Textile Enterprises In Fujian Find New Ways To Move Factories To Emerging Markets

Last month, the Eurasian Economic Commission announced the launching of safeguards for importing chemical fiber fabrics into the customs union.

A total of 34 enterprises were involved in the province.

Reporters learned from the provincial foreign trade and Economic Cooperation Department yesterday that the textile industry in Fujian province has experienced more frequent trade surveys from emerging markets this year, including Egypt, Peru, Brazil and Mexico.

According to industry analysis, since last year, Fujian's enterprises have been fighting for emerging economies because of the declining purchasing power of developed economies in Europe and the United States.

Labor intensive products have been significantly affected, so in order to protect domestic industries, these countries have adopted trade surveys to block China's textile exports.

Reporters learned that in the new situation, Fujian textile enterprises are also looking for new outlets, some of them to reduce trade friction, and take advantage of lower production costs in some countries, and start moving factories to emerging markets. In addition, some enterprises in Fujian province begin to pform and turn danger into opportunity.

Phenomenon: frequent trade surveys from emerging markets

Reporters learned that last month, Russia, Belarus and Kazakhstan formed the Economic Commission for Asia and Europe (Russia, Belarus) announced the import of

A survey on the launching of safeguard measures for chemical fiber cloth within the territory of Fujian has been carried out. There are 34 enterprises involved in the province, of whom 8 are over one million dollars.

In 2011, Fujian's total exports to Russia, Japan and Kazakhstan were 36 million 440 thousand US dollars, accounting for 29.86% compared with the same period last year, accounting for 6.51% of the total exports of the country (560 million US dollars).

This is not a case. Reporters learned that textile industry in Fujian province has experienced more and more trade surveys from emerging markets this year.

In June this year, the Peru government launched an anti-dumping investigation on some Chinese clothing and accessories products.

The total amount involved is 243 million US dollars.

Fujian accounts for about 10% of the country's total, and the enterprises involved are mainly concentrated in Fuzhou, Xiamen and Quanzhou, of which 2 are over $1 million, and 6 are over 500 thousand dollars.

In July this year, the Ministry of Foreign Trade Secretariat of the Ministry of industry and foreign trade of Brazil issued a notice, decided to initiate anti-dumping investigations on nylon lines imported from China and South Korea. One of the 4 compulsory respondent enterprises in Fujian, the creator of Changle nylon industry, was exported to Brazil last year, amounting to US $3 million 90 thousand, and the export volume ranked first in the country.

The monitoring of the Fujian provincial foreign trade and Economic Cooperation Department shows that one of the main features of this year's international trade friction situation in Fujian is that the trade protection in Latin America has been continuously strengthened, and the number of cases initiated by the developing countries has increased significantly. In the first half of the cases initiated by Latin American countries, 5 cases were involved in the province, and the amount involved was as high as 32 million 420 thousand US dollars, 3 times more than that of last year.

11 of the 22 cases in the first half of Fujian province were initiated by developing countries, and India and Brazil were particularly protectionist.

Textile industry is also a province with more trade frictions in Fujian province. This year, Fujian textile and clothing products have been investigated in Egypt, Peru, Brazil, Mexico, Russia and other emerging market countries and regions.

Reason: concentrated shift to emerging markets is accused of hitting local industries.

Textile and clothing is one of the major traditional export products in Fujian province. The total economic volume of textile industry in Fujian ranks fifth in the country. The output of main products of textile enterprises above designated size is ranked third in the country, and the output of yarn, printing and dyeing cloth, nonwovens, clothing output and textile and clothing ranks fifth in the country.

"The European Union, ASEAN and the United States are the main export markets for textiles and clothing in Fujian. But last year, the weak demand in Europe and America led to a decline in exports."

Some textile enterprises in Fujian province said that this year, the export orders of Fujian textile enterprises generally reduced by more than 20%, mainly the European orders fell by more than 30%.

Orders for the new season are also cumbersome. The biggest worry is that the European debt crisis is still continuing to ferment. It is a trap.

Data show that in the first half of this year, China's textile and clothing exports to the EU totaled 21 billion 310 million US dollars, down 12.2%.

Exports to the EU dropped to two digits, worse than in 2009.

Against this background, many textile enterprises in Fujian have accelerated the expansion of emerging markets, so that Fujian's export to emerging markets has also increased substantially in the past one or two years.

For example, exports to Peru last year reached 24 million 20 thousand US dollars in Fujian, an increase of 157.83% over the same period last year.

In the first three quarters of this year, Fujian's total exports of textiles related to Russia, Japan and Kazakhstan were about $33 million 990 thousand, up 53.02% from the same period last year.

Exports to Russia, Brazil, India and other BRIC countries also grew by 35% over the same period last year.

However, the problem is also followed. China's textile exports to emerging markets are accused of a significant impact on the local textile industry in emerging markets.

Relevant people from the Fujian provincial foreign trade and Economic Cooperation Bureau said that the representatives of the relevant industries in these countries asked their governments to increase their protection of domestic industries and to exclude China from manufacturing.

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Impact: many textile enterprises develop or "add insult to injury"

According to customs statistics, from January to August this year, China exported $161 billion 990 million of textile and clothing, down 0.7% from the same period last year.

However, Fujian's textile exports are on the contrary, with exports of 12 billion 20 million US dollars and 10.6% against the trend.

