By  on February 25, 2008

BEIJING — Although China seems to be losing ground as the world's top apparel manufacturer, many experts say this is a natural part of its economic development.

"This trend has just started and various contradictions and problems will gradually arise," said Cao Honghui, a market economist with the Chinese Academy of Social Sciences, Beijing's top economic think tank.

Yet, he said, mature economies the world over — from the U.S. to Hong Kong — have been through similar circumstances, providing China with good examples of how to move its economy from one based on simple manufacturing to one structured on innovation and technology.

"It's a historical process and there is a need to implement coordinated policies," said Cao.

Luo Jun, secretary of the Asia Manufacturing Association, said China's economy is evolving from being one in a developing country, and, as a result, competition and prices are bound to increase. He said the new climate will contribute to a rise in the success of domestic companies, environmentally friendly production and better working conditions.

"It's a very normal thing to have this kind of trend of shift in manufacturing," Luo said.

In recent months, American and European apparel and textile manufacturers have become increasingly vocal about their dissatisfaction with certain growing trouble spots of producing in China. Costs are rising because of higher wages, a steadily appreciating yuan, stricter labor laws and rising domestic inflation. As the country loses its cost advantage, other problems, such as logistics and simple cultural gaps, have become increasingly apparent to Western companies. As a result, countries and areas such as Vietnam, India and Eastern Europe are emerging as strong competitors to the Chinese production powerhouse.

China had a 40.2 percent share of the U.S. apparel and textile import market last year. The country increased the volume of apparel and textile imports to the U.S. by 14.8 percent to 21.37 billion square meter equivalents.

But U.S. apparel importers did diversify their sourcing strategies. Imports from Vietnam increased 31.3 percent to 1.5 billion SME, shipments from India rose 2.5 percent to 2.7 billion SME, imports from Indonesia gained 1.6 percent to 1.62 billion SME and goods shipped from Bangladesh rose 4 percent to 1.55 billion SME.


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