Future of Textile Industry in China

-- DU Yuzhou,  Address at 2007 ITMA World Textile Forum (II)

 (Sept.12, 2007)

III. Upgrading of Chinese textile industry is the objective requirement from Chinese modernization drive to comprehensively build up a well-off society

3.1 China's sustained and rapid economic development is the first impetus for industrial upgrading of China's textile industry

From 1980 to 2000, China's per capita GDP boasted an annual growth rate of 9.85%, on average. In 2000, according to the exchange rate at that time, the per capita GDP amounted to 949 US dollars, accomplishing the two strategies: fulfilling the basic needs of people and moving into a well-off life. From 2001 to the middle of this century, China's third strategy is being implemented in order to make our people’s life achieve the level of that of moderately developed countries. In 2001 -2020, as the important stage of our comprehensive construction of a well-off society, basically achieving industrialization, and quadrupling per capita GDP than that of 2000 and its people's living standards to be achieved to a well-off level top the agenda of Chinese government.

With rapid economic growth, domestic consumption of clothing and consumption structure has undergone significant changes. From 2001 to 2006, per capita consumption of fiber hiked from 8 kg to 14 kg (including technical textile consumption), an increase of 75%, according to constant prices, per capita consumption expenditure of urban and rural residents increased by 124.54%, the growth of total retail sales of consumer goods and total retail sales of clothing increased by, 80.04% and 137.99%, respectively. In terms of above-designated size enterprises’ sales value, the proportion of domestic consumption rose from 67% to 75%.

China's per capita GDP reaching 1,000 US dollars heralds that the consumption structure enters into a new stage in pursuit of quality and fashion. The population of six provinces and three cities in eastern China accounts for 34.84% of total with per capita GDP 3,547.09 US dollars in 2006 and clothing consumption expenditure per capita 9.59% higher than that of other parts in China.

In the 20 high-end department stores and fashion stores in Shanghai, 1,975 brands are sold, hereinto, Hong Kong and Taiwan and foreign brands accounted for 81%; among the 1,917 brands sold in eight comprehensive department stores, foreign and Hong Kong and Taiwan brand combined constitute 50%. It is tempting to say that the escalation of demand structure of China's textile industry has become a new industrial upgrading pulling power.

3.2 China's macro implementation of the scientific development strategies and policies, a concentrated expression of an objective need for industrial upgrading of textile industry stimulated by fast and sound development of the national economy.

The overall situation of China's economic development features a fairly rapid economic growth, improved quality and efficiency, enhanced structure coordination as well as the increasing benefits for customers. Meanwhile, Chinese government has been working hard to resolve the problems that may result in overheated economy from a too quick growth, such as, excessive growth of investment, relatively inadequate consumption, trade surplus and overstock of foreign exchange accumulation. Some of these issues will inevitably arise in the development; some are institutional problems, furthermore, some are related to the income distribution gap between urban and rural area, resources and environmental problems are also included.

The overall domestic and international situation shows that China's development is at a new historical turning point. On the basis of scientific and profound analysis of the new opportunities and challenges of economic globalization, China strives to research new tasks and new contradictions emerging from the industrialization, urbanization, marketization and internationalized development of the situation and make more efforts to promote scientific development. China already takes changing the economic development approach and improving the socialist market economic system as a key to a fast development of the national economy.

China's textile industry will remain its ever irreplaceable historical status in China’s scientific development period. In 2002, the coefficient of textile industry's influence is 1.198, garment industry 1.23, ranking the fourth of the 17 major categories in the national economy.

Among the 20 million workers of textile industry in China, 75% of which are rural labors. With expanding scale and escalating demand, China's textile industry enjoys a huge market space. At present, China is proud of its quarter share in international export market and still has stamina to maintain a moderate growth rate, which will be conducive to ease the pressure on employment and expand domestic consumption demand. meanwhile the textile industry can generate more domestic and international markets for over 700 million tons of natural fibers every year, which bears a great significance on the Chinese urbanization and strengthening agriculture, improving their lives and promoting the construction of new rural.

However, to complete the new historical mission, China's textile industry is definitely facing unprecedented challenges. Fundamental change of long-term extensive development is not overnight thing. Internationally, China's textile industry is facing more intense competition with focus gradually on new challenges of transnational production mode of advanced productive forces in terms of innovation; domestically, this industry is faced with greater restraint of low-end extensive development in implementation of the scientific strategy. The synthetical influence caused by adjustment of exchange rates, interest rates, tax rate and the increased cost of labor wages, “reducing energy saving” campaign and environmental protection as well as social responsibility, coupled with long-term weak research and brand consciousness constitutes acute challenges for the textile industry in China. Only by adhering to the policy of accelerating industrial upgrading unswervingly, can China hail a fast and sound development at a new historical starting point.

