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Who takes the lion's share in Sino-US textile trade?


31-Aug-2005 - Xinhua
Profit is the ultimate goal for all enterprises.

However, the latest focus of Sino-US textile trade seemed have less to do with how to further enhance profit margins than with grousing about a dubious trade imbalance by the party who actually takes the lion's share in the transaction.

In the Youngor Group located in Ningbo, a coastal city in east China's Zhejiang Province, the country's most well-known textile base, it takes 72 working procedures and 7.5 US dollars to make a cotton shirt ready for export, mainly to the United States, Europe, Japan and Australia.

During the first six months this year, the group, one of China's leading garment makers and exporters, sold 400,000 shirts to the United States, at a FOB (Free on Board) price of 8 US dollars each, accounting for 15 percent of the company's total production in the same period, according to Youngor sources.

The Youngor-made shirts, with varieties ranging from classics, wide collar to button-down, were subsequently priced 30 to 40 US dollars each at the retailing outlets in the United States, mostly under the brand name of Tommy Hilfiger.

Youngor statistics made clear a typical profit distribution mode in Sino-US textile trade.

It is widely estimated that Chinese textile manufacturers like Youngor get no more than 10 percent of total profits in trade. The remaining 90 percent is shared by foreign brand-owners, wholesalers and retailers, mostly Americans.

"What we've done is to 'make the bridal gowns for other brides' as a Chinese saying goes," said Pamela Zhu, a veteran foreign trader from the Group's shirt company during an exclusive interview with Xinhua on Tuesday.

Although capable of producing five million quality shirts annually, Zhu's company now has to tone down its production binge due to US limits on importing Chinese textiles.

"We were expecting no US shirt orders in the latter half of this year," said the 37-year-old trader, who has been selling Chinese shirts overseas for over ten years.

Actually, as a company that started trading with the United States in 1992, Youngor, like many other Chinese textile enterprises, has far more than cheap prices to offer in doing business with US garment importers.

In addition to using top-quality cotton from the United States and west China's Xinjiang Uygur Autonomous Region, Youngor has also invested millions of dollars in purchasing advanced machines and quality cotton from the United States, a common practice conducted by many Chinese export-oriented textile enterprises to meet quality standards demanded by US importers.

Last year, China bought a total of 1.6 billion dollars of cotton from the United States, making China a blessing for US cotton growers and the No. 1 cotton importer in the world. Much of the imported cotton was used to manufacture the textile products serving the US market.

However, as the export channels to the United States were almost closed after the previous three rounds of Sino-US negotiations that failed to iron out the textile disputes, it is highly possible that the Chinese import of US cotton will drop considerably following the shrinkage of US and European orders for Chinese textile products, said industry observers.

According to the Chinese Textile Industry Association, if the Sino-US textile talks fail to make concrete progress, a total of 100,000 Chinese textile workers will lose their jobs within a year.

Meanwhile, US importers will have to hunt elsewhere, at a much greater cost and lesser probability of success for garments of the same quality and prices to replace the made-in-China textiles. If importers' relocation attempts fail, US customers will have to pay much more for their t-shirts and bras.

"That situation would be a lose-lose ending for the current Sino-US textile entanglement," said Song Hong, a trade expert from the Chinese Academy of Social Sciences on Tuesday in Beijing, where the fourth round of Sino-US textile talks were still going on.

Chinese Customs statistics show that China's textile exports to the United States totaled 9.06 billion US dollars in 2004, accounting for 5 percent of the total trade volume between the two countries.

31-Aug-2005 - Xinhua

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