On April 2, the “Pakistan Investment Forum” organized by the Industrial and Commercial Bank of China and Habib Bank of Pakistan was held in Suzhou. The meeting attracted more than 40 companies and heads of relevant departments from China and Pakistan to discuss China’s Investment and development opportunities between Pakistan.
Xu Yingxin, Assistant President of China Textile and Apparel Federation, Executive Vice President of Textile Industry Branch of China Council for the Promotion of International Trade, Zhu Beina of China Cotton Textile Industry Association, Lin Yunfeng, Vice President of Textile Industry Branch of China Council for the Promotion of International Trade, China Knitting Industry Zhao Hong, vice president of the association, attended the meeting.
Xu Yingxin said at the textile sub-forum of the “Pakistan Investment Forum” that my country’s textile industry has now entered a new stage of transnational layout, and overseas investment is accelerating in multiple regions, industries and forms. At the same time, the strategic goal of the textile industry’s transnational resource allocation is to achieve transnational integration of the industrial chain and global breakthroughs in the value chain through “going global.”
According to incomplete statistics, by the end of 2014, Chinese companies had established more than 2,600 textile and apparel production, trade and product design companies overseas, distributed in more than 100 countries and regions, covering key areas such as Southeast Asia, North America, Europe, Australia, and Africa. region, the main investment companies come from coastal provinces such as Zhejiang, Jiangsu, and Shandong. Foreign investment in the textile industry covers almost the entire textile and clothing industry chain, from the upstream raw materials such as cotton, pulp, and hemp, to the manufacturing of intermediate products such as cotton spinning, wool spinning, and chemical fiber, and then to the terminal clothing, home textile products, and textile machinery. involved. The forms of foreign investment in the textile industry include typical FDI forms such as greenfield investment, equity mergers and acquisitions, asset acquisitions and joint ventures. Although the cumulative statistical amount of overseas investment is only a few billion US dollars, according to special visits and surveys conducted by the China Textile and Apparel Industry Federation in the past three years, overseas investment in my country’s textile industry has shown an accelerated growth trend.
Xu Yingxin said that based on the understanding of the textile industry’s “going global” situation, the current overseas investment in the textile industry mainly presents “two main lines”, “three characteristics” and “two key concerns”.
Two main lines and one main line are to take my country’s industrial capital as the leading factor, carry out transnational layout of productivity through greenfield investment and cooperation, create a “China + neighboring countries” (focus on Southeast Asia and South Asia) manufacturing base layout model, maintain and improve China’s textile industry has an international leading position in the global supply chain. Another main line is that my country’s textile industry capital has vertically extended and controlled the raw material resources, design and R&D resources, brand resources and market channel resources at both ends of the industrial chain through proactive overseas direct investment and mergers and acquisitions, driving the overall development of our industry. Penetrate into high value-added areas of the world textile industry value chain.
Three characteristics: First, the cotton spinning and knitting industries have become hot spots for overseas greenfield investment. In the past few years, the cotton purchase and storage policy has caused domestic cotton prices to be 30% higher than international cotton prices on average, which has seriously weakened the international competitiveness of my country’s cotton spinning industry. In 2012 and 2013, China imported 1.53 million tons and 2.1 million tons of cotton yarn respectively, year-on-year. The growth rates were as high as 69% and 37% respectively. Under this situation, domestic cotton spinning companies began to invest overseas on a large scale. The total cotton spinning investment of Tianhong, Bailun, Huafu, Xindadong, Yulun and other companies in Vietnam has exceeded 1 million spindles. Daiyin has invested in Malaysia, Cole’s cotton spinning project in the United States has also entered the production stage. At the same time, due to the labor-intensive nature of the sewing process, knitted garment processing is also a popular industry for foreign investment in our textile industry. Key enterprises such as Shenzhou International, Jifa Group, Dongdu Group, and AB Group have made greenfield investments in countries with lower labor costs such as Cambodia and Vietnam. For example, 60% of Dongdu Group’s orders have been undertaken by manufacturing bases in Southeast Asia. The number of local workers has exceeded 20,000.
Second, cross-border mergers and acquisitions of upstream raw materials and brand technologies are increasing. In terms of controlling upstream raw material resources, Ruyi’s acquisition of Australia’s Kirby Cotton Farm and Fulida’s acquisition of Canada’s Newsil Dissolving Pulp Company are typical successful cases. In terms of brand and technology mergers and acquisitions, Youngor acquired shares of SMART and XINMA, Zhongyin Cashmere acquired the British Duncan Spinners Mill, Ruyi acquired the Japanese listed company Reina Co., Ltd., Wanshili acquired the French silk company MARCROZIER, and Masfil acquired the Italian Krizia brand, Jiangsu Cases such as Jinsheng’s acquisition of all assets and equity of Swiss Oerlikon’s natural fiber textile machinery and textile machinery parts are all efforts to acquire high-quality brand and technology resources globally through mergers and acquisitions based on the company’s own needs.
