For several Chinese textile and garment enterprises, the year 2012 is likely to be the most challenging since 2000, according to a report released by the Development Research Centre of the State Council or Cabinet.
The annual report on Chinese enterprises' development says global demand for textiles and garments is likely to decline further this year, which would increase the troubles of several manufacturers who are already confronting the rising costs of raw material and labour.
Zhao Changwen, Director of Development Research Centre, suggested that the textile and garment firms in China, particularly small and medium sized enterprises (SMEs), should focus on brand building and product design, and thereby try to move up the value chain.
Such a strategy may help the domestic enterprises to enhance their exports and improve their profit margins, Zhao said.
In fact, several SMEs in the coastal city of Wenzhou in Zhejiang province have already adopted the strategy in the midst of rising production costs and decline in exports. Some of them have shifted their focus to the domestic market.
But, over 80 percent of garment manufacturing firms in Wenzhou are finding tough competition in the domestic market, according to the Wenzhou Clothing Chamber of Commerce.
The Chamber adds that several companies are confronting issues such as lack of innovation in product design and declining overseas demand.
The Chamber is helping Wenzhou garment firms to restructure, by manufacturing products attuned to the emerging markets and by building their own brands.
Fibre2fashion News Desk - China