The 3rd Global Textile Economic Forum 2006 Beijing
Opening-up, Cooperation, and Win-Win Development
- A New Trend of World Textile Industry

Du Yuzhou, President of China National Textile and Apparel Council


Ladies and Gentlemen,

We are greatly honored that Chairman Xu, Minster Bo, Mr. Harbinson, and Mr. Munir Ahmad join us in this forum and give keynote speeches on invitation, to make this forum more authoritative and influential. As the President of CNTAC, it is honorable to be here, to exchange ideas and to listen to penetrating views with heads and prestigious entrepreneurs in textile industry from so many countries and regions. I would like to talk over two issues in the beginning.

First, two main trends of global textile industrial development and their great effects on the strategic choices of the textile industry for each country


1. Wide application of high and new technology accelerates the upgrade of global textile Industry and goes deep into individual's real life.
On one hand, it continually rouses higher demands of individuals in clothing consumption, by seeking high quality, high function, high affectivity, green consumption, and individualized expression of multiculturalism.

On the other hand, the wide application of high and new technology accelerates the updating and renovation of traditional textile technology. Taking computer science technology, digital technology, and information technology as the core, driving the combination and amalgamation of various modern subjects and technologies, it creates high qualities, innovations and quick response abilities for modern textile industry that have never appeared before in many aspects, such as fiber, processing, equipment, distribution, management, design and research & development.

The increasingly globalized modern manufacturing mode transforms the competition focus from the comparative advantages in labor-intensive size to the innovative advantages in playing a decisive role in the value-added supply chain.

2. Further economic globalization accelerates global horizontal structural adjustment.

Globalization urges optimized international and trans-regional allocation of productive factors in textile industry to upgrade the productivity to a large extent.

Along with the gradual decrease of trade barriers, the international trade in textile industry gradually increase. From 1990 to 2004, the world fiber processing gross increased 50%, while the trade of fiber products increased 100%. And this will be a continuous growth momentum in the coming five years.

(In US$100 million )

 

 

 

1990

2004

Growth Rates

World

Export

Textile

1043.54

1947.32

86.61%

Clothing

1081.29

2580.97

138.69%

Developing Countries

Export

Textile

386.83

902.00

133.81%

Clothing

705.88

1429.50

102.51%

Import

Textile

644.92

963.52

49.40%

Clothing

306.76

338.02

10.19%

Developed Countries

Export

Textile

657.79

1045.00

58.87%

Clothing

376.76

1151.40

205.61%

Import

Textile

398.62

983.48

146.72%

Clothing

774.53

2242.98

189.59%

Source: WTO


As is known, the faster the technological progress has been made in developed countries, the more mature manufacturing technologies will be shifted to other countries. This shift does not mean a decline of the whole industry. The shift, on one hand, provides developed countries a much bigger opportunities in researching and developing technologies to upgrade core competitiveness; on the other hand, it utilizes production quality and low cost labor in developing countries, to reduce the total cost of international manufacturing, and gain greater profit in international industry. From 1990 to 2004, the amount of textile and apparel export in developed countries remained an increasing of 122.3%, accounted for 48.5% of the global export.

Developing countries ,on one hand, gain developing opportunities to be merged into globalization by carrying on low-end manufacturing part; on the other hand, by utilizing the effects of knowledge spillovers and upgrading innovative abilities to bring the late-developing advantages, they accomplish industrial upgrade and leap-forward development.

Each country has its unique comparative advantages in different parts of the industry. Even between developed countries and developing countries, there are complementary relationships. The horizontal structural realignment of the industry has become the mainstream of the shift of the contemporary textile industrial structure.

3. Under the new circumstances of international textile industry, each country has to make new strategic choices, all without exception.
Developed countries or developing countries, with abundant or lean resources, under the new circumstances, in spite of different opportunities, different levels and paths of development, all have one thing in common, that is, each country cannot stay away from the cooperative and competitive global relationship, and all are situated in the system of "opening, cooperation and win-win development".

The practice tells us that free trade is the historical trend and the retrogressive trade protectionism will eventually come off the stage. The horizontal shift of global textile structure has already provided developed and developing countries more means of production and livelihood, as well as different opportunities. The horizontal structural shift of the industry is a complicated cyclic developing process which is full of adjustment, cooperation, competition. The process is full of developing opportunities as well as failure risks. Developed countries may gain more profit from international allocation as well as being faced with the challenges of late-developing advantages from developing countries; while developing countries may obtain opportunities from international allocation as well as confronting the risks of losing independent status. Therefore, as the trait of contemporary global textile industry, opening, cooperation and win-win development embodies the strategic choices for almost all the countries.

Second, the historical conditions of China textile industry's persistently high growth and the certain choice of changing the economic growth pattern

1. China textile industry's persistently high growth is mainly contributed by the persistently high growth of domestic demand.

