China'S Textile Industry Continues To Grow Overseas Investment. Stock Over 10 Billion! Africa Has Become A New Oasis For Textile Industry Investment.

China's manufacturing and manufacturing costs continue to increase. International textile industry investment and international purchase orders transfer to other developing countries and regions is an inevitable trend.

In recent years, textile processing capacity of developed countries and regions such as the United States, Europe, Japan and Korea has also been increasing rapidly in Southeast Asia. In the long run, they will inevitably compete with China's textile industry.

The textile industry is a pillar industry in China's export earning.

According to the customs data, according to the textile industry caliber statistics, in the first half of 2019, the total export volume of textiles and clothing in China amounted to 128 billion 400 million US dollars, accounting for 70% of the total contribution rate of China's goods trade surplus.

Textile industry is a traditional pillar industry in China. It is also an important livelihood industry and a technology green fashion industry in the new era.

Over the past forty years since reform and opening up, China's textile industry has taken the lead in building the world's leading modern manufacturing system of the whole industry chain, and has become the world's largest producer, export and consumer of fiber products.

　　 In recent years, China's textile industry has gradually entered the new stage of global layout.

From the external environment, along with the "one belt and one way" initiative and the international capacity cooperation, and the rapid rise of textile and garment industries in Southeast Asia and Africa, more and more Chinese textile enterprises are going out to sea.

At the same time, due to the escalation of Sino US trade friction, it poses threats and challenges to the sustainable and healthy development of China's textile industry, and deserves attention and vigilance.

Survey of foreign investment in textile industry

The foreign investment of China's textile industry is accelerating in a multi regional, multi industry and multi form manner, and the awareness of textile backbone enterprises to take the initiative to carry out international layout is constantly increasing.

According to incomplete statistics, China's textile industry has more than 10 billion foreign investment stock, and overseas investment is distributed in more than 100 countries and regions, covering Southeast Asia, Africa, Europe, North America, Australia and other key regions, with annual sales revenue of more than ten billion US dollars.

According to the statistics of the Ministry of Commerce, China's textile foreign direct investment totaled 6 billion 230 million US dollars in 2015~2018, accounting for 7.12% of the total foreign direct investment of manufacturing industry (see Table 1).

The external investment of textile industry covers almost the entire textile and garment industry chain, and the main forms of foreign investment include green investment, equity acquisition, asset acquisition and joint venture and other typical FDI forms.

China's textile industry enters a new stage of transnational layout

At present, China's textile industry has entered a new stage of transnational layout, and overseas investment is accelerating in many regions, industries and forms.

At the same time, the strategic goal of transnational resources allocation in textile industry is to achieve cross-border integration of industry chain and global breakthroughs in value chain by going out.

Characteristics of foreign investment

At present, China's textile industry overseas investment mainly presents two main lines and three characteristics.

Thread:

A main line is to take the industrial capital of China as the leading factor, and carry out the transnational layout of productive forces through greenbelt investment and cooperation, and create the layout pattern of manufacturing base in China + neighboring countries (especially in Southeast Asia and South Asia), so as to maintain and enhance the international leading edge of China's textile industry in the global supply chain.

Another main line is that China's textile industry capital is controlled globally through active overseas direct investment and mergers and acquisitions, and raw material resources, R & D resources, brand resources and market channel resources at the two ends of the industrial chain.

Characteristic:

First, the cotton spinning and knitting industry has become the focus of overseas greenbelt investment. Because domestic cotton prices are higher than international cotton prices, domestic cotton spinning enterprises are investing overseas in a large scale.

At the same time, due to the labor intensive characteristics of sewing links, knitted garment processing is also a hot industry for Chinese textile industry to invest abroad.

Two, cross-border mergers and acquisitions of upstream raw materials and brand technology are increasing.

The three is to go out and integrate closely with the Chinese market. China's textile industry is based on the healthy development of domestic business.

Investment area Africa

Africa's textile and garment industry: huge room for development

Compared with the average development level of the global textile and garment industry, the overall development of the textile and garment industry in Africa is lagging behind. There is much room for improvement in the production and sale of raw materials, upstream textile, printing and weaving, and downstream clothing and home textiles.

