In recent years, the overall migration of the apparel industry to Southeast Asia, where labor costs are lower, is a major trend. The textile industry located upstream of clothing involves cotton, chemical fiber, weaving, etc. Due to relatively high technical requirements, the overall advantage will continue to be domestic.
Recently, the Regional Comprehensive Economic Partnership Agreement (RCEP) was signed. It will include the 10 ASEAN countries and 15 countries including China, Japan, South Korea, Australia, and New Zealand to “group” to promote trade and investment, and also connect China’s textile fabrics and Southeast Asia’s garment manufacturing factories more closely.
As a major export trade center in the textile industry, many textile companies in Wujiang Shengze, Suzhou, said that the signing of this agreement is a major benefit.
One
The “tariff” that has troubled textile people for a long time
will be reduced Got it!
As the core upgrade measure of RCEP, it is to gradually reduce tariffs now or in the next 10-35 years. to the 0% level.
According to the China-ASEAN Free Trade Area Agreement signed in 2005, we have Import tariffs from Malaysia, Myanmar, Singapore, Thailand, etc. have all been reduced to 0% since 2010.
Picture/First Financial
Therefore, after the signing of RCEP, in addition to the above-mentioned 6 countries, tariffs on most products from the Philippines, Cambodia, Laos, Japan, South Korea, Australia, and New Zealand will also gradually decrease. to 0%.
In particular, China and Japan have a free trade area zero-tariff agreement for the first time. Judging from last year’s customs-related export data, Japan is a very important textile export market for my country, so , China’s textile and apparel industry may benefit the most from the implementation of RCEP.
Suzhou Dongcheng Fabric Research Co., Ltd. is an enterprise that develops and produces down jacket fabrics and functional fabrics. 20% of the company’s products are sold to Southeast Asian countries. General Manager Dong Xiaokui said that exports to Vietnam are mainly down jacket fabrics, which will definitely increase. It is currently 20%, and may increase to 40% after the agreement is signed. This is beneficial to both parties, mainly because both parties are exempt from each other and the cost is reduced. In addition, imported The price of Japanese looms will definitely come down a lot.
For example, fabric traders export fabrics to Southeast Asia duty-free and make finished products, and then export them to Japan, South Korea, Europe and the United States and other countries. In this process, in view of the tariff advantages of the agreement, the price is greatly reduced. This includes operating costs such as garment production and transportation costs. In other words, the implementation of the agreement will allow all companies in the region to participate in the accumulation of value in the country of origin.
Undoubtedly, the textile bosses are still happy to hear about the signing of this agreement.
The person in charge of Wujiang Xuxin Textile Co., Ltd., which specializes in exporting down jackets and cotton clothing fabrics Mr. Wang said: “The signing of the free trade zone agreement has given greater opportunities for fabrics to be exported from China, which means that the probability of domestic fabric merchants receiving orders is also increasing, which is definitely a good thing!”
Mr. Lu from Wujiang Yunjie Textile Co., Ltd., which specializes in wide-width home textile fabrics, is also excited about the news: “After the escalation of Sino-US trade friction affected the US market share in the past two years, we have been actively developing the Southeast Asian market. , but the volume is not large. The signing of the free trade zone agreement this time has a great advantage for us to enter these markets. After all, the tariff reduction has increased the market competitiveness of our products.”
The textile person in charge of Wujiang Siyue Textile Co., Ltd. also said that the company’s current foreign trade ratio is around 50%. This year, the overseas trade plan has been put on hold due to the impact of the epidemic. This signing gives greater confidence to the textile industry. It is planned to continue to expand trade with countries in the agreement, especially the Southeast Asian market.
Two
Reduce the impact of the Sino-US trade war
The transferred orders are expected to return!
The escalating trade friction between China and the United States has affected the foreign trade market in recent years. However, with the signing of the free trade area agreement, this pressure may be alleviated.
According to estimates from the Peterson Institute for International Economics, assuming that the Sino-US trade friction continues, China’s participation in RCEP will bring an additional US$100 billion to its real national income in 2030, thus offsetting about 30% of the negative effects of trade friction. Influence.