Since 1980, China has achieved its modernization drive goals systematically. Now it is in the effort to mainly achieve industrialization by 2020, build a moderately prosperous society in all respects, and reach the standard of moderately developed countries in the middle of 21th century.

Domestic demand remains the first impetus of China textile industry. After the reform which has lasted for a quarter of century, China has already become the biggest market in the world for fiber consumption. The amount of per capita fiber consumption developed from 4.1 kg per person to 14 kg per person. The growth between 2000 and 2005 gained an increase of 50% over the previous 20 years.

In 1980, the population in China was 987 million, with 19.40% for urban population. Up to 2005, the number has reached 1,308 billion, with 43% for urban population.
From 1981 to 2000, the per capita GDP was less than US$ 1,000, with an average annual increase of 8.32% percent. The per capita clothing consumption generally increased in the same pace with GDP.

From 2000 to 2005, China's per capita GDP increased to over US$ 1,000, with an average annual increase of 8.8%. The average annual increase of per capita clothing consumption was 13.8%. (Comparable prices)

During the past five years, among enterprises above the designated size (each with annual sales revenue of five million Yuan), value of product sales rose 1.3 times, while the proportion of export delivery value declined from 33% in 2000 to 28% in 2005.

During the process of China's Industrialization, textile industry has a special significance to many issues like economic and social development, increasing employment, and solving the problems of agriculture, rural areas and farmers. Currently, the annual Incoming labor force reaches 10 million populations in cities and towns, surplus rural labor 150 million still , the registered unemployment rate in cities and towns is 4.2%, the proportion of service industry is only 31.3%, and the rate of urbanization only accounts for 43%.

Currently, China textile industry owns about 19.6 million employees, with about 14 million coming from rural areas, gaining more than 100 billion Yuan as annual salaries. Among the enterprises above the designated size in China (with annual sales revenue of 5 million Yuan), the portion of employees in textile industry is 14.12%.

The using of more than 7.3 million tons of homemade natural fiber in textile industry bears on the bread and butter issue of 100 million farmers. Thanks to the development of textile industry, a great number of rural areas took the lead in accomplishing urbanization.

In 2005, the textile industry turned out an international trade surplus that accounts for 98.58% of the nation's total favorable trade balance, with its influence coefficient to national economy for 1.25, showing its unchanged pillar status in the new era.

2. Following the strategy of opening wider to the outside world for a long time is important for China textile industry's persistently high growth.

-- Taping its comparative advantages, the textile industry takes an active part in international division of labor and cooperation, imports advanced technologies and management, absorbs foreign investment, expands international contacts, exchanges and trade, and drives development and progress of the whole industry.

-- China textile industry is engaged in cooperation with other countries & regions, and the textile and apparel exports totaled US$117.5 billion in 2005, with 32.7% to former quota regions including the US, the EU, etc., and 67.3% to former quota-free regions. From 2001 to 2005, China's import of cotton rose from 110,000 tons to 2.65 million tons, and import of raw materials for man-made fiber went up from 5.6 million tons to 13.08 million tons, and the import of textile machinery amounted to US$18.9 billion. The actual utilization of foreign investment (paid-in FDI) reached US$ 22.86 billion in the textile industry.

Import of China Textile Industry from 2000 to 2005

Unit: A (in 10 thousand tons) or B (in US$ 100 million)

Year

Cotton

(A)

Wool

(A)

Monomers for MMF (A)

Man-made Fiber (A)

Textile Machinery (B)

Dyeing Stuff (A)

Textiles (B)

Clothing (B)

2000

8.4

30.07

450.47

165.3

19.13

4.21

127.03

11.84

2001

11.26

30.91

559.58

147.3

25.14

4.63

124.58

12.62

2002

20.8

23.72

754.91

172

35.19

5.63

130.26

13.37

2003

87

19.27

904.52

185.8

46.11

10.8

141.83

14.04

2004

198

23.92

1126.83

177.68

47.55

11.02

152.73

15.31

2005

265

26.9

1308.77

170.01

35.56

11.11

154.9

16.09

2005/2000

3054.76

-10.54

190.53

2.85

85.89

163.90

21.94

35.90

Growth Rates %

Source: China Customs

Foreign Capital Utilization of China Textile Industry from 2000 to 2005

US$ 100million

Year

Projects

Contractual Foreign Investment

Paid in Capital

This Year

Change From Previous  Corresponding Period ±%

This year

Change From Previous  Corresponding Period ±%

This year

Change From Previous  Corresponding Period ±%

Total

23827

 

498.95

 

228.61

 

2001

3014

26.11

45.10

34.39

31.67

42.85

2002

4672

55.01

74.91

66.10

45.78

44.55

2003

5707

22.15

103.75

38.50

48.67

6.31

2004

5577

-2.28

129.39

24.71

53.16

9.23

2005

4627

-17.03

145.80

12.69

49.33

-7.20

-- Currently, of the paid in capital of the enterprises above the designated size in textile industry (with annual sales revenue of 5 million Yuan), 1/3 is invested by Hong Kong, Macao, Taiwan and foreign capital. The export of enterprises invested by Hong Kong, Macao, Taiwan and foreign capital accounts for 34.3% in total export( US$117.5 billion in 2005) of China's textile and apparel.

