By  on April 19, 2005

BEIJING — Chinese textile manufacturers are expressing mixed opinions about the state of their industry more than three months into the post-quota era.

Their main concern is that many buyers are holding back because the U.S., the European Union and other major importers may impose temporary safeguard restrictions on Chinese goods. The U.S. is reviewing several safeguard cases and Turkey and Argentina already have imposed safeguard quotas.

“Not much has changed since last year,” said Zhang Hong Shu, general engineer for the Bao Lei Group, at the recent Intertextile Beijing trade fair, which ended a three-day run on April 1. “Our number of orders has not increased. We’ve found that foreign buyers are still very cautious. They’re worried about antidumping regulations and safeguards, and they are waiting to see what happens.”

The Wujiang-based company, which makes cotton fabrics and sells about $25 million worth of goods a year to the U.S., Europe and at home, has expanded its labor force and production equipment to improve the quality of the fabrics it sells rather than to meet demand, Zhang said.

“The competition among Chinese textile companies has greatly increased this year,” he said. “We have to constantly improve our product to find a way to remain competitive.”

Many of the other Chinese textile manufacturers at the fair — representing more than 60 percent of the 560 exhibitors — echoed a growing concern over the increased competition between local textile companies, now all vying for a piece of the post-quota profits.

“There have been a lot of new textile companies started here in the past few years,” said Fu Guo Qing, president of Shaoxing Yonson Industry & Trade Co., which produces fabrics from man-made fibers, as well as cotton. “There is a lot of opportunity to make a profit in textiles following the end of quotas and many people are looking to take advantage of that.”

China’s overall exports were up 36.6 percent, to $95.28 billion for the first two months of 2005, according to the Chinese Ministry of Commerce. Analysts estimate that the bulk of that growth is coming in textiles and apparel.

Manufacturers are turning to distinctive products as a way to stand out from the growing crowd. Yan Xin Ning, general manager of Dandong Unik Textile Co. of Dandong, brought the company’s new dyed-denim line to the fair for the first time and said she was pleased with the response it received.Dandong Unik is one of thousands of new textile companies formed in China in the past two years, industry experts said. Yan said it was attracting attention for its creative colors and splatter-style patterns.

“This is a good time to enter the textile market, but we’ve had this product in the works for a long time,” Yan said. “It’s been a real benefit to be a unique brand right now. Because of this, we’ve had a lot of interest in our company during the fair.”

While the glut of competition is the most pressing problem many companies said they are facing, others also expressed concern about possible taxes, safeguards and antidumping legislation enacted by the EU or the U.S. Most of the fair’s vendors spoke out against the possible restrictions, which might severely limit the potential of their post-quota prosperity.

“A restrictive policy would affect all companies, not just the problem makers,” said Jimmy Zhang, a foreign trade department representative for Fuzhou Huaguan Knitting & Textile Co., based in Shaoxing. “Not every company in China is intent on lowering their prices and flooding the market, and that has to be considered.”

Many manufacturers said they have been hesitant to invest heavily in more machinery and labor until the threat of restrictions has passed.

The Yu Yu Textile Co. of Shanghai hasn’t added any more workers or equipment to its factory, but instead has beefed up its sales team in an effort to gain more customers.

The company “just started to see a very small increase in orders, but we’re hoping a larger sales team will be able to improve on that,” said Alan Ran, a sales executive with the firm, which specializes in cotton fabrics and man-made fibers.

Ran said Yu Yu Textile wants to double its export sales — now 40 percent of its total business — by the end of this year.

Despite the anxiety that was an undertone of the fair, some exhibitors said they were pleased with business in the post-quota era.

Joseph Chang, general manager of Unitex (Shanghai) Material Corp., a Taiwan-based manufacturer specializing in embroidery and lace, said he was glad that he joined the trend of Taiwanese textile enterprises that have relocated production to China. The company moved part of its manufacturing unit to Shanghai almost two years ago to take advantage of China’s cheaper costs and more complete supply chain.“Before [we came to China], our orders were smaller,” he said. “The expansion has allowed us to do more bulk orders than in the past. We were able to increase our sales 12 percent in the first year and are projecting an additional 12 to 16 percent growth this year. And since the end of quotas, we’re seeing more overseas buyers than ever before.”

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