can only keep their eyes open.

Cao Xinyu regrets that strategic adjustment is not easy for enterprises now.

"Because the profitability of the enterprise is in the script src=>