| China's
2,000 export manufacturers are projected to export
more than US$4 billion worth of T-shirts and
polo-shirts by the end of 2004. This figure is
expected to increase by more than 30 percent in the
next 12 months.
The remaining garment and textile quotas will be
lifted in 2005. Suppliers in China are gearing up
for the expected surge in demand by expanding their
capacities and upgrading equipment. They are also
preparing for the inevitable cutthroat competition
that will ensue.
Japan is currently China's largest importer,
absorbing close to US$2.5 billion worth of T-shirts
and polo-shirts from January 2003 to September 2004.
Combined imports to the European Union amounted to
US$559 million in the same period. Shipments to the
United States, however, totaled only US$268 million,
but this is expected to increase significantly next
year.
This is despite the possible safeguards the US
and EU might impose on imports of polo shirts and
T-shirts from China. Such restrictions are possible
because prior to China's accession to the World
Trade Organization in 2001, the US signed a
bilateral agreement with the country, under which
the US can reimpose quotas on China's garments and
textiles if a significant increase in imports is
proven to harm local industries.
There is at least one precedent to this. In
November 2003, the US capped imports of China-made
dressing gowns, knit fabrics and brassieres
garment and textile categories with quotas lifted in
2002
to 7.5 percent growth.
This year
even before quotas are lifted
the
American Manufacturing Trade Action Coalition has
filed 10 safeguard petitions against imports of
China's garments and textiles, including cotton knit
shirts.
Regardless of whether safeguards will be imposed
or not, China suppliers are preparing for a
post-quota exports surge. Many companies are
constructing additional factories and purchasing
more sewing machines in order to raise production
capacities by at least 20 percent.
Suppliers are also gearing up for intense
competition in the quota-free era. Without quotas,
some China makers that rely primarily on quotas as
their competitive edge will lose to suppliers that
offer better-quality polo-shirts and T-shirts at
competitive prices. As such, suppliers are improving
manufacturing capability and product quality while
cutting costs to boost their competitiveness in the
quota-free market.
Apart from the anticipated post-quota price
competition, makers have had to deal with rising
production costs as a result of the labor shortage,
power rationing, and the spiraling prices of
chemical and synthetic fibers. Most suppliers are,
therefore, increasing R&D expenditure substantially
in order to come up with more effective means of
reducing costs. Some makers are finding new ways of
reducing fabric wastage. Cutting fabrics following
CAD patterns instead of hand-drawn outlines has
enabled makers to effectively reduce wastage by at
least 2 percent.
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