By: Christian P. Schindler
Director - ITMF
Looking at some smaller Asian countries one can notice that in the case of Malaysia and Thailand exports in 2004 were barely above the respective levels in 1995. Malaysia�s exports increased at an average annual growth rate of merely 0.8%. In Thailand the respective growth rate reached only 0.5%. With 5.3% also Sri Lanka experienced strong rising exports � though only in clothing, whereas exports of textiles stagnated. Vietnam on the other hand could increase both its textiles and clothing exports between 1997 and 2003. Its annual growth rate averaged impressive 18.2% thus even outpacing that of China.
How did the textile and clothing industries develop in Africa? While some countries could increase their exports others stagnated or lost ground. On average Morocco was able to increase its total exports on average by 24.1%. However, it is important to note that this growth mainly materialised in 1998 as a result of a bilateral agreement with the EU. The picture in South Africa looked a little different. Exports rose on average by 4.4% with both textiles and clothing contributing equally to this increase. Egypt on the other hand experienced a fall in total exports by 2.9% on average. The increase in exports of clothing could not make up for the lower textiles exports.
In the Americas the countries under review also recorded rising exports of textiles and clothing. Colombia�s exports grew annually with a growth rate of 4.1%. El Salvador experienced a strong surge in textile and clothing exports reaching a growth rate of 12.7%. Also Mexico recorded higher textile and clothing exports in 2004 compared to 1995. But it is important to note that Mexico started to feel the impact of the Chinese export growth since 2001 losing market shares since.
In Eastern Europe Bulgaria and Romania reported strong growing textile and clothing exports which were stimulated by bilateral trade agreements with the EU in the 90ties. Bulgaria�s exports were growing on average at a pace of annually 20.1%. Romania recorded a growth rate of 14.9%.We have seen that during the phase-out period between 1995 and 2004 not only the big developing countries could increase their exports but also many smaller developing countries.
Recent Textile and Clothing Export Data
The data available for 2005 show that the big developing countries continue to gain export markets shares with China and India recording the strongest increases. Also some smaller developing countries were also able to stay on the growth path like Vietnam or Columbia. Others like Egypt were able to bounce back after losing ground in the beginning of the millennium. But other small developing countries like El Salvador, Morocco or Bulgaria could not keep their shares on the export markets.
The surge of textiles and clothing exports from Asia and particularly from China in 2005 led to the reintroduction of quotas for certain products from China in the EU, the USA and some other countries. These new quotas consequently slowed down the Chinese export growth in 2006 considerably. In the first six months of 2006, Chinese textile exports to the US declined for the first time in several years. However, Chinese textile exports to countries without restrictions continued to surge.
After 2008 all quotas will have to be removed eventually. This raises the question where the industry will invest and build production capacities in order to remain competitive in the future. For that reason let us now turn to the development of textile machinery shipments in the past six years. With the perspective of abolished quotas which regions and countries around the world have kept or even intensified their investment levels, which have reduced them?
Mr. Christian P. Schindler joined the ITMF on October 1, 2004 as an Economist and on January 1, 2007, he was promoted to the position of Director of the Federation by the ITMF-Board.
Born in Karlsruhe, Germany, in 1968, Mr. Schindler studied economics at the University of Fribourg, Switzerland, from where he graduated in 1994. He has worked for three years as a personal assistant of two Members of Parliament in the German Bundestag, Bonn.
In 1998 he joined the Federation of German Wholesale and Foreign Trade (BGA) in Bonn/Berlin as personal assistant and speechwriter of the Association�s President.
Between 2001 and 2004 he stayed at the Institute for Economic Policy at the University of Cologne, Germany, and wrote his dissertation receiving a doctorate degree in 2004.
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Main Destinations of Textile Machinery Shipments 2000 - 2005
Spinning: Short-staple Spindles
Looking at the shipments of short-staple spindles since 2000 two things becomes obvious: first, the global shipment of short-staple spindles almost tripled form just 4 million to more than 11 million. Second, a process of concentration took place in the way that new production capacities were mainly built up in Asia absorbing 96% of all new short-staple spindles shipped in 2005.
If you look at China�s share of global shipment during this relative short period of time you can see that it could raise its share from around a fifth to two third of total shipment.
The other two big investors in short-staple spindles are unsurprisingly India and Pakistan with shares of 13 and 9%, respectively. The fourth biggest investor, Turkey, which is not on the slide, absorbed 3%.
Spinning: Open-end Rotors
Like in short-staple spinning we can observe that the volume of open-end rotors shipped since the year 2000 rose significantly. In 2005 it was 80% higher than in 2000 reaching 374,000 rotors. The process of regional concentration was not quite as staggering as in short-staple spinning but continued also in rotor-spinning with Asia absorbing more than three quarters of all shipped rotors.
