Chinese textile firms face challenges in 2008

Apr. 7, 2008 (China Knowledge) - Textile companies in China may face the toughest year in 2008 due to an expected slowing down in exports where a large proportion of their revenues come from.

In the first two months of this year, China's exports value of textile and apparel products rose only 5.7% to US$16.44 billion, compared with the annual growth rate of 18.9% last year. Guangdong province, the country's largest textile products export base, even reported an 11.3% fall in exports during the period.

The decrease is partly attributable to the shrinking market demand from the U.S. due to the subprime credit crisis, said a industry insider, adding that domestic suppliers are also facing problems brought by RMB appreciation, rising cost and export tax rebate cut.

Currently, 15% of China's textile exports were shipped to the U.S. and takes up 25% market share in the country.

The harsh market conditions require Chinese textile manufacturers to speed up the transformation from labor-intensive to more innovative and environmental friendly model. Many textile firms in the south are considering of moving their production bases to the inland provinces to reduce costs.