A set of data released by Liu Xin, director of the Information and Statistics Department of the China Textile and Apparel Industry Federation, is worrying. China’s global share of textile and apparel exports, which once had a solid international position, fell again in the first quarter of this year.
From January to March, the retail industry of the EU and Japan continued to decline. China’s textile industry’s exports to the EU accounted for 37.5% of the global market, a year-on-year decrease of 1.04 points. Vietnam and Bangladesh took advantage of the situation. Share remains the same or improves. The textile industry’s exports to Japan “shrinked” even more seriously. From January to April, the global share of exports to Japan plummeted by 2.28 percentage points. The market vacated by China has been rapidly “cannibalized” by Southeast Asian countries, with Vietnam, Bangladesh, and Indonesia increasing their share.
Gao Yong, vice president and secretary-general of the China Textile and Apparel Federation, said that in fact, China’s position in the global textile export market has been “shaken” since 2011, as shown in the three major export markets: the United States, the European Union, Decline in Japanese market share.
He said that when looking at the competitiveness of an industry, “market share” is an important assessment indicator. Looking back at history, consumption in the international market is weak, and this is not the first time that my country’s textile and apparel exports have experienced negative growth. However, when China’s exports experienced negative growth, exports from other countries dropped even more. In the end, the global market share of China’s textile industry increased. The current situation is exactly the opposite. The global market share of my country’s textile industry’s exports to the EU, Japan, and the United States has dropped from 65% to about 40%.
For textile companies, the domestic demand market is “full of ideals, but skinny in reality.” We have yet to find a way to truly leverage the wallets of domestic people. From January to April this year, the retail sales of enterprises above designated size in clothing, shoes, hats, needles, and textiles increased by 11.2% year-on-year, and the growth rate fell by 4.42 percentage points year-on-year and month-on-month by 0.5 percentage points respectively. “This rate is even lower than the growth rate of retail sales of goods by enterprises above designated size nationwide. However, we estimate that in order to complete the binding indicators of the ‘Twelfth Five-Year Plan’, growth must be around 15%, which is far from being achieved now. Gao Yong said.
Amid internal and external troubles, the domestic textile industry production index in the first quarter of this year continued to decline based on the fourth quarter of last year.
Cotton prices at home and abroad are as high as 5,000 yuan per ton
The international competitiveness of China’s textile industry is declining
Why is China’s textile industry in such a difficult situation? “The huge price difference between domestic and foreign cotton is one of the important reasons.” According to industry insiders, the current domestic cotton price is between 19,000 yuan and 20,000 yuan/ton, even if the state sells off the state reserve The price of cotton is about 19,000 yuan per ton. In comparison, the CIF price of imported cotton is 14,000 yuan to 15,000 yuan/ton, and the price difference per ton is as high as 5,000 yuan. Domestic and international cotton price inversions are nothing new, but the price difference has never been so wide.
Gao Yong, vice president and secretary-general of the China Textile and Apparel Federation, analyzed that the cotton price experienced abnormal rises and falls the year before last. It rose to 35,000 yuan/ton at the beginning of the year, then plummeted to 25,000 yuan/ton in the middle of the year, and fell to 25,000 yuan/ton at the end of the year. to 19,000 yuan, the government finally stepped in to support the market. But the government’s “hand” continues to this day. In order to protect the interests of cotton farmers, in the past two years, the purchase price of national reserve cotton was about 20,400 yuan/ton, and then sold and stored at about 19,000 yuan/ton. Although the state has allocated a large amount of funds to provide basic subsidies to cotton farmers and textile companies. However, it was not matched by the even greater decline in international cotton prices. Affected by shrinking demand, international cotton prices have fallen to 13,000 yuan per ton. The cost of cotton cultivation in Southeast Asia is far lower than that in China.
A participant in the Indian cotton spinning industry suggested: “Buy yarn!”
But in fact, imported cotton is not something you can buy if you want. According to reports from enterprises, quotas are required to buy imported cotton. Currently, due to the “high threshold” for approval of the 1% tariff quota, the number of sliding tax quotas issued is uncertain. At the same time, for small and medium-sized enterprises that cannot easily obtain processing trade quotas, if they want to obtain cotton import quotas, they will have to pay an additional 3,000 yuan to 4,000 yuan for one ton of quotas. In desperation, many textile companies have recently transferred their production capacity overseas.
Gao Yong analyzed that the entire cotton spinning industry will have to endure the pain of price differences between domestic and foreign cotton for at least one year.
“Just like China’s economic trend, after a period of rapid development, it has now entered a period of medium-speed development. China’s textile industry is also going through such a development trajectory. At present, we need to have a stable mentality to face the current situation , study how to develop under the slowdown of growth and scale expansion. After the cotton policy issue is resolved, the textile industry will also face challenges from more fields such as environmental governance and green manufacturing in the future.” Gao Yong said.
