Textile industry is not only a traditional pillar industry and an important livelihood industry, but also has more obvious advantages among international competition, and occupies an important position in China’s exports trade. Since the financial crisis broke out, the global economy has been badly hit. Because China’s textile industry and textile enterprises have their own problems, which make China’s textile industry face unprecedented challenges. China’s textile industry should enhance technological innovation and brand building, implementation of management methods and export market diversification, government to strengthen the effort of macro guidance and support, establishment of trade friction arly warning mechanism, to deal with the crisis.
1.Introduction
The financial crisis in the second half of 2008, made some major developed countries in Europe and the United States’ economy went into the worst recession, which has brought a heavy blow to many developing countries and regions’ export-oriented economy. As the financial crisis spread to the real economy, the international demand declined significantly. As the largest textile-producing countries in the world, China’s textile industry has also suffered a dramatic impact. China’s textile industry had a marked increase tended to decline for the first time after consecutive years of steady and rapid growth. In 2009, the impact of international financial crisis was still lingering, the international market remained in the doldrums, and the textile industry is still facing with the non-optimistic external situation. In the harsh international and domestic environment, in order to cope with financial crisis and achieve sustainable growth of China’s textile industry, study the impact that the international financial crisis on China’s export trade has important theoretical and practical significance. Most of the domestic and foreign scholars are concentrating on the perspective of the impact that financial crisis on export trade, to study the situation of China’s textile industry and made a number of coping strategies, or comparing the domestic and foreign policies and economic environment trajectory to the study of the development trend of China’s textile industry then put forward some guidance. But it’s still relatively small to study in perspective of combine the status of the Chinese textile industry and their problems, as well as the financial crisis triggered a chain reaction. Only in-depth study of the financial crisis and Chinese textile industry its own problems, we can be more targeted to guide China’s textile industry to deal with the crisis, otherwise, just remain at the surface of a general study is no practical guiding significance. This paper based on reviewed the literature and relevant literature at home and abroad, through in-depth analysis of the status quo and existing major problems, as well as the financial crisis on the real impact of China’s textile industry, ompared some of the data in recent years, made corresponding countermeasures for the characteristics of the textile industry of our country.
2 Analysis of China’s textile industry development
2.1 China’s textile industry development and its importance
Textile industry is not only a traditional pillar industry and an important livelihood industry, but also has more obvious advantages among international competition, China’s textile exports account for the global textile and apparel exports of about 30%. Since1980, textile exports has been the first in China, the huge trade surplus of import and esport trade became an important source of China’s foreign exchange earning and capital accumulation. The proportion of textile industrial output of GDP is rising, accounting for about 6.5% in 2004 and 2005, in 2006 rose to 7.3%, in 2007 to reach 8.0%, although in 2008 the proportion has dropped slightly, also reached 7.03 %. China’s textile and garment industry employed directly more than 20 million people and indirectly related to the livelihood of 100 million farmers, which is one of the most important and most basic social responsibilities for China’s textile and apparel industry. For a long time, the development of China’s textile industry not only solve more than 10 billion domestic residents dress issue, provided a complete for related industries, but also played an important effect in stimulating economic growth, accumulating construction funds, solving domestic employment and increasing exports and foreign exchange. But the RMB continued to appreciate, the export tax rebate rate cut, a substantial increase in business costs as well as the global economic recession triggered by the financial crisis and so on, made China’s textile industry faced unprecedented challenges and crises. According tothe Customs statistics of China, from January to November in 2008, China’s textile and garment exports amounted to 173.212 billion U.S. dollars, up 7.82 percent growth rate was down 12.25 percent from a year earlier. Excluding price factors, in 2008 from January to November the number of China’s textile and garment exports increased by only 1.20% growth rate was down 9.32% from a year earlier. Textile and clothing exports are slowing down have a great impact on employment and business, the survival and development of China’s textile industry’s has been a severe test.
