Editor’s note: At the 2014 Imported Yarn Forum, the Indian Cotton Textile Export Promotion Council and cotton yarn suppliers from Pakistan and other countries introduced their country’s textile market situation and suggested that Chinese textile companies actively take advantage of its good investment environment.
Indian Cotton Textile Export Promotion Council Siddhartha Rajagopal:
Textiles and clothing account for 4% of India’s GDP and are the industries that provide the most employment after agriculture. At present, Indian textiles account for 6.56% of global trade, clothing accounts for 3.43% of global trade, and the export of cotton products dominates. India is the second largest cotton producer and yarn exporter, accounting for 28% of global cotton yarn exports in 2013.
China is the second largest destination for Indian textiles and clothing exports, but most of the exports to China are raw materials, such as cotton and cotton yarn. China is India’s largest source of textiles and clothing imports, and India mainly imports high value-added textiles from China. In 2013, 11% of China’s textile and clothing imports came from India, of which 30% of cotton yarn imports came from India, while 45% of India’s textile and clothing imports came from China.
Today, India has become a highly competitive country in the cotton textile industry. First of all, India has obvious advantages in the field of raw materials. India produces 6.2 million tons of cotton every year, but consumes only 4.2 million tons of cotton. It is one of the few countries that still has surplus cotton after being used for production. In addition, India produces 526 kilograms of cotton per hectare, while the world average is 726 kilograms. Even if cotton planting area decreases, there is still a lot of room for improvement in cotton production in India. In recent years, investment in India’s textile field has grown very rapidly. Despite the rapid growth in yarn production, Indian cotton can still maintain a surplus. Domestic cotton prices in countries with excess cotton production tend to be lower than international cotton prices.
In addition, the Indian spinning industry has reached a world-class level. Textile companies have excellent traditions, fast operation speed, high startup rate, and excellent product quality. India also has vocational training institutions and design skills development institutes, and many highly qualified workers make Indian textile factories run efficiently. Complete infrastructure and public facilities, as well as lower labor costs, make Indian companies more competitive in terms of production costs.
The textile industry has always been moving from high-cost areas to low-cost areas. As China’s production costs rise, low-end products will increasingly be produced outside China. Just as European textiles gradually enter China from low-end to high-end, it is time for low-end textiles to leave China. India welcomes Chinese yarn customers to invest and purchase in India. Integrating Indian textile mills with the Chinese textile supply chain can significantly reduce costs for Chinese textile manufacturers.
In order to encourage the development of the textile and clothing industry, the Indian government has taken many measures, including allowing 100% foreign direct investment; the government has invested in the construction of infrastructure to build textile industry parks, and has currently approved the construction of 40 parks; the government has formulated export promotion policies Programs, including encouraging the export of production means, tariff subsidies and export tax rebates, aim to eliminate the impact of tariffs at different stages of production. By taking advantage of India’s friendly investment environment and India’s lower processing costs, and establishing market alliances with Indian textile companies, Chinese textile companies can enhance their competitiveness. It is time for Chinese textile companies to take advantage of investment opportunities in India.
Sajid Latif Sheikh, Manager of Pakistan Sadar Company:
China-Brazil cooperation has great potential
The textile industry is Pakistan’s largest manufacturing industry, accounting for 8% of GDP. Cotton and textile products account for 60% of Pakistan’s export share. Pakistan is the fourth largest cotton producer in the world and the third largest spinning country in Asia, with a spinning capacity of 12 million spindles.
From 2007/2008 to 2012/2013, the average annual growth rate of Pakistan’s yarn production reached 9.7%. Its yarn is known for its high quality and low price. In Pakistan, most spinning companies use local cotton, and some also use Indian cotton. Due to cotton quality restrictions, the average count of Pakistani yarn does not exceed 24S. In the product structure, low-count pure cotton yarn accounts for 47.1% of yarn output, medium-count pure cotton yarn accounts for 23.7%, and high-count pure cotton yarn accounts for 5.4%. Blended yarn accounts for 23.8%.
Pakistan once occupied a dominant position in China’s cotton yarn imports. Its market share in 2012 was about 39%, making it China’s largest cotton yarn supplier. Due to capacity constraints and weak Chinese demand for low-count pure cotton yarn, Pakistan is no longer a standout since last year. China’s demand for yarns above 32S has increased, and Indian yarns have gradually taken a dominant position. In 2013, Pakistan was overtaken by India, and its share of China’s cotton yarn imports dropped to 28%, and continued to decline in 2014. In recent years, China’s yarn imports have increased significantly, and the situation of Pakistani spinning mills is generally good. The investment plans of the Chinese government and investors in Pakistan’s energy, textile and apparel and related industries will help more Pakistani yarns be exported to China.
