This year, the garment industry will face complex trends in exports
Due to the growing uncertainties in the global market, China's textile and apparel exports are expected to encounter a challenging environment this year. A slowdown in worldwide economic growth, ongoing sovereign debt issues, pressure from the appreciation of the yuan, and rising costs of labor and raw materials are all contributing factors that could impact the performance of China’s textile sector.
Externally, while the European and American markets have shown some signs of recovery, the pace remains slow. In a context where international demand has not significantly expanded, China’s textile exports have still managed to achieve notable results. However, it is important to recognize that the current global economic recovery is sluggish, and consumer demand is not picking up as expected. This will likely put pressure on the export of Chinese textiles and apparel. Additionally, the continued appreciation of the yuan is becoming a double-edged sword—while it reflects the country’s economic strength, it also erodes the competitive edge of Chinese manufacturers in the global market, potentially leading to loss of orders.
As Zhong Shan, deputy head of the Ministry of Commerce, once put it, “If the water is heated to 99°C, it won’t boil, but adding just one more degree will make it boil.†This metaphor highlights the fragile state of many textile exporters. The average net profit margin for the industry is between 3% and 4%, rarely exceeding 5%. If the yuan appreciates by more than 5%, over half of the companies could face serious challenges. Moreover, if cotton import quotas remain restricted, the industry may suffer significant order losses after the currency’s appreciation, pushing profits close to zero.
Domestically, the textile industry is also grappling with rising labor and material costs. These pressures are expected to slow down the growth of China’s textile and apparel exports in 2011. Recruitment difficulties have become one of the most pressing issues in the garment industry. Before the Spring Festival, cotton prices experienced a volatile fluctuation, which hit the apparel sector hard. In 2010, despite regional differences, "recruitment difficulties" were the top challenge for the clothing industry. Even in Shandong, where conditions are better than in other coastal provinces, worker turnover rates range from 10% to 20%. This shortage of skilled labor has led to lower operational efficiency, with coastal areas reporting an overall operating rate of only 70% in 2010. Many large firms reduced their operational rates to 80% due to labor shortages and higher wages. Some increased outsourcing to maintain production levels, with about 50% of SMEs relying heavily on contract manufacturing.
Over the past two decades, China’s textile and garment industries benefited greatly from an abundant labor supply and a demographic dividend. However, the changing attitudes of the younger generation, along with structural imbalances in the labor market, have weakened the positive impact of this demographic advantage. While population aging plays a role, many rural workers lack the skills needed to transition into new jobs, further limiting the potential of the demographic dividend.
Despite these unfavorable factors, the transformation of traditional industries through high technology and the enhancement of innovation, technology, and brand value remain key strategies for improving international competitiveness. These efforts are essential for overcoming challenges and ensuring long-term growth in the textile and apparel sector.
Shaoxing Yingcheng Textile Co.,Ltd , https://www.sxyingcheng.com