Workers at a clothes manufacturing factory in Lianyungang, Jiangsu ProvinceWorkers at a clothes manufacturing factory, China - 13 Feb 2019

SHANGHAI — As the world’s largest textile producing country, even small shifts in China’s manufacturing mind-set can reap monumental changes internationally.

China’s apparel sector is turning its focus toward environmentally friendly, sustainable practices, partly due to the demands of overseas buyers, as well as a growing green wave among domestic consumers. Big apparel manufacturers, with money to invest, are improving their processes from the beginning to the end of the supply chain, using new technology to boost their environmentally friendly credentials. The speed of this shift to greener manufacturing is led by an industry eager to scale the value chain and is being amplified by some of the world’s strictest environmental regulations imposed by the Chinese government.

The stringent environmental regulations were first rolled out by the government in 2012, with seven laws being enacted covering land, air and water protection, among other areas. Now, the Environmental Protection Law follows the United Nations’ Sustainable Development Goals, released in 2015. “The introduction of environmental protection laws by the state is in line with the trend of global sustainable development and an inevitable requirement for China’s high-quality development,” said Chen Dapeng, president of the China National Garment Association.

“The laws and regulations that the Chinese textile and apparel industry comply with in environmental protection are the most stringent [in the world],” said Chen, giving the example of the dyeing and finishing industry where, he claims, China far outpaces the EU and Japan in emission standards.

Even with the rigorous manufacturing regulations put in place in the country, the government still needs further reforms to make growth sustainable, greener and more inclusive, according to the Organization for Economic Cooperation and Development’s Economic Survey of China, released last week.

For 2018, carbon dioxide emissions in China were expected to rise by 4.7 percent, according to the Global Carbon Project, leading analysts to believe that emissions in the country have not yet reached their peak. However, the OECD noted in its report that environmental data falsification or manipulation at the Chinese surveillance facility is rampant, so this emissions figure could be higher. In a summary of the survey, the OECD recommended that regulations should still be enforced more strictly, fines for polluters should be raised, along with the raising of an environmental tax. It also noted that investment in the treatment of environmental pollution has been stagnating and access to sanitary facilities in rural areas is limited.

Last year, China introduced the Environmental Protection Tax, which replaced the previous pollutant discharge fee. This tax does not cover carbon dioxide emissions, but it does tax companies producing noise, Sulphur dioxide and water pollution, as well as solid waste pollution. Last month, the country also released the first draft rules for its nationwide Carbon Emissions Trading scheme, forcing some companies to cut emissions or buy carbon allowances. The first trades are slated for next year.

“Through technological innovation and management innovation, China’s textile and apparel industry has made great progress in manufacturing technologies and production methods of green manufacturing, such as energy-saving and emission reduction technologies, recycling of waste textile resources, development of eco-friendly textile chemicals, and continuous promotion of the transformation of scientific and technological achievements,” said Chen. He believes that, “The green development practice of China’s textile and garment industry will certainly promote the sustainable development of the global textile and apparel industry.”

The sustainable development of China’s textile and apparel industry involves multiple stakeholders, including the government, industry and enterprises, as well as private initiatives.

In order to stay competitive internationally, and avoid falling foul of any new environmental regulations put in place by the government, many apparel manufacturing companies are forming industry-led organizations devoted to the research and development of sustainable production methods. Often with the support of government agencies, they are able to pool knowledge and research together to better leverage their position in the global market.

One such private initiative is the Collaboration for Sustainable Development of Viscose (CV), founded last year by 11 manufacturers of viscose that between them make up 60 percent of the global production of the material. “It is industry-driven, with some state-owned companies and also trade associations — so it’s a private and public-sector collaboration to drive the industry toward sustainable development,” said Sharon Chong, vice president of sustainability at Sateri.

Leading the charge for sustainable manufacturing in the viscose industry makes good business sense, according to Chong. Compliance gives the companies a legal license for operation, and for industries relying on natural resources as raw materials, such as viscose manufacturers, managing and properly valuing natural resources is imperative to ensuring continual business viability. Sateri also counts the demand in the market for sustainable products as well as the opportunity to achieve a competitive edge as reasons to collaborate in this initiative.

The VC organization’s research and development efforts are beginning to bear fruit in this case. “There are a number of R&D efforts in the textile industry focusing on circularity, closed loop, alternative fiber and disruptive technology. Most are still at the pilot stage, with some showing potential for scalability and large-scale commercialization, particularly on the circularity business model front,” said Chong.

The shift toward greener manufacturing could also be a reflection of consumers’ interest in environment and resource protection, with Millennial and Gen Z shoppers showing a high propensity to buy based on the environmental impact of the product. Brands such as Gucci, Zara and H&M are already proving that there is demand for eco-friendly apparel in the country.

“People no longer only pay attention to the product itself, but pay more attention to the environmental impact of the production process. Pursuing green products and environmental awareness is becoming a new consumer trend and lifestyle,” said Chen. “On this basis, the activities of grassroots organizations and private initiatives have played a certain role in promoting the implementation of environmental regulations,” he said.

Although it would be nice to believe that these industry-led initiatives are completely changing the landscape of manufacturing in China, Dan Wang, analyst at the Economist Intelligence Unit believes that they have limited impact besides raising public awareness — although, it could be argued that consumer education is equally important. “The main obstacle comes from the government restriction on the scope of their research. If they clash with the economic development plan, industrial policies or political decisions, then they run the risk of being shut down,” she said.

Wang believes that the environmental protection regulations enacted through administrative orders are effective in reaching targets, but lacking in sophistication. “Different regions and different types of clothing are subject to the same set of rules, which is unfair in many cases. China also is striving to upgrade its industrial structure towards high-tech, and apparel making, which is considered low-tech, no longer enjoys policy support,” she said. There is room for improvement when it comes to rolling out environmental reforms and a one-size-fits-all policy might not be the best option.

Chen believes, however, that the environmental regulations heralded in by the Chinese government will play an important role in the world’s environmental regulations system. “Through open dialogue and mutual learning, we will continue to contribute the ‘China Program’ and ‘China Best Practice’ for global sustainable development,” he said.