Business

Yuan appreciation and recession in the West are driving Chinese textile makers to shift focus from exports to the domestic market.

Most Chinese textile makers, attending the ongoing China International Trade Fair for Home Textiles and Accessories in Shanghai, are keen to explore the domestic market to cope with declining profits.

“We have decided to start selling in the domestic market this year,” said Lu Wei, sales manager of Shanghai Homeland Textile Co Ltd, yesterday.

“The fair may help us explore other income avenues, especially after the yuan revaluation last year led to a 30-percent drop in profits,” Lu said.

His company, which earlier manufactured textile equipment and had annual sales of 100 million yuan (US$14.71 million), aims to achieve a turnover of 5 million yuan from domestic sales in the coming years by selling fabric to local distributors.

China’s labor-intensive home textile industry saw a 30-percent growth year on year since 2003, fueled by a buoyant overseas market.

But textile exports slowed down significantly last year, leaving most home textile makers to struggle with declining sales and profits. A stronger yuan during this period meant lower returns for exporters.

In August, the government gave more export tax rebates to textile and garment manufacturers, but those in the industry say it is not enough to cover the losses incurred due to weak demand, soaring labor and raw material prices and stiff competition within a highly fragmented industry.

Some textile manufacturers, however, remain upbeat. “Rapid economic development in China has boosted people’s income and created a demand for high quality textiles. We hope the rise in prosperity will help the domestic market,” said Hu Xinggang of Hangzhou Xiaoshan Phoenix Textile Co Ltd. The company hopes to lift domestic sales from the current 10 percent to up to 40 percent.

Nearly 909 textile makers from home and abroad attended the trade fair at the Shanghai New International Expo Center in Pudong.

Organizers said it has increased the number of buyers from domestic department stores and shopping malls this year. More than 200 “sourcing officials” from 10 cities were invited to the fair for the first time.

(Shanghai Daily August 28, 2008)