The Overseas Layout of China’s Textile Industry Focuses on “Belt & Road Initiative”

The Belt and Road Initiative has injected new impetus into the cooperation between China and the countries and regions along the route. China’s textile industry has seized the international cooperation platform and new opportunities created by the Belt and Road Initiative to find better overseas investment opportunities. Many flagship enterprises in China have carried out the overall arrangement in the countries and regions along the Belt and Road. Xu Yingxin, vice president of the China National Textile and Apparel Council, recently revealed at the Belt and Road Investment Promotion Conference held in Shanghai that as of now, the total investment of the Chinese textile industry in the countries along the Belt and Road has accounted for more than 80% of the total global textile investment in the same period.

 

China’s Textile Industry Enters a New Stage of Cross-border Layout

At present, China’s textile industry has entered a new stage of cross-border layout, and overseas investment has shown a trend of accelerating multi-regional, multi-industry and multi-form model. At the same time, the strategic goal of the transnational resource allocation of the textile industry is to achieve global integration of the industrial chain and global breakthrough of the value chain by going global. This is the view expressed by Xu Yingxin at the Textile Forum of the Pakistan Investment Forum held in 2018.

 

According to Xu’s introduction, the current overseas investment of China’s textile industry mainly presents three characteristics of the two main lines.

 

One main line is to create a layout pattern of manufacturing base related to China and neighboring countries (Southeast Asia and South Asia), maintaining and upgrading the international leading edge of Chinese textile industry in the global supply chain. The other main line is to take control of the raw materials resources, design and research resources, brand resources and market channel resources along the industrial chain through overseas direct investment and mergers and acquisitions, driving the development of Chinese textile industry towards high value-added field.

 

The three characteristics are as follows. Firstly, the cotton spinning and knitting industry have become a hot spot for overseas greenfield investment. As China’s cotton prices are higher than international cotton prices, domestic cotton spinning enterprises are investing overseas on a large scale. And due to the labor-intensive nature of the sewing process, knitwear processing is also a hot investment choice for the Chinese textile industry. Secondly, cross-border mergers and acquisitions of raw materials and brand technologies are increasing. Thirdly, “go global” action closely integrate with the Chinese market. However, the “go global” plan of China’s textile industry is based on the healthy development of domestic business, and these two aspects need to cooperate and support each other.

 

ASEAN and Africa Become the competing destinations for the overseas layout of China’s Textile Industry

Xu Yingxin also said that at present, Chinese textile enterprises have invested in more than 100 countries and regions abroad. The investment field almost covered the entire textile and garment industry chain. And the layout of the overseas productivity of China’s textile industry presents a model of “China + ASEAN + Africa”.

 

According to the statistics of the Ministry of Commerce, from 2003 to 2018, the outward foreign direct investment of China’s textile industry totaled US$ 9.79 billion, with an average annual growth rate of 15.6%, accounting for 5.2% of the total outward foreign direct investment of manufacturing industry. Among the countries and regions along the Belt and Road, China and ASEAN have a harmonious cooperation relationship, and their share in China’s outward foreign direct investment and import and export trade has been increasing. ASEAN is also the largest export destination and the largest source of imports for China in the Belt and Road route, accounting for more than 30% of the total trade volume.

 

The textile industry is not only the leading industry that help the construction of the Belt and Road Imitative, but also the preferred livelihood industry for promoting industrialization, creating national wealth and providing a large number of employment opportunities in countries and regions along the Belt and Road. ASEAN is an important partner in the construction of the Belt and Road Initiative and a key area for the international capacity cooperation of China’s textile industry. In recent years, many domestic textile enterprises have invested in setting up factories in ASEAN countries, promoting the international development of China’s textile industry and strengthening the implementation of the international capacity cooperation projects of the textile industry.

 

In recent years, the development pace of China’s textile industry in Africa has also been accelerating. With its advantages in resources, labor, policy and consumption potential, Africa has become a key area for the overseas layout of Chinese textile enterprises.

 

Industrial insiders pointed out that the comparative advantage of developing the textile industry in Africa is obvious. Firstly, Africa has a largely young and inexpensive workforce. Secondly, some countries in Africa have advantages in energy and raw materials. Thirdly, Africa has an excellent external trading environment that can access in the market of Europe and the United States preferentially. Finally, in recent years, preferential incentives released by African countries have continued to create a favorable business environment, while Africa also has huge consumer market potential.

 

Source: CHINA TEXTILE LEADER Express