-- After being a member of WTO, China carries out its pledge and undertakes obligation.

Chinese import tariff generally drops to the point already below the averaged level of the developing countries, with that of industrial goods down to about 9%. China has signed up FTA with Chile, and the FTA with ASEAN will be established before 2010. China has also granted tariff-zero treatment to the thirty-nine least-developed countries (LDCs) that have diplomatic relationship with China for their products, including textile.

--International brands for clothes have lassoed a growing market share in some metropolitan cities in China.

Take Beijing's 35 middle and high-end markets for instance, international brands account for 42% of 5940 sale booths. In the slap-up marts,( Peninsula-Palace Hotel, Scitech, Yansha Mall) 80% of the brands are international and overseas.

--In Shanghai's Huaihai Road, a famous shopping street, is busy with 1159 brands of garment, 60% of them are also international and overseas.

--Multinational retailers entered China, and their business phases in bigger size
Only 18 foreign enterprises accessed to Chinese retail business before 1997, and the number of foreign retailers yet to be approved had grown to 314 by the end of 2004. In the first half of 2005, 59 international retailers got Chinese approval for new establishments in China, 1.9 times higher than that in 2004. The seven large foreign retailers (Wal-Mart, Carrefour, Metro, Auchan, Lotus, Trustmart, Loogoo) have their business presence for 306 chain stores in 59 big cities in China. Foreign investment represents over 61% of the total large supermarkets in our country.

Chinese textile industry supports our enterprises to develop textile business by investment, joint venture and cooperative running in some developing countries. In 2005, as entrusted by Ministry of Commerce, we staged training programs for 66 textile executives and government officials from 17 African countries with respect to cotton, cotton textile production and trade projects ( namely, Ethiopia, Nigeria, Sierra Leone, Seychelles, Tanzania, Togo, Uganda, Zambia, Zimbabwe, Benin, Central Africa, Eritrea, Ghana, Kenya, Lesotho, Mauritania, Mauritius) China National Textile and Apparel Council, at the invitation of Ethiopian government, also organized our experts to pay a field visit to map out a ten-year development program for cotton, textiles & apparel industry there.

Some of our backbone enterprises have already staged investment and brands cooperation in some developed countries and regions to set up business development & marketing agencies .

3. Market-Driven Reform is the Powerhouse to Engine the Sustained and Rapid Growth of Textile Industry in China

In 2005, of the total paid-in capitals in the above-scale enterprises, non-governmental and foreign capitals accounted for 94%. Also in the same year, of the investment in the fixed assets of textile industry, domestic bank loans accounted for 9.32%, overseas funds for 13.89%, and corporate own capitals for 72%.

The marketization progress speeds up the development of industrial clustering belt in the eastern area of the country, the production of these industrial clustering takes hold of 80% of the nation's total. Right now, there are over 280 specialized markets of its kind, whose individual annual sales going between 100 million and 20 billion yuan.

The systems for investment and for the development of science and technology are undergoing market-oriented reform, which has greatly facilitated development of textile industrial chains in a more coordinated way. At present, the man-made fiber takes up 65% of the total fiber consumptions in China. As regards the newly-added 10, million tons of man-made fiber capacity in the past five years, the overwhelming production of the polyester fiber that represents about 80% of Chinese man-made fiber production, is subject to in-house proprietary technology based on self-initiated innovation, a result from a teamwork of Chinese R & D institutions, production enterprises and universities, coupled with non-governmental investment. Consequently, the investment on averaged unit output is saved as much as 90%, compared with the imported projects five years ago. Up to now, the new-type advanced textile equipment locally made has already accounted for 52% of the fixed asset investment.

at present, about 300 thousand students are studying in textile universities、colleges and occupational schools.

4. A Change for a New Growth Mode Fits in with the General Trend of Global Textile Industry, and is also a Natural Selection Demanded by Economic, Social and Scientific Development in China

As a big producer, consumer and exporter, China is not a powerful country for its textile industry on a global perspective, leaving much to be improved for its low labor productivity and extensive- mode growth yet to be fundamentally rectified. Therefore, to facilitate industrial upgrading is an indispensable selection when we are faced with very competitive issues of focal considerations, such as global oversupplies and the new challenges for environment, resources, energy, water shortage and innovative competence etc.

