How does the US's withdrawal from the TPP affect the textile global supply chain?

2016 China textile clothing exports declined in the first two now, because of the slow economic recovery in major export markets, weak external demand; unstable external environment, the uncertainties affecting export increase; production costs continue to increase, further weakening the traditional advantages; and industry The transfer of products led to a gradual reduction of the market share of China's products; the depreciation of the Renminbi, and the decline in the prices of export commodities in US dollars.

2016 is a tough year for the global textile and apparel industry. Han Bekke, president of the International Apparel Union, said in a speech that the main reasons for the difficulties are: First, the global macroeconomic situation fluctuates. Except for the economic growth rate of China and India exceeding 6%, the traditional market is still at a low level and the industry is underdeveloped. Second, geopolitical tensions, polarization and populism have had a certain impact on the regional situation. Trade protectionism in major countries such as the United States has risen, especially since the United States withdrew from the Trans-Pacific Partnership Agreement (TPP) negotiations, making the transatlantic partnership in place and the North American Free Trade Agreement facing renegotiation. At the same time, the United States or a substantial increase in import tariffs. Third, security issues such as terrorist attacks have had an impact on tourism and shopping, especially on Europe. The fourth is the internal reasons of the industry, including changes in consumer habits, increasingly fierce market competition, and difficulties in profitability.

Instability is the new normal uncertainty will continue

Han Bekke said that although apparel purchases were gradually transferred from China to Vietnam, Cambodia, and Bangladesh, they were not as expected; while industrial investment moved from India, China, and Turkey to Africa, and there was not yet a large amount of exports.

"In addition, forward-cost manufacturing countries reflux example textiles and clothing commercial laboratory projects funded EU Horizon 2020 program, aimed at changing the textile and garment industry. The goal is by 2025 to 5% of the transfer of production capacity back to Europe. But I It is believed that the industrial return will not have much impact on the production share of other countries because of the lack of productivity and high labor costs in European factories. In addition, the Asian market is increasingly becoming an important international consumer market, which has become considered by many buyers. Factors." He further pointed out.

Julia K. Hughes, president of the American Fashion Industry Association, agrees very much. She analyzes: "At present, 52% of US apparel buyers are purchasing apparel from more than 10 countries, and Asia has a major share; US apparel buyers from the US Less than 10% of domestically purchased goods."

According to McKinsey's forecast, the number of mid- to high-end consumers in China will increase by 141 million in the next 10 years, and will reach 247 million in 2025, accounting for 28% of the global total. This means that the growth potential of China's textile and apparel consumer market is huge.

In 2016, the retail sales of online goods and services in China was 515.56 billion yuan, a year-on-year increase of 26.2%. Among them, the online retail sales of physical goods was 419.44 billion yuan, an increase of 25.6%. The physical retail sales of physical stores, which accounted for 12.6% of total retail sales of consumer goods, and apparel, increased by 28.5% and 28.8% respectively. The continued growth of China's domestic consumer market has not led to a significant decline in the proportion of local procurement.

In addition, Nguyen Van Tuan, President of the Vietnam Cotton Textile Association and Deputy Secretary General of the Vietnam Textile and Apparel Association added: “The rapid growth of the garment processing industry has caused an imbalance in the supply chain, leading to fabric production (including weaving, knitting, printing and finishing). The bottleneck has caused Vietnam to rely heavily on fabric imports (6.5 billion square meters per year, equivalent to 75% of total demand)."

He further pointed out that Vietnam has attracted a sharp increase in foreign investment in recent years. From 2014 to mid-2016, Vietnam attracted 8.3 billion U.S. dollars of foreign investment. The foreign investment attracted by two and a half years is equivalent to the sum of the past 14 years. Among them, South Korea Hyosung, Ningbo Shenzhou, Hong Kong Crystal Garden, etc. These investments mainly have the following characteristics: first, large-scale enterprise investment; second, large-scale investment and divided into several periods; third, the main direction of investment is fabric production; fourth, the main purpose of investment is to establish large enterprises in Vietnam and form their own complete Integrated supply chain. At present, the first phase of these investments has been basically completed. The survey shows that if TPP or other alternative FTAs ​​are not implemented, the next investment will likely be stalled.

