BEIJING — With no quick recovery in sight for China’s slumping manufacturing sector, the country’s producers are trying to get creative, aiming for a piece of the high end pie.
Textile and apparel factories in China’s main manufacturing zones are looking for new ways to appeal to upscale buyers, with an eye toward replacing declining large-volume sales of the glory years with smaller, more expensive orders. Though the plan is working for some, for many, moving China-made goods up the value chain is a difficult and risky proposition.
Li Ming, a director at the Si Mixan Textile Co. in Wuxi, said his company plans to upgrade its offerings and appeal to a higher-end clientele. In order to make that happen, Li said, “We will need to partner with a high end clothing brand to be able to do it. There is no point in creating a brand alone because as a manufacturer of semifinished products, our target clients are the big clothing companies. By linking to a well-known clothing brand, we get to open up the overseas market faster.”
The idea will be difficult to implement, as most high end brands producing their textiles, apparel and other items in China already have long-term partnerships and training agreements with existing factories. Multinational companies have invested billions of dollars in Chinese factories to produce goods that meet specific quality standards.
Meanwhile, China has fallen short of its own government’s plans to escalate homegrown innovation. So many companies are looking at more traditional routes: investment, buyouts and partnerships with foreign firms that have cash and demand.
A manager with the Jingyi Textile Co., in Changzhou, also said her company wants to move up the value chain, but already-thin profit margins are putting a damper on plans to change and innovate.
China’s garment and textile associations have not revealed the number of factory closures in the past year, but industry executives say thousands of workshops have shut down and production lines have generally cut back. The latest economic indicators continue to show slumping production in China, with the main measurement falling into the negative for the first time in nearly three years. The government did recently reveal a five-year plan to bolster and modernize its textile industry that focuses on higher-value products, more innovation and moving factories farther inland.
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Textiles industry analyst Kong Jun said there is some good news on the horizon for producers willing to take a risk, but innovation and moving up the value chain could help those factories that can afford to make the investment in new technology and raw materials.
“Textile companies all have the survival skills they need to stay in business, but the sense of urgency to make the move is stronger and capability is stronger in some companies than others,” said Kong. “The high end market is relatively small, making up only about 15 percent. Basically to move up the value chain is what every company wants to do. Some feel more urgent than others. For those who are doing well with what they are producing now, the sense of urgency is less strong so they will start taking actions a bit later.”