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Exporting units transforming business models to survive

18
Nov '08
The global meltdown accompanied by recessionary trends has started taking its toll on export oriented textile and garment companies. In the struggle for survival, a few have cut down on their workforce, some are contemplating pulling shutters, while others with the will to survive and ride through this crisis are in the midst of transforming their business.

Surviving through this crisis has become the mantra and consensus for a majority of textile garment units in Fujian province which is one of the most important hubs of the sector. Small units with 50-60 employees have already pulled shutters while those with 100+ workers are on the verge of doing so. The main reason aver experts, is over dependence on exports by these units.

According to statistics available with the local government, of the thousands of textile and garment manufacturing units in Fujian, nearly 50 percent are dependent on exports for their livelihood and in these turbulent times they are becoming vulnerable to global recessionary trends.

New orders have been reduced to a trickle and old orders are either being cancelled or re-negotiated making it tough for these companies to survive who have ridden on the wave of unprecedented growth in the last few years. The exporters are looking at 2009 too with skepticism as they expect the situation to worsen in the new year.

A few of them are turning their business models upside down and instead of concentrating only on exports are looking at the domestic markets or looking for new unexplored global markets. But as experts suggest penetrating domestic markets is a long and treacherous road and these companies need to get their product mix right to do so.

In another instance footwear manufacturers in Jinjiang, Fujian, which is considered the shoe capital of China, are turning back to contract manufacturing for big reputed global brands. They are content providing support and processing services to these brands. But the good piece of news is that Nike which is facing troubles in its unit in Thailand has plans to add five production units in China.

A few others are taking advantage of the appreciation of the national currency and are upgrading equipments to be competitive as well as roll out quality products. The government in its own way has also contributed to reducing the miseries of these exporters by raising export rebates as well giving tax breaks.

Fibre2fashion News Desk - China


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