China's Textile Industry Gears Up for WTO Challenges

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Last updated at: (Beijing Time) Monday, November 26, 2001

China's Textile Industry Gears Up for WTO Challenges

Facing the challenges brought by China's entry into the World Trade Organization (WTO), textile enterprises are building up muscles to meet fiercer competition at both domestic and foreign markets. Experts advise textile industry to keep abreast with world market, improve after-sale service, following the international rules.

Facing fierce competition

Facing the challenges brought by China's entry into the World Trade Organization (WTO), textile enterprises the country are building up muscles to meet fiercer competition at both domestic and foreign markets.

Joining economic globalization

Quickening their steps to join in the process of economic globalization, Chinese textile enterprises are striving to catch up with the international standards in personnel, capital, information and management.

Sunshine Group, China's largest worsted wool textiles enterprise based in Jiangsu Province, is busy opening branches abroad while consolidating its domestic shares. Under an ambitious plan, the company is trying to have half of its annual sales from the domestic market and the other half from the foreign market in three to five years, said Sunshine Group's President Lu Keping.

Keeping abreast with world market

Industry insiders believe China's accession to the WTO will bring many opportunities to its textile industry, for the quota of China's textile exports will have increase by 25 percent on a yearly basis, and by 2005, the quota regime set up by the developed nations restricting China's textile exports will be canceled.

However, they say, only by expanding export on the one hand and increasing cooperation with foreign companies, learning their advanced experience and keeping abreast with the developments in the world market on the other, can Chinese textile enterprises have more development opportunities.

"Those enterprises that have reached international standards in terms of equipment, technology and product quality will have an edge on global competition," said Lu.

Improving after-sale service

Xia Hua, president of a Beijing-based private garment enterprise, said China's WTO entry will create an environment where textile enterprises compete in the field of management and after-sale service, instead of taking price as the only weapon as they do today. The influx of foreign companies in China will also provide an opportunity for Chinese enterprises to learn their advanced designing, marketing and management, Xia said. Despite the opportunities, insiders are well aware of the tense competition ahead. Chinese textile companies have been struggling with a declining export over the past few years, and China's WTO entry will not automatically increase the country's textile exports by a big margin, said Yang Donghui of the China National Textile Industry Council. Instead, the accession will bring the industry with "more challenges than opportunities in the short term," he said.

Yang Li, a scholar from the Beijing-based Capital University of Trade and Economics, pointed out that in recent years, people only saw a trade surplus from China's export of low and middle-grade textile products and failed to see the growing deficit in the trade of wool and other high-grade textiles.

Following international rules

At the same time, the boom of the textile industry in Brazil and some south Asian countries has also posed a threat to China's traditional export products, Yang said.

Li Rucheng, president of Youngor Group in east China's Zhejiang Province, said after the WTO entry, Chinese enterprises have to follow internationally accepted rules in running business. What they lack is personnel for international competition.

The renowned suit and shirt producing company is now stepping up internationalization by establishing, under French garment experts' guidance, a number of super-large sales outlets and make them its sales, service, information and decision-making centers.

The company has also set up branches in Hong Kong, Japan, Europe and America, and, in cooperation with big name foreign companies, has formed a cross-continent production and marketing network.

Shanghai Three Gun Group, an underwear producer, also takes international cooperation as a measure for further development.

"To obtain a `passport' to the global market, we need to establish ties with world-renowned textile brands," said Su Shounan of the company, which has been recognized by DuPont as " the best partner in the world."

Textile Machinery Imports Slow

China's textile machinery imports will continue to decline even after the recovery of the country's textile industry, officials with the China Textile Machinery and Accessories Association predicted.

But authorities anticipate closer collaboration between home and overseas producers after the country's entry into the World Trade Organization (WTO). China imported US$1.2 billion in textile machinery last year, according to official statistics.

Although that represented a 7.41 per cent increase from 1998, it indicates a plunge from China's record high US$3.5 billion in imports in 1993.

The proportion of imported machinery in the total has fallen to 50 per cent from 75 per cent in the early 1990s.

Stagnancy in China's textile industry since 1994 has had a negative effect on the country's textile machinery imports, said Wang Shutian.

China's textile industry began to lose money in 1994 because of surplus low-grade production capacity.

It was forced to reduce its production scale by about one-fourth in 1998-99.

The country's textile machinery industry was also dragged into a losing bog.

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