Textile industry in China
The textile industry in China has had an important place in the Chinese economy since 1949. It can be subdivided into the textile and clothing sector and has undergone major changes in recent years. This led China's textile industry to become a global player and the largest exporter of textiles and clothing. China's clothing and textile industry is relatively broad and can be divided into eight main categories such as clothing, cotton fabrics, chemical fabrics, woolen fabrics , silk fabrics , knitted fabrics , textile machines and bast fibers . The product capacities of all categories of the clothing and textile industry are unique in the world. With reference to the Chinese Textile Development Report from 2014/2015, China produced more than 50 million tons of textile fibers, which corresponds to a market share of 54.36%. In addition, 64.2% of the world's chemical fibers, 64.2% synthetic fibers and 26.2% cotton were produced in China. The share of the world textile market was 43.1% in 2017. In 2017, China exported textile products and clothing worth $ 266.95 billion.
China profiting from the liberalized textile trade
With China joining the WTO in 2002 and the complete elimination of import quotas on January 1, 2005, global textile trade has multiplied. Above all, countries with large production capacities and relatively low production costs such as China , which, however, above all had a good infrastructure and a high level of technical expertise , benefited from trade liberalization. As a result, the value of Chinese textile and clothing exports has increased almost fivefold since 2002. Textile exports grew by 90% to US $ 291 billion from 2002 to 2015, and the apparel industry grew 122% to US $ 454 billion. The remaining tariffs on textiles and clothing, which are on average below 10% in trade with the EU, hardly reduce growth. Only Turkey and India with world export shares of 6% and Vietnam and Bangladesh with 6% achieved similarly high export growth with textiles in the clothing industry. This process meant that the specialized manufacturing countries in Western Europe came under pressure and countries like Italy and Belgium even recorded declining textile exports since 2002.
Decline in competitive advantages in China
The Chinese textile and clothing industry is currently at a turning point. The decisive factor is that traditional competitive advantages such as inexpensive mass production and low wage costs are falling rapidly. As a result, EU imports of textiles and clothing are shifting further from China to other South Asian countries. According to EURATEX , in 2010 the market share of textile and clothing imports from the People's Republic fell from almost 41% to 35% in 2015. Chinese exports to Germany fell by 4.4% in the first half of the year. The Chinese textile industry is intensifying the independent development of innovative and technological products and is increasingly distancing itself from the lower price segment. Furthermore, more emphasis is now placed on priorities such as research in the own country and the training of specialists.
China's 13th Five-Year Plan
In March 2016, China's Ministry of Industry and Information Technology (MIIT) approved its development plan. The Chinese government's 13th five-year plan for the period from 2015 to 2020 envisages that the Chinese textile industry will increasingly turn away from the lower price segment and focus on strengthening the independent development of technological and innovative products. Further goals are the training of specialists and a focus of research in the own country. China itself assumes a decline in the growth of the industry, in the period from 2011 to 2014 the growth rate was 8.5%, in the next five years a target of 6 to 7% growth has been set. The export of Chinese textiles and clothing will decline significantly. The development plan itself does not set a fixed rate of growth, but assumes that a stable market share can be maintained in the world export market. To ensure a sustainable clothing and textile industry, the plan sets new guidelines for energy and water consumption as well as the emission of pollutants .
Important companies in the Chinese textile sector
The Shandong Demian Group Co . is a large, state-owned group of companies that was founded in 1997. Its fields of activity include weaving , embroidery , spinning , clothing as well as printing and dyeing . They own 21 combers, 1,696 looms of all kinds, 300,000 spindles, 40,000 open-end spinning devices and 1,000 knitting machines. Shandong Demian Group Co. has total assets of 2.7 billion RMB with 8,000 employees. Demian Group has advanced technologies and equipments and therefore can cope with the market demand for high density and wide fabrics. Their products are sold to Japan, Europe, USA and Southeast Asia etc. Another large state-owned company is the China National Machinery Industry Corporation (Sinomach), which merged with the textile giant China Hi-Tech Group Corporation in 2017. The Esquel Group and Luthai are among the largest private companies . The private company Yangtzekiang Garment produces mainly for European companies .
