According to an agreement between China and the EU, exports of China's textile products to the EU countries will not be subject to any quantity limits starting this year. And textile export quotas to the US will be abolished in 2009.
|According to an agreement between China and the EU, exports|
of China''s textile products to the EU countries will not be subject
to any quantity limits starting this year.
Beijing Topnew Group is one of the municipality's largest textile exporters. The company earned 73 million US dollars in export revenue last year through its manufacturing for established international brands, like H&M and Columbia.
EU is Topnew Group's largest export market, accounting for 60 percent of its export revenue. The Chinese manufacturer predicts a 50 percent increase in its exports to the area this year, as a result of the scrapping of the export quotas.
Ma Hui, Vice GM of Beijing Topnew Import & Export Co. said "The situation has already begun to change. We have received more orders from H&M, one of Europe's largest apparel companies, for pullovers - a category that was previously subject to quota restrictions."
According to a new agreement reached by China and the EU last October, a joint import surveillance system will replace the previous quota arrangement this year. The goals is to ensure a smooth transition to free trade in textiles.
The new international trade landscape and the ever increasing domestic labor costs in the past few years have pushed many Chinese textile manufacturers to re-think the direction of their development. Shifting to more technology intensive production with higher added-value is the answer for many large, capital-rich manufacturers.
Topnew Group poured some ten million US dollars into upgrading its manufacturing facilities over the past two years. Improving the quality of its products was the main goal.
Ma Hui said "It's imperative for us to streamline our product structure. We would not be able to survive if we stuck to low-end production. We must move towards middle- to high-end manufacturing."
The China Chamber of Commerce for Import and Export of Textiles says domestic manufacturers have matured. That's why it predicts the scenario of explosive growth in 2005 will not take place again this year.
And despite the expiration of quotas between China and the US in 2009, experts have warned domestic enterprises not to be overly optimistic.
Wang Yu, Vice Chairman of China Chamber of Commerce for Import & Export of Textiles said "It will not be impossible for the US to adopt anti-dumping and anti-subsidy measures after the quotas system expires next year. So the prospect is still unclear in terms of Sino-US textile trade."
In addition, the anticipated appreciation of the yuan, export tax rebate reductions, and increases in labor and other manufacturing costs will further squeeze the already slim profit margins of Chinese textile manufacturers. For domestic textile exporters, both opportunities and challenges lie ahead.