NEW YORK — Exhibitors from South Korea and China at a pair of trade shows in Manhattan last week expressed strikingly different views on how their businesses will be affected by the 2005 end of quotas on textiles and apparel among World Trade Organization members.
James Park, director of Seoul-based weaver Tae Woong Inc., said his company was taking a two-pronged approach in preparing for the event. His firm was one of 50 exhibitors at the Korea Preview in New York, which ran Sept. 22-23 at the Altman Building on West 18th Street.
On basic fabrics, the company is focusing on ways to cut costs and also trying to focus its efforts on selling to larger customers who can take big-run orders that allow the company to run its Taegu mill, which can produce one million yards of fabric a month, at higher rates of efficiency.
Secondly, the company is trying to develop more specialized fabrics that its competitors don’t produce, which, in theory, could command higher prices. He said the reason his company is making these changes is to prepare for an expected onslaught of Chinese competition when quotas are lifted.
“After 2005,” he said through an interpreter, “China will be in a better position to ship to the U.S.”
Uptown at the Jacob K. Javits Convention Center, where 150 firms exhibited at the China Textile & Apparel Trade Show that ended its three-day run on Thursday, voices were not so confident about China’s prospects.
“Maybe the lifting of quotas won’t make such a difference,” said Zhang Yan Kai, executive vice chairman of China’s Sub-Council of Textile Industry and the Textile Industry Chamber of Commerce, a promotions organization. “Maybe the boom will not be as big as we imagine it.
Through an interpreter, he also pointed out the bulk of the $250 billion in textiles that Chinese mills produce each year are bought by Chinese consumers, with about $60 billion in fabric being exported.
In remarks to the press prior to the show, sub-council vice president Xu Kunyuan said: “We have a very modest assessment of the international competitiveness of China’s textile industry after China’s accession to the WTO. Any exaggeration in this regard is not only unfounded, but is also harmful.”
According to Commerce Department data, for the year ended in July, Chinese apparel and textile companies exported about $10.7 billion in products to the U.S., up 44 percent from the prior 12-month period.
The officials’ comments came at a time of growing political concern within the U.S. about China’s surging exports. As reported, U.S. textile industry officials have called on the Bush administration to invoke the safeguard procedures in a U.S.-China bilateral trade agreement to limit the surge in imports of categories of goods on which quotas have already been dropped. They have also voiced complaints about China’s fixed exchange rate with the dollar, which many economists contend undervalues the yuan by about 40 percent.
Lobbyists and executives of domestic manufacturing concerns in recent months have cranked up the volume of their predictions that China’s growing industrial base will threaten the competitiveness of U.S. industry. Still, exhibitors at the event voiced varying opinions on what the lifting of quota will mean for China’s exports.
James Feng, a sales representative at Sherffer (USA) Co., a New York distributor for Jiangu-based sweater maker YunFu International Trade Co., acknowledged that so far “sales to the U.S. have been limited by quotas.” But, in reference to the coming end of quotas, he said, “Actually, we are not so excited about it because we don’t know for sure what is going to happen.”
His firm employs about 3,000 workers, who produce about 500,000 garments a year.
One prediction he made was that “prices will take a nosedive” as manufacturers from around the world scramble to maintain or grow their U.S. market share. That, he said, will only intensify the economic pressures that garment makers around the world are facing to boost productivity.
“Every year, buyers want better prices. If they paid $8 for something last year, they want it for $7.50 this year,” he said, adding, “We try to reason with them.”
Exhibitors at both shows said the price pressures in the U.S. market are especially intense and noted that European buyers, for instance, are not so focused on watching pennies. Still, they said there’s one advantage to U.S. customers that outweighs the problems caused by price pressures.
“The prices here are very cheap, but in the U.S. they can take bigger orders,” said Peppy Tang, a representative with jeansmaker Guangzhou Zeng Cheng Xili Co., which like many Chinese enterprises is vertical. His company employs 1,200 people in Guangzhou and produces about 400,000 pairs of jeans a month. He said the company likely would expand its facilities and seek to boost its U.S. business after the quotas are dropped.
At Korea Preview, most exhibitors said they were trying to specialize their production so as not to have to compete directly with Chinese mills.
Kang Dong-Hwan, a manager with Seoul-based Shin Hwa Trading Co., which serves as a sales arm of Kyongdoi-Do-based mill Hayoung Textile Co., said his firm has focused most of its production on high-quality fabrics made from rayon, as well as others made from unusual fibers, such as a bamboo-based yarn.
“The Chinese companies are more focused on polyester,” he claimed through an interpreter. “We are focused on rayon and higher-quality fabrics, we don’t think it’s direct competition.”
But the Chinese firms also had new product developments to show. One company at the Javits Center unveiled a soybean-based fiber.
“People think about soybeans only for oil, but there is also a lot of potential in the protein,” said Yang Shibin, vice general manager for Jianghe Tianrongsi Fiber Co., a Jangsu-based firm.
He explained that the fiber, which was introduced commercially in April, had been in development for about a decade. It’s made by extracting some of the protein from the beans — also used to produce tofu and other food products — and processing it into fiber.
The fiber had a soft, dry hand that Yang said makes it particularly suitable for “anything that touches the skin,” such as innerwear or children’s apparel. He said the company currently can produce 9,000 pounds of the fiber a year. He declined to provide details on price, but said it costs more than cotton and less than wool.
The China show, in its fourth year, featured fewer exhibitors than recent editions, where as many as 170 companies had exhibited. Organizers said that some exhibitors had run into difficulties obtaining their travel visas from the U.S. State Department at the last minute.
Chinese textile industry officials at the show said the nation’s industry currently employs about 15 million people and sustains about another 100 million rural cotton farmers. They also noted that last year China imported $14.36 billion in textiles and apparel.
As part of the conditions of its WTO entry, many of China’s state-owned companies have been privatized. Officials said taking into account the size of investment, about 20 percent of the volume of the market is controlled by state-owned firms. However, since many privately owned companies are smaller than the state entities, only 2 percent of all companies are state-owned.