The Trans-Pacific Partnership and the Chinese Textile Industry
On February 4, 2016, Japan , Brunei , Australia , Canada , USA , Chile , Malaysia , Mexico , Vietnam , New Zealand , Peru , Singapore and Peru officially signed the Trans-Pacific Partnership Agreement (TPP) in Auckland . The import duties , which include more than ten thousand categories of goods, including textile clothing, can be lowered or reduced by the members of TPP as needed. The competitiveness of the Chinese textile industry is significantly weakened by the influence of TPP. The total value of Chinese textile clothing in the first ten months of 2015 was $ 234.98 billion. The biggest competitors for China in the American and Japanese markets are TPP members such as B. Mexico and Vietnam. The Chinese export share of textile products to the USA and Japan reached 2.5% in 2015. When the agreement comes into force, TPP member companies in the US and Japan will be able to benefit from zero tariff treatment.
Example Vietnam : Textile clothing can be treated with a tax reduction of 12% to 32%. The market share exported to the US , Japan and other regions is expected to increase by a factor of 1, while Chinese exporting companies will have to pay import duties based on the standard tax rate, so the comparison costs will increase significantly. As an example of cotton shirts, the import duty rate of the Chinese exporting companies in the US and Japan is 7.4% to 19.7% higher than that of the members of TPP. This will significantly weaken China's competitiveness.
TPP has adopted the rules of origin of the North American Free Trade Area . These stipulate that all textile products are processed by TPP members, with the exception of materials that only enjoy a tariff preference in the free trade zone. This rule will weaken the benefits of the policies put in place by China-ASEAN and other free trade areas, and force Vietnam and other major importers of textile materials to replace their orders from China with other TPP members. Because of this, China is losing nearly $ 10 billion in orders only in Vietnam . This situation will cost China a lot of orders and will inevitably weaken the Chinese textile industry.
In recent years, orders between 10% and 15% have gone from China to Southeast Asia . Taking the USA as an example , the value of clothing trade from China to the USA in 2010 was 39.2%. 2014 only 36.2%. In 2000, the value of clothing imported from Vietnam to the US was only 0.1%, while in 2014 it had already risen to 11.3%. Vietnam is already the second largest supplier of clothing for the USA . In addition, Vietnam signed a free trade agreement with Korea in May 2015. For Vietnam, Korea will cut tariffs to 95.43% of tax items including textiles. In August 2015, Vietnam reached an agreement for a free trade agreement with the EU , with the result that the tariff will be lowered for almost all goods from Vietnam, which is counterproductive for the Chinese textile industry.
Impact on the environment
The production of clothing, more than 90 percent of which comes from Asia, causes devastating environmental damage. Animals and humans in particular are the ones who suffer from mass production. More than two thirds of the lakes and rivers in China are now considered polluted. Time and again, dangerous chemicals such as antimony , chlorobenzene and nonylphenol were found in Greenpeace tests of factory wastewater , which are mostly discharged unfiltered by the factories and can later be found in food but in drinking water. These pollutants can be detected in animals and humans and pose a health risk. In the Greenpeace report "A little Story About a Monstrous Mess" it was proven that toxic sewage was discharged into the sea through textile factories. The culprit in this case was the “Wubao Dyeing” industrial area, which is located near the Chinese city of Shishi in the Fujian province and is responsible for the production of Chinese children's clothing. Of course, environmental pollution cannot be limited to just one province, so in 2012 two thirds of 435 registered drainage stations in China did not comply with applicable environmental standards. Since the labels do not indicate the harmful substances, consumers do not even know about them and are exposed to the harmful substances without protection. The weak environmental regulations in China encourage these processes. Greenpeace aims to have all companies publish their wastewater data by 2020 and to ban hazardous chemicals from their supply chain. Furthermore, the Chinese government is demanding that the new transparency directive be enforced at textile companies.
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