Circular Knitting Machine Manufacturer & Supplier!

On February 4, 2016, the U.S., Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, 12 countries officially signed TPP (Trans-Pacific Partnership Agreement) in Auckland. The members of TPP will reduce or relieve import tariff on more than ten thousand categories of commodities including textile clothing. Influenced by TPP, the competiveness of Chinese textile clothing industry will be weakened significantly.

 

Competiveness is weakened on American and Japanese market. In the first ten months of 2015, the total value of Chinese export textile clothing products was 234.98 billion dollars. Export proportion to the U.S. and Japan reached 2.5%. Vietnam, Mexico and other members of TPP are the largest competitor for China on American and Japanese market. After the agreement going into effect, the enterprises in members of TPP can enjoy the treatment of zero-tariff in the U.S. and Japan. Taking Vietnam as an example, textile clothing products can enjoy the treatment of tax reduction by 12%~32%. It is predicted that market share exported to the U.S., Japan and other regions will increase by 1 times while Chinese export enterprises should pay import tariff based on standard tax rate. Comparative cost grows significantly. As cotton shirts as example, import tariff rate of Chinese export enterprises in the U.S. and Japan is higher than that of members of TPP by 7.4%~19.7%. Competiveness is weakened substantially.   

 

Industry chain of textile clothing suffers from impact. TPP adopts rules of origin used in North American Free Trade Zone, yarn-forward. All of textile products should be processed in members of TPP except for materials, only can enjoy tariff preference in free trade zone. The rule will reduce bonus of policy brought by China-ASEAN and other free trade zones, forcing Vietnam and other main importer of textile materials to transfer their orders from China to other members of TPP. China loses almost 10 billion dollars of orders only in Vietnam. The embarrassing situation that has capacity and market while lacking of orders will result in Chinese textile materials manufacturers getting into trouble or even shut down, heavily hitting the improving systematic advantages of textile clothing industry in China. 

 

Foreign-invested textile clothing enterprises will accelerate their transfer. In recent years, due to price of cotton hanging upside down, RMB appreciating, Chinese labor cost rising, Chinese textile clothing industry has obvious trend that transfer to Southeast Asia. After TPP going into effect, recessive tariff and rules of origin – yarn-forward results in external environment that Chinese textile clothing industry invites investment deteriorating rapidly. The ability that attracts foreign investment is decreased sharply. In pursuit of low coast and high revenues, foreign-invested textile clothing enterprises will accelerate their transfer to Vietnam, Peru, Mexico and other members of TPP further. Meanwhile, the transfer of Chinese textile clothing industry to Southeast Asia is also quickened.

 

In recent years, 10%-15% of orders run away from China to Southeast Asia. Taking the U.S. as an example, value of trade of clothing imported from China to the U.S. accounted for 39.2% in 2010. It fell to 36.2% in 2014. In 2000, value of imported clothing from Vietnam to the U.S. only accounted for 0.1% while it had already grown to 11.3% in 2014. Vietnam has already become the second largest supplier of clothing for the U.S.. What’s more, in May 2015, Vietnam signed free-trade agreement with Korea. For Vietnam, Korea will reduce tariff on 95.43% of tax items including textile; in August, 2015, Vietnam achieved consistent principle on free-trade agreement with EU. Tariff on almost all of commodities from Vietnam will be reduced. Chinese textile clothing industry will suffer from more impacts of South East.