Looking at China again one can see that the investments intensified during the past 6 years.In 2000 it accounted for a third of world shipments. Last year China�s share stood already at 66%.
In 2005 the biggest investors behind China in were Brazil and India with 6 and 5%, respectively.
In the segment of texturing machinery the volume of machinery shipped increased steadily doubling since 2000. The regional concentration of shipments was even more staggering than in the segments of spinning with Asia almost absorbing all of the 315,000 newly shipped texturing spindles and China again being the preferred location of investment.
Already in 2000 more than 50% of all texturing spindles were destined for China. In 2005 this number reached 84%.
The second and third biggest investors of texturing spindles are located in Asia as well. India absorbed 4% followed by Vietnam with 2%.
Unlike in the segments of spinning and texturing machinery the volume of shipped shuttleless looms fluctuated during the past five years around the volume in 2000. But the concentration process continued also in this segment with Asia absorbing last year 87%.
Unlike in the previous segments China as the biggest investor did not increase its market share which stayed around 60%.
With regard to the biggest investors in 2005 it is worthwhile to note that China�s share did stay around the 60%-level in 2000. With 9% India became the second biggest investor followed by Bangladesh with 5%.
Between 2000 and 2005 the volume of shipped circular-knitting machines jumped by approximately 140% reaching over 30,000 machines. The Asian share grew during this time span from just under 60 to almost 90%.
China was again the most active investor, increasing its global market share in the past few years rapidly from just 28% to 74%.
The second biggest investor was India with a market share of 4%, closely followed by
Bangladesh with 3.5%.
The graph shows that as far as electronic flat-knitting machines are concerned not Asia was for once the main region of investment in the year 2000 but Europe including Turkey. Of a total of 8,600 electronic flat-knitting machines 45% were shipped to Europe, whereas 42% were destined for Asia with the Americas absorbing 12 and Africa 2%.
Looking at the time-span between 2000 and 2005 we can observe that the volume of
electronic flat-knitting machinery increased by around 20%. Asia�s share of shipments more than doubled rising to 87% proving that also in this segment a regional process of
concentration took place within a short period of time.
Unlike in the other segments China absorbing �only� a little more than a quarter of global
shipment in 2005 was for once not the main Asian destination of investment. Instead it was Hong Kong that increased its global market share since 2000 from 16% to almost 50%.Turkey and Italy were the third and fourth biggest investors.
To summarize: we could observe that in all textile machinery segments Asia has become the dominant region of investments while all other regions have lost market shares. Within Asia the main destinations of investments were China and India. Therefore, it is of interest to see how much of global shipment of textile machinery the smaller developing countries mentioned earlier were able to attract?
Textile Machinery Shipments to Small Developing Countries 2000 - 2005
Spinning: Short-staple Spindles
Looking at the investments in short-staple spinning in the smaller countries we can generally observe that most countries could either keep their investments more or less at a constant level or were reducing it like Thailand or Mexico. But there are also exceptions of the rule: Vietnam for example was able to increase its investments lately.
Spinning: open-end rotors
Generally speaking shipments of rotors to the smaller developing countries stagnated or were reduced since 2000. In some countries like in Mexico or Thailand the investment peak was reached in 2001.
If we are looking at texturing spindles we can observe the same tendencies as in spinning. Most countries continue to invest but do not seem to intensify investments. Again there is an exception: In Vietnam where we did not see any investments at all in the first three years of the millennium we could suddenly record investments in 2003 and especially 2005.
Turning now to the shuttle-less looms we do see a similar picture. Investments in shuttle-less looms peaked in some countries like Egypt, Thailand and Vietnam between 2001 and 2003. but have fallen back afterwards below the respective levels in 2000.
With regard to shipped circular-knitting machines we see the same developments. Most of the countries under review show a tendency of reducing their investments. Egypt and Thailand were able on average to keep their investment level. Only Vietnam was constantly increasing its investments.
Summary and Conclusions
It has become evident that during the past six years the big development countries in general and China in particular were investing heavily in almost all the different textile machinery segments. Total shipments of textile machinery therefore rose significantly during this period. Only total shipments of shuttle-less looms did on average not increase. On the other hand the smaller developing countries have at best kept their investments level constant with most of them actually reducing investments like Mexico and Thailand. Of course there are always exceptions from the rules. In our case Vietnam and Bangladesh can be seen as the exceptions with increasing investments in some segments.
The overcapacity in the textile industry which has been pointed out at many occasions at
previous ITMF Annual Conferences has certainly not been reduced in the past few years with China but also India and Pakistan increasing their investments tremendously and thus outpacing the reduced investments in all the other countries.
Despite this overcapacity most of the smaller developing countries kept on investing showingthat they see a future for themselves in certain markets and product niches. Coming back to my question: �Does Size Matter After 2005/2008� one can conclude:
No, if you are adapting rapidly to the changing trading environment, size does not matter.