LexisNexis(TM) Academic - Document
Financial Times (London, England)
September 6, 2005 Tuesday
London Edition 2
SECTION: ASIA-PACIFIC & INTERNATIONAL ECONOMY; Pg. 12
LENGTH: 656 words
HEADLINE: Textile quota setbacks point to streamlining for Chinese industry: Less competitive manufacturers will be weeded out, writes Alexandra Harney
BYLINE: By ALEXANDRA HARNEY
BODY:
Down a pocked and dusty road lined with makeshift cafes and crumbling brick buildings, Huang Chaohong marvels at the peculiarities of world trade.
Last year, a flood of executives from UK retailers washed up at the gates of his garment factory in Guangzhou, eager to take advantage of the end of the decades-old quota system on January 1 2005 by sourcing more from China.
The appetite of the executives from Debenhams and elsewhere so impressed Mr Huang and his colleagues that they drew up a Rmb20m (Dollars 2.5m, Euros 2m, Pounds 1.3m) plan to double the capacity of their plant. An additional 200 workers were hired, increasing the factory's shopfloor headcount by a third.
"We were very happy," says Mr Huang, surrounded by multi-coloured clothing samples in his office. "We thought there would be no quotas after China entered the World Trade Organisation. And it wasn't only us - our international customers felt the same way."
How wrong they were. European and Chinese negotiators' June agreement to limit Chinese growth in textile exports by imposing a set of quotas left millions of Chinese-made garments stranded at European ports.
Women's blouses, jackets and shirts made at Mr Huang's factory, owned by a Chinese-Hong Kong joint venture called Suntex Garment Manufacturing, are among them. One container of clothing has already returned after failing to reach European stores.
There are fewer phone calls from UK retailers these days. Mr Huang, whose customers include Next and Marks & Spencer, expects to ship his last container of goods under quota to Europe this month. Then he will have to wait for next year's allocation.
China and the European Commission announced yesterday an agreement on how to resolve the problem of the stranded garments, ending protracted negotiation.
Last week, Beijing failed to reach a deal to manage growth in its textile and apparel exports to the US. The US then moved to restrict imports of Chinese-made bras and some synthetic filament fabric.
EU and US attempts to rein in China's textile and clothing industry have inconvenienced some producers, but they are unlikely to put the best of them out of business. It might even make them stronger.
While smaller, low-end producers may suffer as a result of the quotas, the most competitive Chinese textile and apparel-makers will find new customers and markets for their goods.
"There will be fewer players, but that doesn't mean we will make less money," says Mr Huang.
Suntex executives briefly considered shifting production to Hong Kong or Macao, which are part of China but separate customs territories.
Discouraged by the shorter working hours and higher wages in the former British and Portuguese colonies - which would have added at least 15 per cent to its costs - Suntex decided to stay put in Guangzhou.
Plans for expansion were put aside. The future of some of the new workers is in doubt. But nobody is being fired yet, since Suntex has taken on a big new customer. Decathlon of France has tapped the factory to make some of its sportswear - goods which are not restricted by the EU quotas - Mr Huang says.
Suntex, which has been paid for the goods stranded in Europe, is also supplying customers such as Esprit, the Hong Kong retailer, in China.
Many Chinese textile manufacturers are moving production to south-east Asia, extending their reach deeper into the region, or shifting their attention to the local market. Those lucky enough to get a quota allocation, such as Suntex, will continue to supply European customers.
Those that are not so competitive will be weeded out. Mr Huang has watched the rise of aggressive, low-quality producers in eastern China this year with dismay. But he believes officials in Beijing are concerned about these companies, too.
"The Chinese government wants to restructure this market and kick out the low-priced, low-quality players," he says. "They just waste energy and resources." Editorial Comment, Page 18
LOAD-DATE: September 5, 2005
September 6, 2005 Tuesday
London Edition 2
SECTION: ASIA-PACIFIC & INTERNATIONAL ECONOMY; Pg. 12
LENGTH: 656 words
HEADLINE: Textile quota setbacks point to streamlining for Chinese industry: Less competitive manufacturers will be weeded out, writes Alexandra Harney
BYLINE: By ALEXANDRA HARNEY
BODY:
Down a pocked and dusty road lined with makeshift cafes and crumbling brick buildings, Huang Chaohong marvels at the peculiarities of world trade.
Last year, a flood of executives from UK retailers washed up at the gates of his garment factory in Guangzhou, eager to take advantage of the end of the decades-old quota system on January 1 2005 by sourcing more from China.
The appetite of the executives from Debenhams and elsewhere so impressed Mr Huang and his colleagues that they drew up a Rmb20m (Dollars 2.5m, Euros 2m, Pounds 1.3m) plan to double the capacity of their plant. An additional 200 workers were hired, increasing the factory's shopfloor headcount by a third.
"We were very happy," says Mr Huang, surrounded by multi-coloured clothing samples in his office. "We thought there would be no quotas after China entered the World Trade Organisation. And it wasn't only us - our international customers felt the same way."
How wrong they were. European and Chinese negotiators' June agreement to limit Chinese growth in textile exports by imposing a set of quotas left millions of Chinese-made garments stranded at European ports.
Women's blouses, jackets and shirts made at Mr Huang's factory, owned by a Chinese-Hong Kong joint venture called Suntex Garment Manufacturing, are among them. One container of clothing has already returned after failing to reach European stores.
There are fewer phone calls from UK retailers these days. Mr Huang, whose customers include Next and Marks & Spencer, expects to ship his last container of goods under quota to Europe this month. Then he will have to wait for next year's allocation.
China and the European Commission announced yesterday an agreement on how to resolve the problem of the stranded garments, ending protracted negotiation.
Last week, Beijing failed to reach a deal to manage growth in its textile and apparel exports to the US. The US then moved to restrict imports of Chinese-made bras and some synthetic filament fabric.
EU and US attempts to rein in China's textile and clothing industry have inconvenienced some producers, but they are unlikely to put the best of them out of business. It might even make them stronger.
While smaller, low-end producers may suffer as a result of the quotas, the most competitive Chinese textile and apparel-makers will find new customers and markets for their goods.
"There will be fewer players, but that doesn't mean we will make less money," says Mr Huang.
Suntex executives briefly considered shifting production to Hong Kong or Macao, which are part of China but separate customs territories.
Discouraged by the shorter working hours and higher wages in the former British and Portuguese colonies - which would have added at least 15 per cent to its costs - Suntex decided to stay put in Guangzhou.
Plans for expansion were put aside. The future of some of the new workers is in doubt. But nobody is being fired yet, since Suntex has taken on a big new customer. Decathlon of France has tapped the factory to make some of its sportswear - goods which are not restricted by the EU quotas - Mr Huang says.
Suntex, which has been paid for the goods stranded in Europe, is also supplying customers such as Esprit, the Hong Kong retailer, in China.
Many Chinese textile manufacturers are moving production to south-east Asia, extending their reach deeper into the region, or shifting their attention to the local market. Those lucky enough to get a quota allocation, such as Suntex, will continue to supply European customers.
Those that are not so competitive will be weeded out. Mr Huang has watched the rise of aggressive, low-quality producers in eastern China this year with dismay. But he believes officials in Beijing are concerned about these companies, too.
"The Chinese government wants to restructure this market and kick out the low-priced, low-quality players," he says. "They just waste energy and resources." Editorial Comment, Page 18
LOAD-DATE: September 5, 2005
posted by Eastlaw at 10:07 PM
0 Comments:
Post a Comment
<< Home