Africa has many high quality cotton producing areas, but the cotton yield is not high.

Cotton is one of Africa's most important economic crops. Benin, Mali, Chad, Burkina Faso and other four cotton countries represented the sub Saharan South Africa and the North West equator are important areas for high-quality cotton raw materials in Africa. Cotton production accounts for about 2/3 of the total in Africa.

Seed cotton production in Africa accounts for about 6% of the world's total. At present, the annual output of cotton is about 1 million 400 thousand tons. With the continuous expansion of cotton planting area in Africa, the output is expected to increase further.

However, although the planting area of African cotton is increasing, the output growth rate is relatively slow. The main reason is that the overall yield of cotton in Africa is weak.

Compared with the major cotton producing countries such as the United States, India and China, the yield per unit area of African cotton is very low. According to the data from the US Department of agriculture (USDA), during the 2018 to 2019 planting season, the average cotton yield per cotton producing country in Africa is only about 25 kg per mu, while the average cotton yield per unit area in the world is around 53 kg per mu, and the US yield per unit area exceeds 62 kg per mu, while China has exceeded 110 kg per mu level.

　　 The value chain of African textile industry is highly dispersed, and the overall production capacity is decreasing. Industrial development is mainly driven by FDI.

Most African countries have not yet formed a complete textile industry chain. In recent years, the overall capacity of textile industry is also decreasing.

According to ITMF statistics, from 2010 to 2017, the production capacity of African ring spinning decreased year by year, and the number of spindles decreased from 5 million 200 thousand in 2010 to 3 million 500 thousand. Rotor spinning capacity is also declining, from 169 thousand in 2012 to 151 thousand.

Shuttleless loom capacity increased, installed capacity increased from 14 thousand in 2011 to 19 thousand in 2017.

Therefore, although some African countries are rich in cotton, they still need to import large quantities of textile fabrics and accessories to produce products such as garments. The manufacturing cycle is long, the added value of products is low, and the industrial technology capability is also very weak.

Terminal products are inferior to imported products from Asia, both in terms of quality and price. In recent years, the selling of transnational second-hand clothing in Africa has caused great pressure on the development of native textile industry in Africa.

At present, the development of textile industry in Africa is mainly driven by foreign investment.

As Ethiopia and other countries began to attract foreign investment in textile industry and made some progress, many African governments began to follow suit and launch corresponding incentive policies, hoping to develop their own textile industry and raise their employment rate with the help of foreign capital and technology.

The trade deficit of Africa's textile and clothing trade is obvious, and the adverse balance is increasing rapidly.

According to the relevant data of the United Nations Trade Commodity Statistics Database (Comtrade), in 2010, Africa's textile and clothing exports totaled 14 billion 800 million US dollars, with an import volume of US $18 billion 100 million. In 2016, the export volume of African textiles and clothing fell to US $13 billion 600 million and imports increased to US $21 billion 500 million.

The trade deficit between 2010 and 2016 expanded from US $3 billion 300 million to US $7 billion 900 million, with a growth rate of 139% and a compound annual growth rate of 5.7%. This shows that the overall production capacity of native textiles and clothing in Africa is decreasing, but the consumer market is growing slowly, and the trend of demand enhancement is more obvious.

　　 Opportunities for textile industry to invest in Africa

The textile industry's comparative advantage in Africa has five specific points.

First of all, Africa has a large number of young labor force (average age of 20 years old), and will maintain a high level of labor supply in the long term, and the price of labour is very competitive.

Secondly, some African countries have the advantages of oil and other energy sources, as well as raw materials such as cotton supply.

Third, most African countries enjoy preferential trade policies in the United States and Europe. For example, the "African Growth and Opportunity Act" (AGOA) in the United States allows nearly 40 countries in sub Saharan Africa to export textiles and clothing products to the United States without quota.

The EU and Africa's "all except tax exemption (EBA)" agreement also allows African countries to export textile and garment products with quota free tariffs to EU Member States.

Fourth, African countries have introduced a number of preferential incentives in recent years, such as export incentives, foreign exchange control loosely, investment tax exemption policy, export tax rebate treatment and so on, creating favorable business environment for foreign investment.

