Interstoff Talk: Fending Off China

HONG KONG — While many eyes in the industry are firmly focused on China’s impressive prospects for growth after quotas are lifted in 2005, the most recent edition of Interstoff Asia featured a push by manufacturers from the Association of Southeast Asian Nations.

The ASEAN group merged their Source It trade show — which was in its second edition after debuting last year in Manila — into the Interstoff event.

“Spurred by 2005, we are supporting ways to enhance cooperation between members,” said Michael Que, chairman of the ASEAN Federation of Textiles, which coorganized Source It. “We hope to establish ASEAN as a trading block. Source It will be AFTEX’s show of choice. Hong Kong was chosen for its proximity to China. This is where the buyers are.”

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The 10 ASEAN nations are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

While Interstoff Asia’s exhibitors continued to show a range of textiles for the spring 2005 retail season, especially high-performance fabrics, cottons and silks, Source It encompassed everything from fibers and yarns to finished garments, albeit on a smaller scale.

With the addition of Source It, the total exhibitor base for the events grew to more than 400 companies from 21 countries, which attracted 10,203 buyers. That brought the attendance back to the level it had been at in 2002 — before last spring’s SARS outbreak crimped last year’s show.

“ASEAN’s members have competing interests, but we try to seed commonality and strategize,” said Que. “Source It is able to work for countries that are at very different stages of integration in the industry.”

The talk of the show, which ended March 25, was whether ASEAN’s plan to form an economic block that could compete with China post-2005 would work.

Michael von Zitzewitz, chairman of Interstoff organizer Messe Frankfurt, said Asian nations need to take advantage of their location and of each other. He said he sees the EU as a model for Asia’s future. “There is a great chance to not make the same mistakes that were made in Europe. Working together in globalization does not mean that you work against ‘regionalization.’ Your neighbor is your best trading partner.”

But access to the U.S. market remains a goal for many, and securing free-trade agreements with Washington — as Singapore has just done — is seen as paramount.

Edward Ang, the ASEAN Federation of Textiles’ delegate from Singapore, said free-trade agreements between Asian countries and the U.S. might be easier to come by if deals are not negotiated one-on-one.

“Maybe individual ASEAN countries can have free trade with the U.S.A., but maybe cumulatively ASEAN will have more negotiating strength,” he suggested. “We can pool our resources, raw materials and human resources to form a block.”

William Gunther, associate director for Southeast Asia at Cotton Incorporated, said, “Source It is a big boost. We can see that it won’t be all China after 2005. There are others who are willing and able to compete in quality and quantity. They won’t roll over and play dead yet.”

China’s domestic cotton prices have risen sharply in the last year and the country does not produce enough of the fiber to meet demand. As Gunther put it, “China is wonderful for us. We want to encourage the consumption of cotton against man-made fabrics no matter where it is.”

But not everyone was so happy.

Anjali Gewali, senior merchandiser for Hong Kong-based denim market Kavi International, which has three sourcing offices in China but produces its fabric in Bangladesh, said ASEAN’s hopes are futile.

“It won’t work. China is very strong, no matter what,” Gewali said. “It was China that raised cotton prices. They started it and the effect was global. It will be like this from now on.”

Still, Gewali saw some potential for other countries: “Bangladesh will survive…It has some advantages. There are buyers who want product made there.”

Se Lee, part of the Asia Sales Team for South Korean fiber maker Hyosung Corp., said his company keeps expanding “just to meet customer demand.” Hyosung, which produces such brands as Creora spandex and Mipan nylon and is the world’s fourth-largest supplier of nylon, expects China to be as much a consumer of fabrics as a competitor in the making of them.

“Some people worry about China,” commented Se, “but the Korean industry has merits, including technical know-how. In this area, Taiwan is our biggest competitor.”

David Lee, manager of Taiwan’s Uan San Textile Co., is looking to innovation for future success. His company has patented a technique for using recycled plastic bottles in producing denim. (Soda bottles can be broken down into the same chemical raw materials used to produce polyester fiber.)

“Our products are high end,” said Lee. “We know our weakness compared to Chinese factories. There is no way we can compete on price, so we make special designs and we can be flexible in order size.”

Such amenability is exactly what appeals to Sonjia Norman, creative director of Chibi. The designer said she has suppliers from Japan, Taiwan and Hong Kong.

“I don’t need performance fabrics. Hand feel and quality are most important — and cost is the million-dollar question,” said Norman, who attends Interstoff every year. “I am always looking to source new techniques, printing, studs, fabrics, anything. And I always find something.”