Now Pakistan’s textile industry is expanding its capacity. In the past six years, Pakistan’s cotton yarn exports have experienced an average annual growth rate of 15%. In 2012/2013, cotton yarn exports were the largest, with an export value of US$2.25 billion. In the past six months, the textile industry has borrowed 41 billion rupees from banks to invest in new machinery and equipment. Among these 41 billion rupees, the spinning industry’s loan amount reached 36 billion rupees. Siro produced in PakistanSpun yarn has a competitive advantage in the Chinese market and most of its products are exported to China. Siro spinning yarn has become the mainstream variety of yarn imported from Pakistan in China. Affected by this demand, related production capacity has been continuously expanded, and there are also textile companies investing in the production of vortex spinning yarn.
New policies to encourage the development of the textile industry in the next five years are being planned, with the goal of increasing Pakistan’s textile exports to US$26 billion. The new policy will focus on increasing the added value of products, paying attention to the quality of cotton seeds, training 120,000 practitioners, and providing tax incentives for imported advanced equipment. Since cotton production in Pakistan is low, the government will work to double cotton production as land conditions are already available and technology can be introduced from other countries.
Factors such as cheap land resources, low cotton prices and labor costs, preferential foreign investment policies, zero tariffs on imported cotton, and preferential export policies to many countries make investing in Pakistan’s textile industry very attractive. . Not long ago, the Masood Textile and Garment Industrial Park invested by Ruyi Group held a groundbreaking ceremony. The project invested 6 billion yuan and invested in the production of high-end cotton yarn, high-end jacquard fabrics, printing and dyeing fabrics, denim fabrics and knitted fabrics. After the project is put into production, it can be realized Sales revenue is 14 billion yuan. The investment of large Chinese textile groups in Pakistan reflects their confidence in China-Pakistan cooperation.
Chen Qinfeng, General Manager of Cathay Group:
See the direction clearly and find your position
In industries such as steel, textiles, and entertainment, customer demands and corporate competitiveness change extremely significantly every few years. Last year’s winning strategy may lead to today’s disastrous failure. Marketing master Kotler said: “There are two kinds of companies in the world: one is a company that adapts to changes, and the other is a company that is about to become history.” Therefore, analyze the changes in the imported yarn market, see the future market direction, and make Corresponding changes are very important for enterprises.
First, analyze my country’s yarn demand. In the past two years, my country’s annual cotton consumption has been about 9 million tons, of which about 6.3 million tons are used to produce pure cotton yarn and about 2.7 million tons are used to produce blended yarn. 6.3 million tons of cotton can be converted into about 6 million tons of cotton yarn. Adding in 2 million tons of imported pure cotton yarn, my country’s annual consumption of pure cotton yarn is about 8 million tons. Among these 8 million tons of pure cotton yarn, those with less than 40 counts account for 70%, which is about 5.6 million tons, and those with more than 40 counts, which account for 30%, are about 2.4 million tons. Affected by factors such as raw material constraints and rapid growth in labor costs, domestic spinning companies are turning to the production of products with higher added value. It is estimated that in five years, 80% of pure cotton yarns below 40 count may be imported. This means that imported cotton yarn has room to double in the next five years, and annual imports may reach 4.5 million tons.
Secondly, let’s look at the changes in the market distribution of imported yarn. At present, the imported yarn market has evolved from single to comprehensive, from small areas to large areas, and gradually extended from the coast to the central and western regions. In the next five years, the imported yarn market will become a national market and has become an unstoppable trend. The number of imported yarn operators has increased from a few to a majority. After the market turbulence in the second half of last year, 1/3 of the operators have been eliminated, and it is expected that the number will continue to decrease in the next year. The number of business operators will gradually decrease as they mature, and the market has cultivated a group of more mature importers and distributors.
From the perspective of the overall environment, my country’s cotton is facing destocking. After three years of collection and storage, the storage volume has reached more than 12 million tons, and it will take another three years to digest the huge state cotton inventory. During the destocking process, domestic cotton prices will not fluctuate significantly and will remain low. At the same time, the international market situation has not improved. The three major economies of Europe, the United States, and Japan are experiencing weak growth and weak consumption. Therefore, we believe that there will be two years of hard times ahead.
At first glance, due to the impact of imported yarn, domestic yarn is losing ground in the mid- and low-end fields. In fact, this is a manifestation of my country’s economic improvement and social progress, and an inevitable result of economic development. Therefore, domestic manufacturers should adjust their strategic direction in a timely manner and transform into high value-added products, and they can still benefit from this. Domestic spinning enterprises should carry out structural adjustment, transformation and upgrading, and choose the best target market segments. If the enterprise cannot be high-end, it must pursue small but refined.
For downstream manufacturers, learning to adapt to and make good use of imported yarn will help enterprises reduce costs and enhance competitiveness. The key is to screen suppliers and importers, select high-quality partners, and establish a stable and win-win cooperative relationship. There are time differences, price differences, and space differences in international trade. Do not look at imported yarn in the same way as domestic trade. In addition, we hope to establish an industry communication and trading platform to provide information and assistance to various parties in the transaction.
