China Textile Industry is Being Tested
August 24, 2009 The rapid development of the Chinese cotton textile industry has benefitted from favorable climate, topographical advantages and support of the people. From 2002 to 2007, with the favorable economic environment at home and abroad, the Chinese textile industry was in a new period of rapid development.
However, since early 2008, as the development of the world economy slowed down, China adjusted its macroeconomic policy the textile industry entered its adjustment period and textile enterprises are facing a tough test.
Reform and opening up have promoted the rapid increase of China’s industrial edge. With advanced technologies applied on a large scale, its capacity for independent innovation showed major development.
From 2002 to 2008, the cotton textile industry imported $11 billion (US) of advanced equipment, and upon joining the WTO, China grasped the strategic advantages of resources and industrial structure. It also introduced, on a large scale, advanced technologies and management experiences, applied domestic and international resources, and developed domestic and international markets. Being promoted by international market demand from 2002 to 2007, exports of cotton products showed sharp growth.
But the worldwide financial crisis had a major impact on the Chinese cotton textile industry:
• The industry is a typical demand-driven industry, depending much on the market. On the basis of yarn output published by the National Bureau of Statistics, yarn for net export of cotton products had a 30% share of total output. From July 2008 to March 2009, the export amount of cotton textile products kept a negative growth for eight months as compared with the preceding period. From January and March, exports of cotton yarn products dropped by about 20%, as compared with the preceding period.
• The continual price increase of raw materials, energy and labor accelerated revaluation of the Yuan. Policy pressure, such as energy savings and emissions reduction, weakened the advantage of cotton exports in price and the resulting fall of competitiveness.
• Due to limited sales, overstocking of product and difficulties with working capital caused a severe test of cotton enterprises.
• It is urgent to improve the industrial level of the Chinese cotton textile business.
At present, the cotton textile business has encountered unprecedented difficulties, but firmly believes it will cross the difficulties safe and sound. The textile business will pass the test of the global of the global economic crisis and will definitely become stronger.
In 2009, the Chinese cotton textile industry will face an even more severe situation for development and will undertake a new round of strategic adjustment. As long as we establish confidence and carry out structural adjustments and industrial improvements, the Chinese textile industry will definitely overcome difficulties and develop faster and better.
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Madame Zhu Lanfen
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