Despite a number of challenges, China’s textile and clothing industry is set for further growth, while its competitors suffer declines as a result of cutbacks by retail buyers, according to a recent issue of Textile Outlook International from global business information company Textiles Intelligence. Although the Chinese textile industry faces rising costs, an aging population and, in some regions, labor shortages, it has done reasonably well in 2011.

During January–November, China’s business revenues and profits each rose by 27 percent, while its industrial output was up by 11 percent year on year. These figures were met with some disappointment, however, because profit growth rate during this period was 14.7 percentage points lower than in the first half of the year.

Several other industries in Asia also did less well in the second half of 2011 as Western retailers cut orders for the spring/summer 2012 season, fearing a slump in demand. Indian apparel exporters missed out on the chance to turn a fall in the value of the rupee into big orders. Even the industry in Bangladesh, which has enjoyed dramatic growth in investment and exports in recent years, reported a downturn in its exports to the United States during the first four months of the country’s 2011–2012 financial year. In Pakistan, apparel exports are expected to fall by 30 percent during the 2011–2012 financial year, with buying reported to be down by half in some cases.

Nervousness in the West has led buyers to make purchases close to the season, which is benefiting suppliers in close proximity to the world’s two major markets (Europe and the United States). Furthermore, Nike and Adidas have recently announced plans to increase production in South America. However, it is not their intention to replace China, and Asia in general, as a source, but rather to complement. Since October 31, 2011, U.S. apparel imports from member countries of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) were up by only 2.6 percent. Imports from China over the same period were down by 3.0 percent, not a dramatic change.

Looking at investment figures, it is difficult to foresee a massive switch in production any time soon. Shipments of many types of fabric machinery to Chinese mills surged to record levels in 2010, and the Chinese textile industry remained by far the largest investor.

Despite mounting pressures from rising costs, waning demand, restrained capital supplies and a shortage of funds for technological improvements, China’s textile industry is expected to grow at the same rate as, or even faster than, growth in international trade during 2012.

Source: Textiles Intelligence