Mr. Xu from Shengcheng Textile Co., Ltd. said that the development of the Southeast Asian market is a layout due to the Sino-US trade friction. Following the country’s “One Belt, One Road” initiative, it is also important to find suitable partners. It can reduce risks in the foreign trade market.
Take Vietnam as an example.
Currently, many products produced in Vietnam using raw materials from China are exported to Japan, South Korea, and India. cannot enjoy the preferential tax rate.
According to RCEP, products produced by Vietnam using raw materials from other member countries are still considered to originate in Vietnam and can enjoy preferential tax rates when exported.
Then Vietnamese garment companies do not have to worry about reducing imports of Chinese raw materials due to tax issues.
Picture | Vietnam Textile Factory
Suzhou Jun Mr. Luo of Ding Textile Co., Ltd. said: “The biggest feeling I have from this agreement is that orders originally sent to India, Vietnam and other places may return. Although there is no immediate effect on the current orders, the textile market in the future is still promising. ”
In addition, in addition to increasing trade between the two sides, it has also increased two-way investment. Chinese textile companies in countries such as Vietnam and Cambodia can enjoy more attractive tax policies than those in mainland China. , creating better fertile ground for local investment. Domestic enterprises can also introduce new technologies and equipment at more favorable prices to help enterprises transform and upgrade in the face of competition and enhance brand effect.
Picture|Oriental Silk Market
Three
Orders show signs of picking up
The market may be expected to recover next year
Entering the third quarter, China’s domestic textile industry has After recovering from the “cold winter” in the first half of the year, October in particular ushered in a hot period. However, after entering November, due to the second outbreak of the epidemic in Europe, some countries continued to implement the “blockade” policy, and terminal consumer confidence was insufficient, resulting in a cooling of the domestic market trading atmosphere, and the orders received by companies were divided. However, there were still corresponding companies taking orders. The situation is performing well.
Mr. Wang of Xuxin Textile said: “The orders we have received have been scheduled until July next year. They are all down jackets and cotton fabrics. They will be sent to garment factories in Southeast Asia first. Then it will be shipped to Japan, South Korea, Europe and the United States, but there is still uncertainty in the market, and I am afraid that the order will be canceled again.”
Manager Chen of Wujiang Sanfeng Textile Co., Ltd. also said Order sales have increased year-on-year in the past two months. “Many of our customers are foreign brand merchants, and they have certain stocking plans every year. The market situation in the first half of this year was not optimistic, but we have been receiving orders in the past two months, mainly because we are relatively optimistic about the market next year.”
Of course, there are still many foreign trade companies in the market saying that export volume has shrunk significantly this year, ranging from 20% to half. Some foreign trade bosses even said that no new orders have been placed after November, and the market outlook is still under great pressure. Mr. Cheng, the person in charge of an export company that produces apparel fabrics, said: “This year’s orders have been unsatisfactory, especially the previous orders with Vietnam and Myanmar. Due to the epidemic, only half of them have been recovered so far. I hope the market will improve next year. .”
Recently, a survey was conducted on China Silk Capital Online about the prediction of next year’s foreign trade market. Among more than 200 market participants who participated in the vote, more than half of them were optimistic about next year’s foreign trade market. The foreign trade market in spring is optimistic. Mr. Shen, a textile foreign trade boss, said: “As long as the new crown epidemic is under control, overseas markets can slowly recover.”
Picture | More than half of textile professionals are optimistic about next year’s foreign trade market
It can be seen that although the COVID-19 epidemic, which is the biggest “black swan” affecting the global economy this year, has not improved and overseas economies are recovering slowly, with the news of vaccines and the signing of the RCEP agreement, market participants are still optimistic about the first half of next year. There are certain expectations.
However, it is worth noting that although the signing of the world’s largest free trade zone agreement will bring positive factors to the development of the mid- to long-term textile industry, at this stage it has no impact on the market. The stimulus effect is not great, and it will take a long time from signing to implementation, and there is still uncertainty.
After all, there have been precedents in Southeast Asia such as policy changes overnight and refusal to pay for goods. Textile companies need to take a long-term view when investing or accepting orders, and do not be blindly optimistic!
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