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Garment factories struggle to survive

By Yu Hongyan (Chinadaily.com.cn)
Updated: 2008-11-17 17:53

The financial crisis has seen some companies in the textile and garment industry facing shut downs, while other factories struggle to transform their business.

"To survive is a victory" has become a consensus among factories in Fujian province, one of the most important centers in China's textile and garment industry.

"Garment factories of around fifty to sixty employees have almost died out and those with 200 or 300 employees are also on the brink of ceasing production," said a local industry insider to the Beijing Morning Post. He blames an overdependence on exports that made these enterprises vulnerable in the face of the financial turbulence.

Statistics have it that among thousands of garment and textile factories centered around Quanzhou, Fujian province, nearly half are export-oriented, and the declining market is hitting the industry hard.

Orders from abroad have evaporated in the wake of the global decline and some companies are confronted with the cancellation of previous orders. "The cancellation rate is very high and buyers are finding every possible excuse to do so," said an owner of a local garment factory to the paper.

"The situation next year may be more rigorous."

As many industry insiders predicted, the real impact of the financial crisis may be revealed later in 2009.

In a wave of companies shutting down, survival has become the paramount task for many garment and textile factories, as they find new ways to break out.

Local factories in Jinjiang, a city in Fujian known as "China's shoe capital", are turning back to the road of OEM (Original Equipment Manufacturer) by providing supportive service and processing to sizable enterprises.

Others have begun to focus on the domestic market, which has proven not an easy way to go. "The operating cost is too high to enter domestic stores" said a spokesman from a company that decided to fall back on the domestic market. Another concern is the adjustment of product mix to cater to Chinese consumers, he said.

However, in a global downturn where some see troubles, others find opportunity. The apparel giant Nike is set to add five production lines in Quanzhou, owing to the closure of some Nike factories in Thailand, as well as the advancement of the coastal city's production chains and technologies.

Taking advantage of the appreciation of the yuan, some enterprises in Fujian have already begun to upgrade their equipments. “We are seeking every opportunity to rebound," said Lin Xiangyang, general manager of a children's wear manufacturer.

To help China's textile industry go through the global slowdown, the Chinese government has taken several favorable measures this year, by raising export rebates and tax cut.