How Can Exports Be "Particularly Cold" When Guangdong's Clothing Exports Drop?

Garment exports fell sharply in the first half of 30%

Influenced by many factors such as the adjustment of foreign trade policy, the subprime mortgage crisis in the United States, the appreciation of the renminbi and the rise in production costs, the export of clothing and other labor-intensive industries has long been an indisputable fact. The latest statistics further confirm this grim situation. According to the statistics of Guangzhou customs, Guangdong exported garments and accessories (hereinafter referred to as clothing) in the 1-6 months of this year, 10 billion 800 million US dollars, a sharp decrease of 31.3%, accounting for 32.5% of the total exports of clothing from 32.5% in the same period last year to 21.6%.

The sharp contrast with the decline in Guangdong is that from the top 5 provinces and cities of the country's clothing exports, 4 provinces and cities have shown an increase except Guangdong, and the growth rates of Zhejiang and Jiangsu are all close to 20%. In the first half of the year, the total export volume of clothing was 49 billion 960 million US dollars, a small increase of 3.4%.

The problem is mainly in the market structure.

Why is Guangdong so "cold" when the situation of foreign trade is generally cold? A member of the foreign economic and trade department pointed out the reason for reporters: the problem is mainly in the market structure. The United States has always been the most important market for garment exports in Guangdong. Due to the subprime mortgage crisis and weak economic growth, the main markets except the European Union are decreasing. In the 1-6 month of this year, Guangdong exported 1 billion 540 million US dollars to the United States, a decrease of 27.3%. It has been relegated to third place from last year's largest market. The proportion of the total exports to the United States in the same period dropped from 20.3% in 2007 to 20.3%, and also declined in Hongkong and Japan, with exports of 2 billion 770 million US dollars and 370 million dollars respectively, decreasing by 25.2% and 15%. Only in the EU market, because of the quota cancellation this year, exports of US $2 billion 750 million increased by 72.3%. In contrast, the Yangtze River Delta region developed relatively early on the European market and was less affected by the US market.

The garment export in Shenzhen Province, which was exceptionally increased in the previous two years, is also an important factor affecting the decline of garment exports in Guangdong. According to the statistics of the Customs Department, in 2006, when the export performance of textile and clothing quota was above the distribution basis, the clothing in Shenzhen increased from 4 billion 480 million US dollars in 2005 to US $14 billion 630 million, which was 2.3 times faster than that in the previous year. In 2007, it also maintained a high level of 18 billion 800 million US dollars. The unusual growth in the first two years has pushed up the base. In the 1-6 months of this year, under the pressure of various pressures, Shenzhen's clothing exports were 3 billion 690 million US dollars, a sharp decrease of 58.3%.

In addition, Guangdong clothing export enterprises are mostly small and medium-sized enterprises, with 4753 enterprises in 1-6 months (accounting for 44% of total), and the export volume of enterprises is less than 100 thousand US dollars, of which 1357 (12.6%) enterprises are less than 10 thousand US dollars. While small and medium-sized enterprises are weak in resisting foreign trade risks and under the pressure of multiple pressures, some small and medium-sized enterprises frequently enter and exit garment export. In 1-6 months, there were 10776 clothing export enterprises in Guangdong, a decrease of 219 compared with the same period last year.

Industrial upgrading and structural adjustment of exports remain the main theme.

The publication of statistical data will be accompanied by calls for the government to introduce supportive policies. Recently, the frequent moves of the Ministry of Commerce have also promoted the industry's expectation of favorable policies, and the export tax rebate and RMB appreciation are still "big problems".

Since July 2007, the export tax rebate rate of clothing has been reduced from 13% to 11%. With the lowering of the export tax rebate rate, the general trade export of clothing has decreased significantly. The export growth in the first half of 2007 has increased by 48.6%, and in the second half of this year, it has dropped to 9.3%, while the first half of 2008 has dropped 47.1%.

The rapid appreciation of the RMB also brings great pressure. Since 2008, the appreciation rate of RMB against the US dollar has reached nearly 6.5%. Because most of the export enterprises in China adopt the US dollar settlement and the bargaining power is weak, the increase of exchange losses is difficult to digest by raising the export prices of the products, and the profits of the export enterprises are reduced, and the order is very cautious.

The industry has warned that China's clothing exports in particular have been struggling. In the second half of this year, there are many green barriers in Europe and the United States. In June 2008, the EU Directive on PFOS (Directive on the EU's restriction on the use of perfluorooctane sulfonyl compounds) and the pre registration of European REACH regulations were implemented. In September 22nd, the newly revised "Flammable Fabrics Act" came into effect in Guangdong. This will make the already stressed textile and garment industry face greater difficulties. Therefore, garment enterprises should seize the opportunity of Guangdong to implement the "double transfer" strategy of industry and labor force, adjust their business strategy in time, optimize and develop the garment industry, vigorously carry out technological transformation and innovation, and improve the quality of products, so as to continuously consolidate the advantages of Guangdong's clothing export and expand the export trade of clothing.

Guangdong's trade development with EU in the first half year is fast.

Total import and export trade grew by 25.3% over the same period last year.

According to customs statistics of Guangzhou customs, Guangdong's total import and export volume to the EU reached US $40 billion 930 million in the first half of this year, an increase of 25.3% over last year's (the same below), 11.9% higher than that of Guangdong's foreign trade import and export in the same period, and the EU's position as the third largest trading partner of Guangdong. Moreover, the growth rate of imports and exports is 17.9% and 18.1% higher than that of Guangdong for Hongkong and Guangdong, respectively. It is the fastest growth of Guangdong's top seven foreign trade partners.

Among them, Guangdong imports from the EU 10 billion 560 million US dollars, an increase of 21.4%; exports to the EU amounted to US $30 billion 370 million, an increase of 26.8%, and a trade surplus of US $19 billion 810 million.

It is reported that in the first half of this year, Guangdong exported 70% US dollars to the EU's electrical and mechanical products, a total of 21 billion 230 million US dollars, an increase of 23.6%, accounting for 69.9% of the total exports of Guangdong to the EU in the same period. Of them, the export machinery and equipment was 6 billion 650 million US dollars, an increase of 17.4%; the export of electrical and electronic products 9 billion 360 million US dollars, an increase of 30.2%. In addition, Guangdong's export clothing and clothing accessories to the EU increased by 72.7% from 2 billion 750 million US dollars, and export furniture increased by US $1 billion 190 million to 47.3%.