Price War Is Unavoidable - Southeast Asia: With A Low Cost Share Of Chinese Clothing Orders

Against the backdrop of the financial crisis, India and Southeast Asian countries have made a share of China's orders with less labor costs than China.

According to reports, as India's second largest job creation opportunities

US demand growth for India

In fact, inspired by the remarkable growth in exports, federal textiles minister Rita mehnon recently said that in the current financial year, the target of textile exports increased to about 30 billion dollars, compared with $25 billion last year.

As western market demand grew, the government raised its export target.

The government of India believes that India has the potential to increase the share of textiles and clothing in the world trade from 4.5% to 8% in 2020, reaching 80 billion US dollars in 2020.

India has the largest number of looms in the world. India has 1 million 800 thousand looms (45% of the world's total) and 200000 shuttleless looms (3% of the world's total).

3 million 900 thousand manual looms (85% of the world's total), the number of spindles in India is the second largest in the world, accounting for 23% of the world's total.

Chairman of India Garment Export Promotion Association (AEPC) Premal

Udani said exporters saw that their products were in good demand, and the industry orders had been in June 2011 -7 months. This is a particularly good situation for the textile industry.

The US market has a very good demand for India products.

European market demand is also improving.

The United States accounts for 40% of all clothing exports in India.

Exports began to grow in August 2010 after the deceleration of the first few months of the year.

According to the insiders, China's labor costs are rising, and the marginal price difference between India and China is conducive to India.

China's garment industry is also beset by delays in strikes and production.

If India can grab 10% of its business from China, India's clothing exports will double in the next few years, reaching US $20 billion.

Vietnam's Economic Times reported on June 28th that Vietnam's textile exports amounted to US $6 billion 160 million in the first half of this year, an increase of 30% over the same period last year.

If this trend continues, Vietnam's clothing and textile sector is likely to complete its export target of 13 billion US dollars in 2011.

The positive trend of Vietnam's clothing exports can be attributed to the general stability of the export market, and they are basically not affected by macroeconomic changes.

Apart from the European Union and Japan, the United States is Vietnam's most promising commodity export market.

In 2010, Vietnam exported US $6 billion to the United States, an increase of 22% over 2009.

The global market research report recently published by the financial times shows that from the beginning of this year, the United States imported 39% of its garments from Bangladesh, and imports of clothing from Kampuchea, Salvatore and Honduras increased by 31%, 23% and 19% respectively.

Bangladesh has become the fastest growing country for clothing exports to the United States. Kampuchea, Salvatore and Honduras are 2, 3 and 4 respectively.

It is understood that in 2010, clothing from these countries became the cheapest source of clothing in the US market.

At present, Bangladesh clothing exports to Europe 58%, 34% exports to the United States.

According to the May data released by the General Administration of Customs of China, the growth rate of textile and garment exports continued to decline in China, still the largest supplier in the US market.

In May, China exported about 20 billion 338 million US dollars of textile and clothing, an increase of 23.77% over the same period, an increase of 12.86 percentage points lower than that in April, an increase of 2.33% in the ring ratio, an increase of 17.62 percentage points lower than that in April.

Ms. Hu, director of the clothing department of the China Textiles Import and Export Chamber of Commerce, said that under the background of the financial crisis, China's textile exports to major countries are still growing, but this year there has been a downward trend, while exports from Southeast Asian countries are growing.

"In the past, 6 of the 10 garments in the US clothing market were made in China, and now only two or three."

According to statistics of 1-4 months this year, the number of textiles imported from China for the first time dropped by three to five percentage points, mainly due to domestic cost factors.

Ms. Hu analyzed that China's textile and apparel industry has a high market share in foreign markets, mainly relying on price advantage.

This year, the average price of Chinese textiles is higher than that of the United States imported from the world. At the same time, the consumers in the United States are more mature, and tend to choose inexpensive, quality and good clothing, so that the order is bound to shift.

"Other Southeast Asian countries also have high raw materials, but labor costs are not as high as those in China, such as Vietnam, where labor costs are only about half of that of China, reaching 5:3, so orders will go to low price countries and regions.

Although there are still some technical advantages in the relatively complicated Chinese clothing, the order has been pferred from China. "

If the industry chain of other countries is perfect, it will be very difficult for orders to return to China.

Ms. Hu further analyzed that Vietnam's textile export advantage lies in the improvement of the industrial chain, the lower cost of labor and the improvement of product quality, so the order is more.

Bangladesh's competitive advantage lies in the fact that the United States and the European Union provide preferential import conditions and low price clothing exports.

In June this year, Bangladesh garment manufacturers and Exporters Association, Bangladesh knitted garment manufacturers and Exporters Association and Bangladesh Textile Mills Association jointly held a press conference. They said: 3 countries such as China, India and Pakistan have pulled back a city with a reduction strategy, so Bangladesh's export orders in the coming year have gradually decreased.

The three chambers also said that the Bangladesh government should implement the relevant economic stimulus plans, such as 15% cash incentives and duty-free incentives, so as to enhance the competitiveness of the garment industry in the country.

In view of this, a new round of price war is inevitable.

Qian Jingfang, director of the Department of textile economics and trade of Donghua University, thinks that compared with other Southeast Asian countries, the competitive advantage of Chinese textile enterprises lies in the relatively high quality of Chinese labor force, skilled workers, stable domestic political situation, and perfect industrial chain.

At the same time, Indonesia, Vietnam and other Southeast Asian countries have little export output and have not formed a scale.

Guo Yan, a professor at Beijing Institute Of Fashion Technology, said that compared with China, the export of textile products in Southeast Asia has increased rapidly, but the scale is relatively small.

"Compared to the comparison between a child and an adult, it can not be compared with the total volume of exports in China."

For example, for example, in the US market, China's textile exports account for about 20-30%, while the total market volume of other Southeast Asian countries is less than 10%.

Although the export growth rate of Chinese textile enterprises has declined, it is the volume price increase.

The pfer to Southeast Asian countries is low-end products, while mid-range products are still retained in China.

According to Guo Yan's research in Vietnam, she found that Vietnam bought low-grade products from China for its own use, and then exported their own "low-grade" products to the United States.

She provided such a group of data: Bangladesh, Vietnam, Indonesia, clothing and textile exports ranked highest in the US market, but they did not have an advantage in price.

In 2010, Chinese textiles exported to the United States amounted to US $about 20000000000, Vietnam was US $5 billion 800 million, Indonesia was US $4 billion 400 million, Bangladesh was US $more than 3 billion 900 million, and Kampuchea was US $3 billion 200 million.

In addition, the textile and garment industry in Southeast Asian countries is heavily focused on processing and production, and the raw materials such as fabrics and yarns rely on China's imports.

Moreover, a common disadvantage of Southeast Asia and other countries is that the quality of labor is relatively low and skills are not as good as those of Chinese labor force.

Industry experts said that China's textile industry should occupy the high-end market, adjust the structure, realize product technological innovation, and do well in brand promotion.