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All Eyes on China at Asian Shows

NEW YORK — For most of its centuries of relative isolation during the last millennium, the population and leaders of China regarded their country as the center of the world. In today’s textile industry, that point of view has been widely...

NEW YORK — For most of its centuries of relative isolation during the last millennium, the population and leaders of China regarded their country as the center of the world. In today’s textile industry, that point of view has been widely adopted — with the phaseout of quotas ticking closer, executives from all over the world make almost no strategic decisions without taking China’s influence into account.

That became clear at last week’s round of textile shows in New York, where companies from across Asia — from Turkey to Japan — showed their wares. Whether they used China as a foil — as did the Turks, who argued their quality was higher along with their prices — or saw it as an opportunity — as did the Japanese, several of whom said they were looking to move production into China where wages are lower — almost all of them were talking about China.

“China is the future of manufacturing,” said Taki Tatsuta, a New York representative of Osaka, Japan-based Shinnaigai Textile Ltd. This company, which produces specialized lyocell yarns and fabrics in Japan, has started to outsource garment production to Chinese contractors and is looking to move more production into China.

Quotas are to be lifted among all World Trade Organization members in 2005, but until then, getting quota rights in China can be a problem, he noted.

Turkish manufacturers, meanwhile, are trying to ratchet up the fashion component of their fabrics and garments in an effort to produce styles that can’t be found in China.

“There is no way we can compete with the prices from China,” said Ahmet Oksuz, owner of Kipas, a vertical maker of casual sportswear with offices in Istanbul. “It’s impossible for Turkey. The labor costs are very high if you compare them to the Far East. That’s why we’re trying new strategies.

“Turkey is changing its industry, getting more into fashion development,” added Oksuz, who also serves on the board of the Istanbul Textile & Raw Materials Exports Association.

ITKIB sponsored the Turkish Fabric Exhibition, which featured 57 exhibitors and ran July 15-17 at Cipriani restaurant. Three other Asian shows ran during the week — all clustered around the two high-end European exhibitions, European Preview and I-TexStyle.

Across the street from Preview, at the Tonic restaurant on West 18th Street, the Tencel lyocell division of Acordis Cellulosic Fibers sponsored Innovation Asia, an exhibition of 16 mills and spinners from across the continent, including Shinnaigai Textile.

Further uptown, Lenzing AG, a maker of rayon and lyocell, sponsored an exhibition of 14 South Korean spinners and mills called Asian Source at the Millennium Hotel on Tuesday through Thursday. Closing out the week on Thursday and Friday, the Taiwan Textile Federation ran PanTextiles New York, with 27 exhibitors at the Hotel Pennsylvania.

Turkey’s textile and garment industry has been most focused on the European market, where it sells 80 to 85 percent of its exports, but in recent years has tried to increase its sales to the U.S.

Still, many of the exhibitors at the Turkish show said they’ve found American buyers to be resistant to their higher prices.

“It’s not an easy market to sell our products, in terms of price…but there are opportunities,” said Nezih Rodop, managing partner at Fabrix Dinamik AS, an Istanbul-based marketer of cotton fabrics that represents mills in Turkey and Brazil, who said he was trying to boost his U.S. business.

While Turkey’s production costs may be higher than those of many Far Eastern nations, they’re still lower than Europe’s. That prompted the Italian mill Cecchi two years ago to set up a joint venture cotton mill in Turkey, said Luigi Vitagliano, operations manager at Cecchi Istanbul Textile.

“The main reason we produce cotton fabrics in Turkey is to get competitive prices,” he said, noting that Turkey grows a lot of cotton.

For most of the east Asian firms exhibiting at the show, quota rights —?who has them now, how much they cost and what will happen when they’re no longer necessary — were a major point of concern. In many textile-producing nations, quota rights are traded like a commodity and can have a significant effect on the final price of a garment. Sometimes the cost of quota can make a business untenable.

“Four or five years ago, I was shipping a lot of fabric for Reebok. But then the quota prices got to be too high, so I had to pull out,” of the U.S. market, said Steve Lin, general manager of BSP (Taiwan) Co., a Taipei-based weaver of synthetic fabrics, at the PanTextiles show, his first sales trip to the U.S. in years. “Now, in 2005, quotas will be lifted. So I want to get back into position.”

Lin said he’s looking forward to the abolition of the quota system. Of the system as it is now, he said, “It’s not fair. It’s not logical. People make nothing and they have the quota and they sell it. And their profits are higher than mine. Quota is a big piece of our expenses.”

Where Lin sees an opportunity, many textile makers also see a threat — that with quotas removed, China and India will be able to capture enormous market share.

“The competition now is in China and is intense. When they lift quotas, for cotton, China will have a big impact,” said Isabelle Cheng, area manager at De Licacy Industrial Co., also of Taipei, at the Innovation Asia show.

Chinese companies are also positioning themselves for 2005.

Converter Ken Chen, in the sales department at Shanghai-based KaiLin Enterprise Co., said he currently does no business in the U.S. because he has no access to quota. He’s looking forward to the fall of that barrier.

“That’s why I’m here,” he said at PanTextiles. “I just want to get to know the customers, so we can do business here in 2005.”

While China’s prices are low, some manufacturers said they had found lower-cost places of doing business.

Andrew Yin, sales manager with Taipei-based knitter K.T. & Ho International Corp., said his company four years ago opened a factory with 400 workers in Myanmar, where, he said, wages are about 30 percent lower than in China.

Myanmar manufacturing has been the subject of much controversy in the U.S. The nation is run by a military regime that has been accused of forcing its citizens to toil on government projects, like road building.

“We are aware there is a political problem because everything is controlled by the military government. But,” he claimed, “conditions for workers are fine.”

He suggested the recent release of opposition leader and Nobel Peace Price recipient Aung San Suu Lyi from house arrest may be a sign of the government becoming less repressive.

Quota and wages are by no means the only economic variables influencing the textile business. The recent slide in the value of the dollar has also had an affect on importers, particularly those from higher-cost countries like Japan.

Osaka-based fabric maker Kuwamura Co. about a year ago decided to re-enter the U.S. market because the then-strong dollar had made its products more price-competitive. The subsequent fall in the dollar has left its New York rep, Tommy Sueda, feeling something like whiplash.

“That hurts us a lot,” he said. “It’s made it a lot harder to be competitive.”

He said he had recently begun discussing a sale with a customer when the dollar was equivalent to 130 yen — as it was in April — and by the time he had closed the sale the dollar had slid to about 115 yen. The dollar was 115.9 yen on July 16, when Sueda was interviewed.

“We can’t raise the price so we need to absorb this,” he said. “But it’s difficult.”

The expense of producing in Japan has Kuwamura also looking for lower-cost places to produce its goods.

“If we made the same thing out of China, Taiwan or Korea, the prices would be more competitive,” he said. “Effective with 2005, we think we’ll need to have Chinese production. We are looking into it.”