GOLD COAST, Australia Aug 13 China's textile
industry, after surging to domination of world markets, is
losing its competitive advantage and some low-end operations
are moving to emerging producers, a leading Chinese textile
mill official said.
Rapid expansion of textile investment in many developing
countries in the last two years was producing oversupply and
sparking fears over earnings and the survival of many mills in
Asia, said Leo Yung, director of Central Textiles (HK) Ltd.
"Currently China is rapidly losing competitive advantage in
costs to other Asian countries such as Bangladesh, Vietnam and
India," Yung told the Australian Cotton Conference on
Many mills had been forced to switch from exports to
domestic sales, which now account for 79 percent of production,
This followed recent years of "drastic and significant"
migration of textile production from the United States, Europe
and Japan to developing countries such as China, India,
Pakistan, and Bangladesh.
Central Textiles has three spinning mills and a weaving
mill in Hong Kong and China.
More than 70 percent of world cotton is now consumed in
Asian countries, with China holding a dominant share of 42
Global demand for denim, at 6.5 billion yards (5.9 billion
m) a year, was swamped by current capacity of 7.7 billion
yards, Yung said.
"The 17 percent surplus in supply has already been leading
to falling prices in the market for some years," he said. "Many
textile mills in China, Pakistan and India are operating at
very small margins or even at a loss.
He added, "Many mills in China will be struggling arduously
and may even close down in one or two years, especially small
mills doing export business."
Oversupply had depressed prices along the entire supply
chain, hitting yarn prices in China, India and Pakistan.
Mills in China found their plight was being worsened by the
growth of cost-effective super-large textile mills, Yung said.
In addition, big retailers such as Wal-Mart of the United
States had developed distribution channels around the world
which had "enormous negotiation power to give prices one more
squeeze," he said.
China had been one bright spot in growth of the world
textile and garment industry, with double-digit annual growth.
But China's industry was reeling from an 18 percent rise in
the value of its currency since 2005, as well as higher costs
of labour, fuel, electricity and chemicals, along with a cut in
domestic tax rebates, official moves to slow the economy, and
Labour costs in China were now double those in Indonesia,
Vietnam, Pakistan and Cambodia, while labour costs in
Bangladesh were only one-quarter those of China, he said.
(Reporting by Michael Byrnes; Editing by Clarence Fernandez)