Chinese textile producers' tactics to offset safeguards
By Michelle Phong
Textile.2456.com
Chinese textile makers are exploring ways to avoid trading frictions. (Source: official web site of Xiawa town, Zhanhua county, Shangdong province, China) The adverse effects of the imposition of special safeguard measures adopted by the US, and later the EU, South Africa, Russia and Brazil, on the Chinese textile industry have surfaced in recent months. Chinese export-oriented textile producers are finding their production either in an utter halt or in halfway to it, Xinhua news agency (Zhejiang Channel) reports.
Under the shadow of these special safeguards, and other forms of protective measures that look inevitable after the expiration of safeguard measures by 2008, some Chinese producers have taken a more proactive attitude, which is aimed also for a long-term success of their businesses, instead of betting on their luck.
From OEM to ODM and OBM
A Beijing garment trading company, for instance, has reportedly been working on its proprietary brand for six to seven years. This company, mainly exporting its own branded women's and kids' wear to Russia and East European nations, is glad that the special safeguard measures are not making serious impact on it.
This example reveals an idea that is being promoted within the Chinese textile industry: to diversify from purely OEM (original equipment manufacturing) into ODM (original design manufacturing) and OBM (original brand manufacturing) business as well.
In this respect, China is proceeding gradually. A new milestone is that a Chinese men's wear brand, Cabbeen, has made its virgin appearance in the currently held New York Fashion Week Fall 2007 - it is the first time to see Chinese brands in this prestigious show.
Investing overseas
Some Chinese enterprises have been investing in other Asian or African countries. Xinhua reports that Ningbo Shen Zhou Group has plans to invest about US$33.8 million to build a facility in Cambodia that will churn out 230,000 pieces of garments a day. Some producers have chosen southeastern Asian countries or those on the African continent, including Nigeria.
Though it is argued overseas investment is not easy, successful enterprises have been able to expand their orders with facilities abroad. A Tianjian trading company has got orders that are scheduled to March or beyond with its manufacturing unit in Saipan, a US commonwealth near the Philippines. This is not an exceptional case. Orders have been shifting from China to Indonesia, Bangladesh, Vietnam and Cambodia since the imposition of special safeguard measures.
Exploring new export markets
Some exporting producers have been trying to ship their textile and garment products to the Middle East and Africa. However, as profit margins in these new markets are far thinner than those in the US or Europe, most of them are still keeping contact with their American and European clients in the hope that the traditional, lucrative markets will be accessible to them again in the future.
Shifting to domestic market
Some enterprises have eyed the fast growing domestic market too, as China is about to replace Germany to become the world's third largest economy, after only the US and Japan. Nevertheless, they find great differences between the domestic and export markets in terms of not only business environment and operation, but also quality expectation and price levels, and they are paying "lesson fees" to learn these differences.
Few enterprises are looking for niche segments such as silk too.
Under the shadow of these special safeguards, and other forms of protective measures that look inevitable after the expiration of safeguard measures by 2008, some Chinese producers have taken a more proactive attitude, which is aimed also for a long-term success of their businesses, instead of betting on their luck.
From OEM to ODM and OBM
A Beijing garment trading company, for instance, has reportedly been working on its proprietary brand for six to seven years. This company, mainly exporting its own branded women's and kids' wear to Russia and East European nations, is glad that the special safeguard measures are not making serious impact on it.
This example reveals an idea that is being promoted within the Chinese textile industry: to diversify from purely OEM (original equipment manufacturing) into ODM (original design manufacturing) and OBM (original brand manufacturing) business as well.
In this respect, China is proceeding gradually. A new milestone is that a Chinese men's wear brand, Cabbeen, has made its virgin appearance in the currently held New York Fashion Week Fall 2007 - it is the first time to see Chinese brands in this prestigious show.
Investing overseas
Some Chinese enterprises have been investing in other Asian or African countries. Xinhua reports that Ningbo Shen Zhou Group has plans to invest about US$33.8 million to build a facility in Cambodia that will churn out 230,000 pieces of garments a day. Some producers have chosen southeastern Asian countries or those on the African continent, including Nigeria.
Though it is argued overseas investment is not easy, successful enterprises have been able to expand their orders with facilities abroad. A Tianjian trading company has got orders that are scheduled to March or beyond with its manufacturing unit in Saipan, a US commonwealth near the Philippines. This is not an exceptional case. Orders have been shifting from China to Indonesia, Bangladesh, Vietnam and Cambodia since the imposition of special safeguard measures.
Exploring new export markets
Some exporting producers have been trying to ship their textile and garment products to the Middle East and Africa. However, as profit margins in these new markets are far thinner than those in the US or Europe, most of them are still keeping contact with their American and European clients in the hope that the traditional, lucrative markets will be accessible to them again in the future.
Shifting to domestic market
Some enterprises have eyed the fast growing domestic market too, as China is about to replace Germany to become the world's third largest economy, after only the US and Japan. Nevertheless, they find great differences between the domestic and export markets in terms of not only business environment and operation, but also quality expectation and price levels, and they are paying "lesson fees" to learn these differences.
Few enterprises are looking for niche segments such as silk too.
7 comments:
Oh good, more bussiness from
China. This could mean thousands
of jobs for Cambodia. Let's make
sure all the plants are build
without delay. Anyone try to
protest, shoot them and ask
questions later.
I am confident with our
administration will handle
this smootly.
Good luck to all.
you never know. may be one of the protesters was your mother. but it was too late, you had already shot her, and you couldn't ask any question either because she was dead.
good luck to you.
use your brain b4 put on writing
Bora
what are you trying to say? Better try to value people more than the wealth or things you have...or you'll be treated the same them...
Yep, we'll never know, Post1:28,
as we'll never the earth will
split in half tomorrow, and we'll
all be suck into another galaxy
either.
Post2:32, the need of the many
outweight the need of the few.
That is what I am saying.
Post 3:08, well, the need of the many overweigh the need of the few....we can get into compromise...
This story was copied from the Chinese press.
Which is always a foolish idea. In this case, the Ningbo Shen Zhou factory in Cambodia opened in 2005 and has been trading happily since.
There are no new jobs for Cambodia in this story, and there are no "plans" for Ningbo to do anything in Cambodia except keep the current factory open.
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