The international marketing system is becoming more and more full of "China + surrounding" layout into a climate

The development of the textile and garment industry in Southeast Asia is very eye-catching. In recent years, despite the problems of minimum wage laws, production safety hazards, and infrastructure construction, Southeast Asian countries have attracted more and more international brands to participate in procurement.

In the face of the European and American markets, competition between China and ASEAN countries, especially Vietnam, remains fierce. China is still the most important supplier to the US textile and apparel industry, and the share of Vietnamese products in the US market is continuing to grow.

In Asia, Vietnam, Cambodia, Bangladesh, and Indonesia have become the founding bases of international clothing brands, and Vietnam is standing out with the most prominent regional environmental advantages.

Among these countries, Vietnam's regional environment is clearly superior to several other countries. Vietnam has sufficient electricity, rich water resources, political stability, and relatively high quality of personnel. The efficiency of garment workers is about 70% to 80% of China's, far higher than several other countries. The textile and garment industry in Vietnam has absorbed about 2 million labors, and textiles and clothing have become Vietnam's largest export products.

However, at present, Vietnam has an investment gap of 2.7 million tons in raw materials, the spinning industry needs investment of 10.7 million spindles, and there is still an investment gap of 9.15 billion square meters in fabric production. To support the development of local manufacturers, the Vietnamese government launched the “Vietnamese Textile Village” model.

In addition, at present, more international companies choose the so-called “China+surrounding” layout in production and sales, and cover the procurement industry chain throughout Southeast Asia and Africa.

At the same time, China is the most important player in the global textile industry, and the development of related industrial chains is relatively complete. Due to the slowdown in economic growth, structural transformation, rising labor prices, and fluctuations in raw material prices, China's textile industry is also at the crossroads of future development opportunities while facing challenges. In response to changes in the procurement situation in the international market, Chinese companies have actively “ goed out ” and laid out globally.

“The new trend of China's textile and garment foreign trade has a new trend, that is, the pace of international marketing system construction has obviously accelerated, and the emerging trade mode has been active. Especially in recent years, enterprises have established overseas offices, R&D centers, direct sales stores and mergers and acquisitions abroad. Brands and other means to rapidly expand sales channels." Zhang Xi'an, vice president of the China Chamber of Commerce for Import and Export of Textiles, analyzed four forms of "going out" of the current enterprise in his keynote speech.

The first is to set up an overseas office or acquire a local trade wholesale company. Recruit local marketing talents , build orders platform, and directly accept first-hand orders from large stores, department stores and brand chains. The second is to set up a product design R&D center and exhibition center overseas. Hire a local professional design team, integrate overseas design resources, strengthen style design, keep up with fashion frontiers, capture market opportunities, and cooperate with the corresponding marketing team to bring products into the final retail channel. For example, the Deshang Group has set up R&D centers in the UK. The third is to invest in mergers and acquisitions or participate in foreign mature brands, or register and promote their own brands overseas. For example, Jiangsu Yunbat has acquired or registered six women's wear brands in the United States. More than 200 employees in the United States are responsible for design, development, and sales. More than 70% of its annual export value is for its own brand. Fourth, some brands that have achieved success in the Chinese market have entered the international market. Carried out abroad by opening directly operated stores or department stores, etc. stationed in international operations, such as Shanghai Silk Group of LILY, South commoner and other women's brands, as well as Li Ning, 361 degrees, special steps such as sports brand.

Industry analysts believe that the face of downward pressure on exports, the endogenous driving force enterprises to upgrade gradually increase, "going out" the pace will be more robust. In recent years, foreign trade export companies have actively researched and developed designs, enhanced industry integration and value-added service capabilities, and made color supply chain managers.

For example, in addition to the construction of five weaving and sewing factories, Haiming Dream Company has developed more than 30 supporting weaving and printing and dyeing factories as cooperative factories, forming a stable industrial supply base and establishing a good reputation among customers. And word of mouth. Jiangsu Guotai Group provides tailor-made services for brand and large customers, and sets up offices, sample rooms and order centers to the downstairs of large foreign customers, so that brand owners can enjoy high-quality services without leaving home. Some leading enterprises in the industry have arranged raw materials for processing and production of raw materials, and built overseas raw material bases such as cotton, wool and chemical fiber to stabilize the supply of raw materials needed for production.