2.2 The analysis of major problems that China’s textile industry facing
2.2.1 Production costs continue to rise
environmental issues have become increasingly prominent Most of the textile industry bear the high cost of raw materials and high energy, while the textile industry is labor-intensive industries, with the promulgation of the new labor law, its social responsibility system costs and social costs will increase, which are directly or indirectly push export prices higher, with continued appreciation of the RMB and the continued rise of bank loan interest rates, the textile products are less competitive in the market, the economies of scale and low-cost advantage of China’s textile industry has been gradually disappearing. The textile industry is one of the more serious environmental pollution industries. Since relevant government departments have recently stepped up examination in environmental standards of printing and dyeing industry, as well as to raise water prices, corporate relocation, to promote companies to reduce pollution. The productivity in many areas of domestic textile printing and dyeing enterprise suffered different degree impact. For some enterprises, low costs, production equipment and technical level, will be eliminated under the influence of the policy.
2.2.2 Lake of innovation sense and independent brands
At present, China has few low-tech and high added value functional textiles for industrial use. Textile industry production is mainly in batch processing, major providing middle and low products for mass consumption, a serious shortage of R&D and technical input, lack of independent innovation. Many enterprises engaged in export garment is just foreign brands’ processing plant, blindly rely on foreign trade agency orders, export product structure is not reasonable. More than 50% of clothing exports are processing; more than 30% are importing country provide trademark, style and paper comp; own-brand apparel accounted for only about 10%, and the design development level is not high, can not independently design and produce fmarketable products, and thus less competition in brands.
3 The influence of global financial crisis on China’s textile industry
3.1 Slowdown in economic growth and market demand
As the financial crisis deteriorates, many countries, such as the United States, Japan, the European Union, have always been in economic recession, which impair international market demand. China’s textile enterprises have to adjust the rate of production in order to relieve the operational pressure and survive in changes in the market by cutting production and reducing inventory. Such actions decelerate textile’s production and exports totally, and shrink the ratio of investment growth. According to the data of China’s Textile Industry Association, in 2008, the gross industrial output value of China’s textile enterprises amounted to ￥ 3.478061 trillion, increasing 13.73% compared with the same period of the previous year, but falling 8.84% in acceleration. And in the first eleven months of 2008, total profit of textile enterprises reach to 104.225 billion, but falling 1.77% compared with the same period of the previous year, and falling 38.76% in acceleration; profit margin is just 3.45%, lower than the same period last year by nearly 14%. And in whole year of 2009, exports of China’s textile industry is 1713.32 million U.S. dollars, lower 9.65% than the earlier year; and imports is 16.924 billion U.S. dollars, lower 9.24% .
3.2 An increase in bad loans of exports and difficulties of capital turnover
The financial crisis not just strike financial institutions of the West but also financing chain of companies. While the direct effects to our country is retrogression in the solvency of the foreign importers and increase in cycle and risk of money recovery. Due to a survey, the importers from the West prolonging the cycle of paying money significantly in recent months is very common, causing China’s export enterprises to extend the cycle of fund recovery, slowing down the efficiency of loan cycle. In this case, the decline in the efficiency of the funds caused by financial crisis will obviously increase the financial pressure on textile enterprises, such as purchase for raw material, paying for workers, repaying loan of a bank.
3.3Intensifying international competition and trade protection
After the outbreak of the financial crisis, the trade protectionism has been prevailed in the field of textile industry, which puts increasingly severe pressure on the exports of Chinese textile, particularly in the first half of 2009. The protectionism, such as recall notifications of the European Union continuously, the “buy American” provisions of Obama administration, and more anti-dumping cases of India to China, makes greater cost pressures and risks of policies and market on Chinese exports of textile. Based on the China Textile Industry Association statistics, in the first three quarters of 2009, the alert bulletins of EU on Chinese textile and apparel products surge up to 153 totally, increasing 6.29 times compared with the same period of the previous year, which account for 20.84% in whole China alert bulletins while only 3.73% in last year over the same period in China textile and apparel products. At the same period the U.S. issued 21 recalls about textile and apparel products of China, increasing 10.53%. Also India has also imported 11.38 U.S. dollars per kilogram as anti-dumping tariffs t from China viscose rayon yarn acquisition to protect domestic industries.
