Chinese textile exporters struggle amid rising costs

16:53, November 04, 2010      

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Exporters of textiles at the Canton Fair, China's largest trade fair, say they are struggling to survive amid rising raw material and labor costs.

"Wages have increased as much as 30 percent. But several of our partner plants have stopped production because of the worker shortage," said Chen Su, the assistant to the general manager at Sunvim Group, China's biggest home textile company, Thursday.

In addition, prices of raw materials are rising rapidly. Cotton prices have risen from 18,160 yuan (2,720 U.S. dollars) to 27,405 yuan per tonne, a 51 percent increase. The prices of other fabrics are also rising.

Furthermore, labor and raw material shortages often hampers the production of textile plants, leading to delivery delays, one of the greatest concerns for buyers.

Elliot Gessle, a British buyer at the Canton Fair, thinks Chinese textile products have lost their competitiveness. "Prices of most products are rising. But delivery delays have been the greatest headache," he said.

China's textile industry is facing competition from other Asian countries with low labor costs.

"Quality and efficiency in those countries are improving. They will catch up with China some day," said Gessle, who also purchases from Laos and Cambodia.

China exported 149.8 billion U.S. dollars of textile products in the first nine months of the year, a year-on-year growth rate of 23.14 percent. But exporters say the numbers are misleading.

The numbers are growing only because buyers are making bulk orders, said Luo Ping'an, the deputy general manager of Anhui Garments Import and Export Co.

"In the past, buyers ordered goods of one or two months of demand. But now they buy half a year's goods in one order."

Luo said buyers are making larger orders as they expect prices to rise and they want to avoid delays in delivery.

Chinese textile companies must focus on innovation and branding to address the many challenges they are facing, said Huang Yuefeng, an official with China's Ministry of Commerce.

Guangzhou-based Nandadi Garment Co. succeeded by putting traditional embroidery on jeans. It established its own brand -- Vigoss in the United States, said a company representative surnamed Wu at the Canton Fair.

"We have opened thousands of stores abroad, significantly increasing revenue and awareness of the brand," Wu said.

The crisis is an opportunity for the competitive companies who will survive after small and medium-sized companies are forced out of the market, experts say.



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