Chinese economy is in a new growth period, maintaining 9.5% growing rate from 2000 to 2005. China's developing goals in new era is to raise GDP three times in 2020 compared with 2000. It is estimated that the demands of clothing consumption in domestic and industrial textile will both keep a comparatively high growing speed. The textile industry will be growing at a rate of 10 per cent annually.

According to the forecast based on domestic and international markets, the total fiber processing volume in the textile industry in China will grow by about 30%, with a growth of labor productivity by about 60%, a reduced fiber consumption by about 26% for the averaged output value, a reduction of waste effluents by about 22%, a drop of energy consumption by about 28% in the coming five years.

38 key projects for R & D break-through are to be accomplished prior to 2010. The projects are inclusive of technology for new textile materials, new and high-tech process technology, ecological textiles and energy-saving & environment-friendly technology, information & quick response system technology, new complete textile machinery and equipment as well as the research of the applied science etc..

We are also actively engaged in technical upgrading and R&D investment and brand developments, upgrading industrial standards, regulating corporate social compliance system to promote CSC9000T (China Social Compliance 9000 Tex) by organizing training and promotional activities. Quality awareness is also elevated by providing quality inspection & certification services.

Intellectual Property Right (IPR) protection is enforced to optimize the environment for creativity and innovation. Self-disciplined practices are implemented across the board.

Efforts are to be strengthened to provide services of public interests in the SMEs (small & medium-sized enterprises) that hold the majority of Chinese textile companies. Big Fives are being implemented ( five public service systems: R & D, quality inspection, information system, modern logistics & E-commerce, training) to facilitate the domestic textile industry to take a gradient transformation.

5. Actively Carrying out International Exchange & Dialogue in the World Textile Industries to Gear up Understanding & Cooperation, Maintaining WTO's Fair Trade Principle to Strive for a Common Prosperity

China accessed to WTO in 2001, but before that, China had long been restrained and discriminated by the trade policy enforced by the restriction-imposing countries to result in an extreme imbalance, comparing the restrained export to those quota-imposing countries with Chinese international competitive potentials.

Referring to Chinese competitive edge, an executive summary from USITC's report entitled [[Textiles & Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the US Market (Investigation No.332-448, sent to USTR in June 2003, published in Jan. 2004)]] reads that in a quota-free era that started in 2005, " China is expected to become the 'Supplier of Choice' for most US importers (the large apparel companies & retailers) because of its ability to make almost any type of textiles & apparel product at any quality level at a competitive price". But the former main quota imposers rashly invoked the safeguards to fasten China with an unfit cap , labeling Chinese 31 categories with " Threatening to Disrupt Market", just in consideration of the short-time market spur for the first quarter of 2005. This greatly damages Chinese textile companies & a good number of workers who are suffering once again with the discriminative trade policy.


US imports of Category 338/339 (1989-2005)

Take some US-invoked safeguard cases for instance, during 1989 - 2004, US global import of category 338/339(knit underwear & T-shirt) grew 7.69 times higher in global volume, while import from China rose only by 23.56%. Chinese share in US market dropped from 6.14% to 0.87% while the import of the same categories from Mexico into US surged by 118.18 times, with its US market share swelling up from 1.01% to 13.85%. It mirrors a market distortion that results utterly from the long-standing quota system.

In the first quarter of the quota-free 2005, Chinese export of these categories grew by 12.77 times as against the same period of its previous year, but our market share in US total import only reached merely 7.34%. In term of the absolute volume, US import from China was 70.39% of its import from Mexico, and 52% of its import from Honduras. By the end of 2005, Chinese share of US total import had reached only a smattering of 5.54%, equivalent to 51.91% & 37.09% of its import respectively from Mexico and Honduras.

In January of 2006, United States experienced an import growth by 14.01% higher than the same time last year while meeting with a sharp import drop from China, 74.92% down, Chinese market share in US imports further down to 1.04%, owing to safeguards restriction. This figure is only as good as 10.45% and 9.01% of US imports from Mexico and Honduras. Should it be called as a " Fair Trade" when US import from China is leveled down to its previous ceiling before quota system was terminated?!
China, as a country with a sense of responsibility, has already seriously honored its commitments to WTO. While fulfilling our obligations, we must hold to free trade principle in the spirits of responsibility, and actively take part in equal consultations in disputes settlement system in an effort to maintain the new order of WTO trade, and must resolutely be opposed to any abuses of relevant clauses & provisions written in Report of Working Group for China's Accession to WTO, and to any impairment to our legal rights of Chinese textile industry.

Chinese textile industry will, as always, adhere to expanding opening-up practice, deepening reform, strengthening an extensive cooperation with both developed and developing countries. With opening-up, cooperation and win-win principle in mind, we will work together to strive for a new prosperity for the world textile industry!!

Thanks!