Chinese textiles 'going out' still in early stages

30 Apr '14

2 min read

The relocation or ‘going out’ of the Chinese textile industry to other countries is still in early stages of development, according to analysts.

Owing to the current domestic economic situation and the increasing integration with the global economy, China’s textile and garment industry has entered a new phase where enterprises set up their manufacturing in other countries.

However, the ‘going out’ behavior is currently limited to companies that want to make use of low cost of production in other countries, especially Southeast Asia. The focus on long-term development of corporate decision making elements, like the culture, customs, laws and regulations, is mostly inadequate.

The main motivation for the Chinese textile and apparel enterprises to set up production units in Southeast Asia is to tap into local resources, and they would be in a surprise when they find that there is extreme lack of understanding about other factors like regional market trends, etc, aver analysts. So, the challenge is to graduate from non-sophisticated type of going out to an active, orderly and mature going out strategy.

At present, the setting up of production units in Southeast Asia is only a transfer of manufacturing, whereas the ultimate goal of the ‘going out’ strategy is to achieve industrial chain optimization by improving labour productivity and business efficiency. Therefore, mergers and acquisitions has also become an important channel for several enterprises.

According to analysts, businesses going out must fully understand the relevant environment policies and local conditions in the country where they are setting up their new production units. They suggest establishment of research centres, marketing network, raw material base, production and processing base, etc. so that the enterprises can achieve optimal allocation of production factors.

Fibre2fashion News Desk - India

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