There's No Ignoring China


Earlier this year, we announced our launch of Apparel's China Symposium & Sourcing Fair, to take place Sept. 13-16 in Shanghai. Its purpose was to help primarily U.S. and European apparel firms understand China's "new" apparel industry, and offer introductions to potential partners relative to sourcing, as well as joint venture and licensing opportunities.

Having just returned from the event - which attracted more than 160 global sourcing executives for the symposium alone - I am more convinced than ever that there's no ignoring China. That's not to say production will evaporate from the Western Hemisphere or that direct importing from China is a breeze. Nor did the symposium have all the answers about what really will happen with quotas post-2005 (that issue remains a political hot potato, though best guesses seem to be that ultimately there will be little stemming of China's export tide). But what it does say is that China is a force - one that is growing, emerging and changing quickly. And whether you view China as an opportunity, a competitor, or maybe both, there's no escaping the reality of its enormous role.

One only has to look at the newest portion of Shanghai's super-modern, super-high skyline, which according to locals, did not even exist a mere decade ago, to appreciate the incredibly rapid pace at which China is changing.

There is communism, of course, bureaucracy, and rampant design and product pirating. (Interestingly, relative to the latter, symposium speaker and attorney Dr. Bart Fisher explained that from a cultural standpoint, the Chinese seek to improve their society by sharing ideas and have difficulty understanding the West's culture, which embraces the protection of original, creative ideas through legal means.)

On the flip side, there is tremendous textile and apparel production capacity with good quality. In addition, there are improving capabilities on the part of apparel firms in north China, a consumer base that is gaining spending power and is brand loyal, and new retail laws effective this December that allow for complete foreign ownership.

Relative to capacity, simply consider these facts, as presented by keynote symposium speakers Merrill Weingrod and Mohan Komanduri of Kurt Salmon Associates:

With 40,000 to 50,000 enterprises, China's apparel and textile industries consume 30 percent of the world's fiber.

Employing 13 million to 15 million workers, the apparel and textile industries represent China's largest industrial employer.

China's textile industry was responsible for consuming 65 percent to 75 percent of the world's textile equipment from 2000 to 2003.

China produces 20 billion garments annually.

The factories that I visited during the trip, with Lectra serving as a host (Gerber Technology and Shartex also organized tours for the symposium attendees), were extremely clean and attractive and producing well-made products for such top names as Nike, Federated, Speedo, Reebok and Costco. Technology was most evident in pre-production and at least one of the factories had automated cutting. There was little automation relative to materials handling, sewing and pressing, and the factories had the luxury of conducting 100 percent inspections as many as four times, all combining to put efficiency rates in an average range of 25 percent to 45 percent, according to the executives previewing the factories. Given average wage rates of US$0.45 per hour without social costs, however, efficiencies haven't yet been the focus. But, it wouldn't surprise me if, like everything else in China, that starts to change too.

Based on attendee feedback, we have committed to the next Apparel's China Symposium & Sourcing Fair, which will be held Sept. 19-22, 2005, in Shanghai. We expect the sourcing fair exhibitor base to double or even triple (up from 340 exhibitors this year), and we know that a year from now there will be a whole new landscape (figuratively and literally) to explore. In so many ways, only the tip of China's apparel industry has been scratched.

Editor's Note: Look for more coverage of Apparel's China Symposium & Sourcing Fair in next month's issue of Apparel.

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