While the EU lifted quotas on all home textiles in 1998, the US removed the caps on towels, drapery and table linen in 2002 and those on bed linen and quilts in 2005.
According to China customs statistics, total home textile exports from the country rose by a modest 24 percent in 2004. However, shipments in the first five months of 2005 soared nearly 40 percent to reach US$2.2 billion from a year ago. But even more remarkable export growth is evident in certain product categories to some of the country's key markets.

Towel exports to the US in January to May 2005 reached US$119 million, a massive year-on-year increase of 105 percent. Shipments of other product lines to the US also registered impressive growth rates
bedding increased by 77.6 percent to US$220 million, while drapery exports were at US$230 million, growing 25.7 percent.

Reacting to the jump in drapery shipments, home textile associations in the US have petitioned to curtail imports of China-made curtains. If quotas are reinstated, limits could be set sometime the last quarter of this year.

In view of the steep rise in bedding exports to the US, similar action on the product line cannot be ruled out.

In fact, bed and table linen have been the products of contention in the EU. In January to May 2005, imports of China made bed linen to the EU jumped 154.7 percent in volume and 57.6 percent in value from a year ago. In response, China agreed to limit shipments of table and bed linen to 5,521 and 6,451 tons, respectively. These limits, which took effect in June, are filling up.

However, embargoes on shipments to the EU will not have a major impact on the industry as the region accounts for only 14 percent of total home textile exports.

Restrictions on US exports, on the other hand, could have more far-reaching consequences, since it is the top market for China-made home textiles. The US absorbed US$1.2 billion, or 25 percent, total export sales in 2004.

In the shadow of these trade disputes, many China suppliers have already started looking for alternative solutions. While some are increasing sales to the domestic market, others are boosting exports to Asia, particularly Japan. The country is China's second-largest destination for home textiles, absorbing US$1.1 billion worth of exports in 2004.

Industry composition
The home textiles industry in China is composed of more than 3,000 small, midsize and large suppliers producing bedding, drapery and towels.

Irrespective of size, the majority of companies make bedding products, with most offering both quilts and bed linen and some focusing on one or the other.

Suppliers that manufacture quilts can also produce bed linen, but those specializing in bed linen do not necessarily offer quilts. This is because quilt production requires specialized machines for cleaning, stuffing and quilting. Makers producing quilts usually also offer similar products such as pillows and cushions.

Very few companies focus on drapery, and even fewer specialize in table linen. Most suppliers have one or both of these product categories as their secondary lines and bedding as their primary line.

Makers offering towels usually specialize in the line, but some large companies offering multiple types of home textiles have separate factories dedicated to the product. The few small and midsize companies that offer towels as their secondary line usually subcontract production or dedicate a small portion of their factories to it. However, most of these makers might not be able to provide the expertise that towel specialists can offer.
 

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