However, at present, the export of some textile products in Fujian also has a downward trend. For example, in the month of July, Fujian's textile exports were only 373 million US dollars, down 7.47% compared with the same period last year, and clothing exports were 1 billion 290 million US dollars, down 1.33% from the same period last year.

Fuzhou clothing association official said that although China's cotton price has dropped from the highest 30000 yuan per ton to less than 20000 yuan, but it is still several thousand yuan higher than the international ratio, which undoubtedly has a great impact on the international competitiveness of enterprises. There are also other production costs which are also rising. Such as labor cost, the annual wage of workers has increased from 15% to 20% every year, and the monthly salary of textile workers has increased from 700 yuan to 800 yuan in 2001, to an average of about 3000 yuan now.

In addition, the appreciation of the renminbi is also a major factor affecting the development of export enterprises.

Fujian textile industry association analysis, textile and apparel dependence is very high, for the RMB exchange rate change is also extremely sensitive.

RMB appreciation of 1 percentage points, the industry's net profit will drop 1 percentage points, while the average net profit of the current industry is only 3% to 5%.

The people in the industry believe that the further development and development of the emerging markets in the developed economies of Europe and the United States such as the developed economies of Europe and the United States and the weak international market demand are very important for Fujian's foreign trade to achieve "stable market and growth".

However, as the emerging market of new export growth point is also suppressed, the development of many textile enterprises in Fujian will be "worse."

Way out: some enterprises are starting to build factories in emerging markets.

This reporter has learned that some textile enterprises in Fujian province have begun to set up factories outside China, pferring orders to overseas production in Vietnam, Kampuchea and India, while reducing trade friction and taking advantage of the lower production costs of emerging markets.

Fujian Feng Da textile and apparel company opened a garment factory in Kampuchea last year. Now it has more than 800 workers and is going to set up another factory. At that time, 10 million dollars will be produced in Kampuchea. The company believes that Kampuchea and Bangladesh belong to the least developed countries listed by the United Nations, and their textile exports to the European Union, Japan and Canada can be exempt from customs duties.

There is also a foundry enterprise in Vietnam, which has 400 thousand spindles and 4000 employees.

The group's sales revenue last year was 6 billion 800 million yuan, and Vietnam's capacity accounted for 40%.

Since the beginning of this year, the company has made full use of the preferential policies of the ASEAN Free Trade Area and the trade policy differences between Vietnam and China. It has been fully loaded at full capacity, and all of its cotton has been duty-free imported. The cotton per ton is 5000 yuan cheaper than the domestic price. Roughly calculated, the profits of the enterprise in the first half of this year amounted to several hundred million yuan.

Fuzhou clothing association official said that this year, the relevant departments of Fuzhou led some enterprises to explore the emerging market. Some enterprises in Changle were interested in setting up factories in emerging markets after their inspection.

According to the analysis of the chamber of Commerce of the Fujian textile and garment export base, Fujian textile and garment enterprises chose to invest in overseas factories mainly in Vietnam, Indonesia, Philippines, Malaysia, Burma and Kampuchea. Among them, the most important factor is to consider the labor cost factors and avoid trade friction, and of course, the allocation of international resources and the need to find business opportunities and expand the market.

"Apart from setting up factories overseas, some enterprises in Fujian also take the opportunity to turn danger into opportunity."

Fujian textile and garment export base chamber of Commerce analysis, for example, a textile enterprise invested more than 100 million yuan this year, added 200 new European double jet looms.

Due to the downturn of the EU economy and the depreciation of the euro, the loom price is about 10% lower than that of the previous year, and 70 million yuan can save millions of yuan. The company can develop new products with advanced equipment, so that its products can remain popular in the first half of this year when the market is depressed.

"Moving" is not a permanent solution.

In the face of increasing international trade friction and increasing production costs, many domestic labor-intensive enterprises, including Fujian enterprises, have moved production shops to other developing countries or relatively backward countries. From the current situation, this plays a certain role in the survival and development of enterprises, but in the long run, this "moving" approach is not a long-term solution for enterprise development.

Experts from the Fuzhou clothing association told reporters that the most fundamental reason for the frequent exposure of textile enterprises to trade surveys is that the scale of products produced by enterprises is too low to win the price advantage in the international market.

By winning the price advantage, the enterprise will fall into a passive situation. On the one hand, the trade friction will continue to happen. On the other hand, once the production cost goes up, the enterprise will not be able to survive without profit.

For many enterprises at present, "moving" can really alleviate these two embarrassing situations, but at the same time, it is worth noting that if the enterprises "move" is to continue to enjoy low cost to maintain their low-level product production, then the two embarrassing situations will eventually follow suit and fail to achieve "one move".

One of the most important facts is that the labor costs of non developed countries have been rising in recent years. The analysis of the chamber of Commerce of Fujian textile and garment export base shows that in recent years, labor wages in Vietnam and Indonesia have risen sharply. Among them, Vietnam has risen from 40 US dollars per month to US $more than 200 this year, and, like China, with the improvement of people's living standard, the labor cost of these countries still has room for further growth.

In addition, in recent years, international trade protectionism has been heating up and many developing countries have been involved in it. So if enterprises still produce low-level products abroad, it will eventually be hard to avoid.

However, in a sense, "moving" has also won more time for the pformation and development of enterprises. If enterprises can adjust the structure and industrial upgrading through technological pformation and technological innovation, improve the added value and brand value and cultural value of products, and take the high-end industrialization route, then they will not be able to "move" or cope with the changing situation.