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30-Year Reform and Opening up - Export Review

Published: 17 Apr 2009 13:14:49 PST

Export Engine Slows Down

The impact of financial storm invoked by US sub-prime mortgage crisis started to rise out of water in August and its strength and vehement to real entities turned up in all perspectives. In July, China's textile and apparel export amounted to $17.999 billion, 19.48% higher than the same time last year, which was very good when considering all costs pressure on manufacturers was mounting day by day since the beginning of this year. But the fair weather did not last long, when it came to August, the financial crisis impact exerted its strength to every sector of life. The shipment value slid down to $17.901 billion with -0.54% growth on a monthly cyclic comparison. In September, the export went further down to $17.373 billion with -2.95% month-on-month growth. If Winter Comes

In September, the total textile and apparel export value dropped by $528 million while to USA dropped by $77 million, and to EU with a drastic loss of $769 million. The drooped buy from these two huge markets that are severely crippled by financial crisis has exerted direct impact on the reduced shipment from China. In the loss of $528 million, 85.5% is attributable to clothing export for the loss of $453 million.

Winter comes, and how long will it last? To measure the length of winter time, many factors are to be sized up: frstly, one needs to think it over when the market demand will resurrect. It seems the fnancial crisis has not yet reached its bottom which is still unfathomable. Many forecasts are projected to see the most diffcult time in the frst half of 2009, and it takes at least 2 -3 years for US economy to recover from muscular dystrophy, and the same length of time is also needed for EU and Japan.

Secondly, against the backdrop of drooping and decaying market demand in the traditional huge markets like USA and EU, Chinese domestic companies have to find new markets or new horizons of their business growth, it certainly takes 2 - 3 years to readjust and readapt themselves to new challenges before real opportunities are in hand. Thirdly, Chinese government would likely continue to give out economy stimulus plans to reshape trade and industry policies. To beneft from this reshaping, any textile company has to experience normal process of two or three years to avoid a hard landing in the new reformation.

Fourthly, this is a high time for the survival of the fttest , amid many closedowns, the surviving companies have to stand sturdy to get hold of more market share, it also takes two or three years to renew their traditional modality of operation. Many experts believe that the hardest times will come in the first half of the new year, and textile and apparel companies enter the coldest time of winter season, and the market will start to turn warm gradually after 2009, the industry will weather through the transitional year of 2010, good days will set in the next two years to follow.

Can Spring be Far Behind?

"If Winter comes, can Spring be far behind?", this is a well-known verse from Percy Bysshe Shelly, an 18th century British poet in his "Ode to the West Wind". This verse is more quoted by many textile company executives who are of the conviction that Spring is not far behind the coming winter for their business. Fearing the continued company bankruptcy and job loss would deteriorate, government has taken active and concrete steps to save its labor-intensive industry out of bog by shifting its previous rigid and tight financial and monetary policy to a more active and flexible line, and enacting 10 measures to expand domestic consumption and to boost economic growth.

To comply with these measures, government has put on an approx $600 billion economy stimulus scheme to be carried out until 2010 when the 11th Five Year Plan draws to an end. Hopefully, all works and must work!