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Export capacity of textile & garment SMEs weakens in China
24
May '14
An analysis of the performance of the Chinese textile and garment export sector during the first quarter of the current year shows that the export capacity of small and medium enterprises (SMEs) has weakened.
 
From January to March 2014, China’s textile and garment exports increased marginally by 0.4 percent year-on-year to US$ 58.1 billion, which is a slowdown compared to above 11 percent growth rate witnessed during the corresponding period of last year.
 
One of the reasons for this slowdown is the decrease in export capacity of SMEs, according to analysts. In recent years, SMEs became the main force of Chinese exports and their general and processing trade grew at an average rate of 10 percent for nearly three years. But, in the first quarter of this year, their share in total textile and garment exports declined to 67.21 percent from 71.5 percent share in 2011. The export capacity of SMEs has weakened due to lack of funds to upgrade technology and other reasons.
 
Another reason for the slowdown is weakening of demand from emerging markets. In the last two years, Chinese textile and garment exports to emerging markets achieved rapid growth. For example, in 2013, Chinese exports to Asean grew by 28.32 percent year-on-year, to Russia by 35.84 percent and to the Middle East by 12.22 percent.
 
However, since late last year, emerging market economies are feeling some impact of the slowdown in economic growth of the US. In the first quarter of 2014, Chinese textile and apparel exports to Asean increased only slightly by 1.28 percent, while its exports to Middle East decreased by 5 percent. Even exports to BRICS countries like South Africa, India and Brazil dropped by 18 percent, 7 percent and 1 percent, respectively.
 
In addition, the market share of China’s textiles and clothing items in developed countries is continuing to decline due to the rapid development of the textile and garment industry in Southeast Asia.
 
Moreover, the acceleration of shift in production base from China to Southeast Asian countries, where labour and other production costs are lower, is also affecting the growth rate of Chinese textile and apparel exports.
 

Fibre2fashion News Desk - India

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