4 The corresponding strategy of China’s textile industry
4.1 Strengthen technological innovation and brand building, to achieve the textile industry of industrial upgrading Facts have proved that if the textile industry exporting production to world markets just rely on low cost, they will be very vulnerable to international economic situation and trade policies, and more easily to be fined because of prosecutions against low-cost strategy, which is not conducive to the entire textile exports. In order to enhance product quality and the competitiveness of products, the textile industry should focus on technological innovation, and constantly increase the scientific and technological input to establish the overall product development system, in particular, to strengthen high-tech, functional, differential fiber research and development and form of its own technology brand. Under pressure of the current situation of trade and environmental issues, the textile industry should be accelerated industrial transformation and upgrading, exploit of new technology in textile processing, develop green and environmentally friendly textiles actively, strive to obtain export “green pass” and go green sustainable development road. Meanwhile, the Chinese textile industry should dominate the market by information technology, adhere to combine internal and external information, analysis and establish of a sound global procurement and supply information systems and industry information network to adapt to the trend of world consumption and textile trends, and thus win the market.
4.2 The implementation of scientific management methods and export market diversification strategy
For a long time, China’s textile mainly exports to three markets, the United States, European Union,Japan, which reflects China’s textile trade has a strong dependence and instability. The concentration in some countries’ markets has led to the conflict on China’s textile products to protect their own markets and respond to the problem of unemployment, and now under the influence of the financial crisis, China’s textile exports encounter more difficulties. Therefore, our textile industry should efficiently implement the management methods and export diversification of the textile production. Enterprises should select and plan to develop the potential markets, reduce risks of market concentration, promote China’s textile trade for sustainable, stable and coordinate development. On the other hand, implement of the “going out” strategy. At present, some countries and regions in Southeast Asia and Latin America already have a textile industry base and lower-price labor, as well as favorable foreign capital policy, domestic enterprises can consider to build factories there, avoiding the fierce domestic competition and the regional restrictions on the importing country, or acquisition of the importing country textile producers, thereby linking the research and development, design, brands, retail outlets and other sectors in order to circumvent trade barriers.
4.3 Strengthen macro guidance and support efforts to establish early warning mechanism of trade friction Textile industry is still an important Chinese traditional manufacturing industry and has main effect on employment. So Government should support this labor-intensive development of the industry on national policy in order to maintain the current production and operation stability of textile enterprises. Meanwhile, to enhance the international competitiveness of the industry, the Government should pay close attention to formulate relevant policies and measures for technological introduction standard of raw materials, semi-finished products, thereby consolidate the overall textile industry technical capability. Facing national trade protection measures, the relevant departments should establish a sound early warning mechanism for textile exports. Besides, they collecting, collating and publishing timely information on international textile trade friction, which provides enterprises with comprehensive,objective and timely information service to guide enterprises to promptly adjust the investment and business activities. Once trade disputes generated, we should strengthen the coordination and cooperation among the government, industry associations and enterprises. Using international trade rules, we formulate countermeasures and response positively. And, through a variety of channels and joint efforts, we can resolve problems in order to maintain a fair trading environment.
5 Conclusion
The outbreak of the financial crisis makes a series of new changes of the external economic and policy environment in the textile industry, which has brought many problems, such as China’s price competitiveness of textile products gradually weakened, the international textile market shrinking, the funds withdrawn from circulation export textile enterprises slowing down, the trade protection against Chinese textiles frequently, to China’s textile industry that has developed strongly. So that, after the consecutive years of steady and rapid growth, for the first time a marked increase tended to decline in China’s textile industry. Faced with these grim situation, China’s textile industry must face up to problems in their own development, to deal with difficulties in a positive and rational attitude, to find effective and feasible strategy to tackle the textile industry to enhance technological innovation and brand construction, textile industry the industrial upgrading, enterprises management methods and export market diversification to cope with their predicament, the government efforts to strengthen macro guidance and support and the establishment of trade friction early warning mechanism to guide the development of China’s textile industry. I believe that under the influence of macroeconomic policy of the central government to stimulate domestic demand and industrial revitalization,in the textile industry’s own positive response, the Chinese textile industry will be able to receive financial crisis and the test of baptism, and change the challenges of the financial crisis into industrial development opportunities. With the development of overall domestic and international economic situation, China’s textile industry is no longer far away from the next spring.