Under the MFA quota system, each supplier country poised to its limits on the volume of textiles and clothing that may be imported from each individual nation with which it trades. From about 60 different countries, U.S. quotas comprised of 2,400 products. It was anticipated that the removal of these quotas will mainly be advantageous to Chinese (and to a smaller amount to Indian) producers, who are capable to challenge their international competition due to its combination of an undervalued currency, low wages, and outright labor domination. In an incongruous twist, the majority of developing countries, who insisted on the phase-out of the MFA as resources to raise their exports of textiles and clothing to well-off countries, insisted on an extension of quotas or some other system that can assure them any share of prosperous country markets provided the projection of China’s awesome supremacy. China, with the help of some other large developing countries, chucked 韓國代購 these demands made by Turkey, and a bloc of African, Asian, Latin American and Caribbean Basin countries.
The profit of China is not only on its benefits in wages. It also profits from a large trained and dynamic workforce, propinquity to inexpensive quality resources, and encouraging government policies, such as subsidized lines of credit and exchange rate manipulation. These aspects, jointly in low wages, will create China, the most chosen supplier for many retailers, particularly after 2008, when the likelihood the United States to impose safeguards on Chinese products is removed.
It is likely to make a sense of the consequence the end of all WTO textile and apparel quotas by analyzing what happened when quotas on some products, covering dressing gowns and luggage were zeroed in 2002 as part of the quota system phase-out. This change gave a 53 percent decrement in the average price per square meter that China got for its exports in those categories, from US$ 6.23 before to US$ 3.12 after quota removal. China’s market contribution in these items increased from 2002 to 2004, up 888 percent in luggage and 1,179 percent in dressing gowns. Overall, China now states 72.3 percent of the U.S. apparel import market in all products where quotas were raised in 2002.
Denim market of China
China is the world’s leading supplier of denim garments, having 30% of global production. The country exported US$1.8 billion worth in 2004. With quotas removal, demand is projected to rise by more than 20% in 2005. But a government-imposed export tax and looming US and EU to protect threaten growth.
Nearly all denim garment producers in China make jeans, and most of them also provide shorts, skirts, dresses and shirts. Many companies provide jeans as their main product line. In some companies, jeans are produce of about 90 percent of its total production. Jeans and shorts report for 64 percent of the denim garment exports by suppliers Jackets report 16 percent, skirts and dresses 13 percent and shirts 7 percent.
According to Global Lifestyle Monitor, average consumption of denim apparel in 2003 was observed in U.K.-12.9, Japan-12, Hong Kong-11.8, Italy-10.8, China-7.9 and India-3.1 items. But, in general consumption of denim apparel items remains highest in the U.S., Germany and Colombia and lowest in India and China. Though, most industry experts believe denim consumption in Asia (most particularly China) to explode over the next several years as income increases and wardrobe dictates vanish.
Present performance of Denim
According to official data, China’s exports of denim fabrics considerably increased in the first half of 2005. China’s exports of cotton denim fabrics (HS 520942) were increased 17.80% in volume terms in the first six months of the year to 193 million square meters to Hong Kong’s denim’s harshly rose direct exports to Korea, Russia, Cambodia India also increased. Prices were increasing at the time, in line with value added content.
Shipments even increased at the same time to 30 million, giving rise in average price to US$ 1.71 per square meter. China’s exports to Hong Kong increased 25% in volume terms, now reporting 38.80% of total shipments of cotton denim fabrics.
Greater demand within China
A greater chunk of those fabrics shipped to Hong Kong normally turn back to the mainland where they are utilized by apparel factories. The sudden increase in first half sales to the SAR (Special Administrative Region) provides the important contribution of Hong Kong’s trading houses in the denim business in China. With the end of quotas on denim apparel, demand for denim fabrics was evidently robust in the first half in the PRC. According to official data, direct sales to other regions were also harshly increased in the period, somewhat because of to an increment in clothing production in these countries or a decrement in domestic output. Shipments to Korea were increased 62% over the period, as a clear indication of diminishing Korean denim production. In comparison, a 132% jump in exports to Russia more possibly gives an increment in Russian apparel output. Other denim suppliers may also have mislaid market contributions, such as Taiwanese manufacturers.
Exports to India, Turkey and Cambodia: Increasing
China’s shipments to India and Turkey boosted at the same time. Contributions of these areas in total denim exports from China are very low. Prices increased in line with better quality and more value added content. In China like to another place, the quality of fabrics is enhancing and is being more advanced.
Though, its exports to Cambodia were increased to 51% in volume terms. The high valued fabrics send to Japan at US$ 2.69 per square meter while low-priced products were bought by Bangladesh (US$1.54), Russia (US$1.49) or Mexico (US$1.31).
Denim fabric re-exports of Hong Kong
Hong Kong’s trading in cotton denim fabrics kept increasing in the first half, improved by higher sales to China and to other low-cost countries such as Bangladesh. Hong Kong’s denim exporters are gaining benefits from the rebound in Asian clothing production in the post-quota period. Unit values decreased in part of the year in partly because of poorer cotton prices.