.3 The establishment of opening up long-term strategies of China economy will bring new opportunities for industrial upgrading in the textile industry.
      Since the accession to the WTO, China not only has realized its commitments on market access, tariff reduction commitments (average import tariff has been reduced to 11%), but also actively promoted a new round of negotiations on WTO free trade. The reach of China and the international bilateral or regional FTAs has been constantly expanding, and China's trade surplus and foreign exchange reserves both remain large, and these are beneficial to China's textile industry to expand the import of advanced international technology, advanced equipment, and outstanding talent and to attract new advanced manufacturing enterprises, for research institutions to accelerate industry technical transformation and enhance innovation capability. All of these are of great significance. From the first 6 years of the new century, China's textile machinery manufacturing industry has made significant progress and development, foreign capital and Hong Kong, Macao and Taiwan enterprises represent 38.05 % for the capital, 31.34% for sales and 64.3% for the value of export delivery. Advanced foreign manufacturing enterprises in China pushed the progress of domestic machinery and accessories plant realized a win-win situation.
      The long strategy helps enterprises to reach the international level, and is conducive for the Chinese textile enterprises in the developing countries and developed countries to have extensive cooperation to enhance the ability of transnational allocation of resources of Chinese enterprises.
      Also, it is conducive for the Chinese market system to improve, and for various economic sectors of different ownerships to head for a common development so as to push forwards in depth reform in the financial, fiscal and taxation system, government functions. It is conductive to further strengthen the fundamental role of the market in the allocation of resources and the macro-control to be more scientific.
    

 IV. Chinese textile industry will take a science-led development roadmap to head for modernization, the world and the future

4.1 Raising industry innovation capability will be the main theme of industrial upgrading.
      China's textile industry will reform into an innovative, resource-saving and environment-friendly industry relying on innovation capability. Through the combination of innovative capacity and comparative advantages, China’s textile industry will realize the increase of the labor productivity. For the entire industry, to enhance the contribution of science and technology and to enhance the contribution of the famous brands to the economic growth have been set the as the two most important goals of "11th Five-Year" development planning.
      -- On the improvement of the contribution of science and technology:
      In accordance with the "11th Five-Year Plan" for the development of the industry, organizing related research, including 28 process technology, materials technology, environmental technology, information technology and basic research of textile industry. Try to achieve breakthrough progress, including the research of 10 complete sets of equipments of modern technology.
     Strengthen the public service for SME. Establish pilot industrial innovation platforms in 135 famous industrial clusters to spread the knowledge of the modern technology and management. Strengthen product development, quality testing, information system building, training and education, modern logistics and e-commerce, developing markets, opening up and cooperation with the other services.
      The promotion of scientific management of the enterprises, efficiency of regional industry and industry organizations, quality, innovation, rapid response capability would also be of great importance.

      -- On the contribution of famous brands:
     Although the manufacturing level of China’s textile industry can meet various requirements and international standards in variety and quality, because of the lack of innovation, the core value of the brand, the domestic products stay in a basic, low-end market position in the domestic market. And in international trade, ‘made-in-China’ is mainly in low value-added processing status of basic OEM .
      The value of a brand derives from the material value of utility and cultural aesthetic value of creativity. As a kind of social wealth, it is a result of the process of production, distribution, exchanging, consumption and social life in interactive performance. It embodies the value of the credibility during social process. It closely relates with material production, social life, and the cultural patterns. In this way, promoting brand contribution is of great significance to enhance the China’s textile industry into a value-added industry and to enhance the international competitiveness of the products. It is also an important qualification of China's textile industry to join the globalization and constantly improve the level of cooperation and improve international competitiveness. Therefore, we must strengthen the combination of the material production and non-material production. In the current situation that international brands accelerate the process of localization, we need to accelerate the process of internationalizing local brands.
      4.2 improve China's textile industry’s open economy standard.
      In the new century and in new stage, China’s textile industry will continue to expand international exchanges and cooperation. We will strengthen the communication with industry organizations, wholesale and retail trades, bilateral and multilateral communication, resolve trade friction, seeking complementary advantages, upholding the principle of win-win cooperation, investment promotion, technology, brand, production, trade, exhibition, transnational procurement, international marketing, human resource, education, information and other aspects of cooperation with the whole world. We will upholding the principle of the WTO and jointly safeguard the new order of world textile’s economy. China National Textile & Apparel Council will provide advisory services to Chinese and foreign enterprises in all kinds of cooperation and investment to help foreign enterprises come to China and help Chinese enterprises to go global.

      4.3 strengthening industry self-regulation
  China’s textile industry will strengthen self-discipline to implement the scientific development, to build a harmonious society, to meet the need of industrial upgrading. Currently there are four major elements:
      -- Quality
      -- Intellectual Property Protection
      -- Social responsibility
      -- Domestic market and the international trade order
     China’s textile industry will adhere to the scientific concept of development, and go hand in hand with peers around the world under the WTO rules in common pursuit of the new prosperity of world textile industry!