Third, “going out” is closely integrated with the Chinese market. The “going global” strategy of my country’s textile industry is based on the healthy development of domestic business, and the two cooperate and support each other. The final sales place for many overseas investment businesses is the rapidly developing Chinese market. Most of the cotton yarn produced overseas by the aforementioned Tianhong, Daiyin and Cole Groups is sold back to China. Many investment and mergers and acquisitions of overseas brands and technologies also adhere to the strategic concept of “grafting Chinese market momentum with global resources”.
Two key concerns: First, changes in global trade policies are profoundly affecting the reshaping of the global textile supply chain, and regional trade agreements such as the TPP will pose greater challenges to the development of our industry. Since the Doha round reached a deadlockSince the 1990s, regional free trade agreements have had a huge impact on global trade in goods. For example, due to the two-way zero tariff on most products, the China-ASEAN Free Trade Area has objectively accelerated the relocation of some of China’s cotton spinning and clothing production capacity to Vietnam and other countries. On the other hand, it has also driven the growth of domestic exports of fabrics and accessories to ASEAN countries. ASEAN has quickly surpassed Japan to become China’s third largest export market, and the textile and apparel industry chains of my country and ASEAN are undergoing deep integration. In the next few years, due to the huge market capacity of the United States and Japan and the rules of origin of “from yarn identification” to “from cotton identification”, the signing of the TPP may further accelerate large-scale investment in the cotton spinning, fabric and clothing industries in Vietnam, Malaysia and other places. , Chinese companies need to continue to take advantage of the trend. In addition, Japan and the European Union use preferential country tariff policies to give Cambodia, Myanmar, Vietnam and other countries zero or low tariffs, with tariff preferences of up to 6-10 percentage points, inducing buyers to place purchase orders on the premise of meeting quality requirements. These countries transfer orders, which in turn accelerates the pace of overseas investment by our companies.
Second, enterprises are becoming increasingly rational and prudent in their overseas investments, attaching great importance to overseas financing, comprehensive costs, investment security and full-process risk management. In the China Textile Federation’s special survey on overseas investment in the industry, the issue of financing costs for overseas investments has always been a hot issue. Enterprises’ overseas investment and mergers and acquisitions are trying to make full use of the current time window when US dollar financing costs are low. For example, the comprehensive interest cost of Daiyin’s cotton spinning project loan in Malaysia is significantly lower than the domestic financing cost. At the same time, enterprises also attach great importance to due diligence and feasibility analysis of investments, taking into account many factors such as labor adequacy and cost, labor productivity, raw material supply, industrial chain support, sales market, management talents, etc., calculating comprehensive costs, and focusing on leveraging investments. A real advantage of the destination. In addition, investment security and risk prevention and control are the factors that companies are most concerned about. It is very important to fully understand the legal system, political environment, and cultural customs of the investment location. When talking about cooperation with Pakistan’s textile industry, Xu Yingxin said that Pakistan is an important member of the world’s textile industry, and the textile industry is also Pakistan’s most important pillar industry. At the same time, building and promoting the China-Pakistan Economic Corridor to achieve greater progress is a major task of the “Belt and Road” national strategy.
China’s textile industry will do its best to support the upgraded version of the China-Pakistan Free Trade Zone in achieving a high level of two-way free trade in the field of textiles and apparel. This will also help increase the enthusiasm of Chinese textile companies to cooperate with Pakistan in production capacity. At the same time, it also fully supports the further advancement of the “China-Pakistan Industrial Park” project jointly built by the Industrial and Commercial Bank of China and its Pakistani partners and the “Pakistan ICBC Ruyi Textile and Garment Industrial Park” project, and provides promotion, information interaction, financial support and risk control plans in the park. Do some down-to-earth service work in terms of recommendations and other aspects. Qiu Yafu, chairman of Shandong Ruyi Technology Group, also said at the meeting that investing and building factories in Pakistan is currently the best choice for Shandong Ruyi Technology Group. Not only does Pakistan have abundant labor and energy resources, but workers also have a very positive attitude towards work. At the same time, China and Pakistan have stable diplomatic relations and profound friendship. It is understood that Shandong Ruyi Technology Group plans to invest US$2 billion in Pakistan. It has already invested in the “Pakistan ICBC Ruyi Textile and Garment Industrial Park” project in Pakistan, and the project is currently in normal operation.
