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China a bright spot on wool's gloomy radar

China a bright spot on wool's gloomy radar Source: english.ctei.gov.cn
Date: 29-06-2012
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RISING domestic demand for wool in China and other emerging countries means all is not doom and gloom for the Australian industry, according to AWI.
Clothing spending by Chinese urban consumers is expected to grow 12.5 per cent year-on-year by 2020.

AWI’s latest subscriber e-newsletter says the China National Textile and Apparel Council recently approved a 10-year plan to increase textile and clothing exports by 7pc annually. This would raise the export value of its fibre products to $U400 billion by 2020.
The report, compiled by AWI’s Paul Swan and Allan Wang, shows the value of garment and textiles rose to $US29.5b – up 3.9pc - and $US20.4b - up 1.4pc – on the previous year.

Data from China’s National Bureau of Statistics shows spending on garments jumped 19.5pc in April compared with the same time last year, and have grown at an average monthly rate of 21.6pc over the past 10 months.
Meanwhile, AWI says the European and North American apparel market has matured and is unlikely to see any significant volume growth.

Growth from 2000-2010 was attributed to production moving to Asia, which lowered garment prices and sparked growth.

“There are now no major western apparel productions to move to Asia, and little likelihood in the next few decades of any more demand stimulation from falling prices,” the report said.

“Subsequently, western markets will simply grow and fall in line with the economic cycle – which usually means up a bit one year and down a bit the next.
“However many horror stories there might be about retail sales in Greece right now, clothing sales in Germany, France, the UK and northern Europe are likely to carry on just being flat, at least for the foreseeable future, therefore more or less ensuring a constant volume of orders.”

The report said since 2011, substantial changes to the clothing market in Western Europe and North America had been expected and nearly all garment manufacturers were experiencing order shortages.

But this was not solely because of falling consumer demand but rather that Asian garment producers raised their prices too fast, charging about 16pc more than the previous year while western consumers were prepared to pay only a 2-3pc increase.
“The increased costs were primarily driven by increased raw material prices, wages rates, interest rates and energy costs,” the report said.

“On top of all this, the Chinese and Indian domestic markets have slowed and most of the other emerging economies such as Brazil and Turkey have increased their protectionist barriers against imported clothing.

AWI said US and western Europe’s clothing import values increased by 15pc and 17pc from 2010 to 2011 but retail value only increased between 3-6pc.
The average price of apparel imported into western Europe was higher. From China, it was up 23.5pc, India 32pc, Bangladesh 27pc and Cambodia 24pc. In the US market, the average price of apparel imported was higher from China 8.2pc, India 16.3pc and Bangladesh 23.6pc.

“With wool and cotton prices falling in late 2011, most sensible buyers anticipated that Asian suppliers would be cutting their prices to match in 2012. Naturally, buyers decided to wait and see what would happen,” the report said.
 
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