Fifth, Africa's per capita fiber consumption (2.6 kg) is far below the global average (12 kg), which has great room for growth. With the rapid growth of the middle class in Africa and the dominance of the dominant population structure, the potential of Africa's huge consumer market can not be underestimated.

Some African countries with investment advantages in textile industry

Africa is the second largest continent in the world and the second largest continent.

The total area of Africa's land is 30 million 200 thousand square kilometers, which is more than 3 times that of China's land area, with a population of about 1 billion 200 million, with an average age of 20 years.

There are 54 countries in Africa. They are divided into five regions in North Africa, East Africa, West Africa, Central Africa and South Africa according to their geographical location. Although most countries have abundant natural resources such as agriculture, energy and mineral resources, the specific advantages of different regions are quite different.

Ethiopia, in East Africa, has become a new hot spot for textile enterprises in recent years because of its stable macroeconomic and political situation, the government's incentive measures to the textile industry and the construction of professional parks, cheap and large scale demographic dividend, cheap electricity and zero tariffs on exports to Europe and the United States.

Jiangsu sunshine group and Ethiopia signed a $980 million wool spinning project agreement, which is being implemented step by step; Wuxi's first cotton and 300 thousand spindles cotton textile project started construction and is about to go into production; Wuxi Jinmao invested 40 million dollars in Ethiopia to start the yarn dyed fabric and garment factory; Guangdong Huida signed a cooperation agreement with Ethiopia Investment Committee in 2016, and 210 thousand square meters of textile and garment industrial park also entered the construction stage.

Egypt in northern Africa has a long history of the development of the textile industry and cheap and high-quality cotton raw materials. Its superior location in Asia Europe Africa joint, the relatively complete infrastructure in the country, abundant human resources and lower production costs all have the leading edge in Africa.

After the stable political situation in Egypt, the government actively adjusts its economic structure, revise the investment law, launch a number of incentives, and focus on attracting foreign investment in the textile and garment industry. It has also become a new choice for the global layout of textile enterprises.

At present, the Sino Suez TEDA economic and trade cooperation zone is one of the main areas for Chinese textile and garment enterprises to invest in Egypt.

The textile project of Shaoxing Keqiao Lei Chu Knitting Co., Ltd., which invested 30 million US dollars, is officially signed. After the project is completed and put into operation, the annual output value is expected to reach US $40 million, which will solve the local employment of more than 500 people. Shandong, a leading textile enterprise in China, has plans to invest in the region.

Madagascar, an island country in southeastern Africa, has been developing textile and garment industry as one of its key objectives in recent years. While actively attracting foreign investment, it is also planning to build a professional textile and garment industrial park in China.

Madagascar has a pleasant climate and abundant labor force, and has the advantage of tax exemption for textiles and garments exported to the United States and Europe. Inner Mongolia deer King cashmere Co., Ltd. has been working in Madagascar for 20 years, and plans to further improve its industrial chain in Madagascar.

Changes and challenges

At present, the domestic and international situation faced by China's textile and garment industry is grim and complicated.

In particular, the escalation of Sino US economic and trade frictions and the comeback of the reverse globalization trend have brought severe challenges to China's textile industry's external trade, industrial structure adjustment and transformation and upgrading.

First, the Sino US trade friction situation, the industry manufacturing capacity to accelerate the transfer of overseas, the industry's long-term sustainable development capacity is impaired.

Since the implementation of the United States tariff collection list on 250 billion goods, the export products of China's textile industry are mainly textiles, yarns, fabrics, knitted and downstream industrial products, and some household textiles.

In the first half of 2019, the total export volume of textile products added to the 250 billion list declined by 21.9% compared with the same period last year, showing a marked downward trend compared to the 0.66% decline in the US textile industry's exports to the United States.

Especially for chemical short fiber and filament, carpet, industrial textiles and fabrics, exports to the US decreased by 20% - 40% compared with the same period last year. In August 2019, the office of the United States Trade Representative (USTR) again released a list of tariffs on 300 billion products, covering clothing, clothing, towels, bedding and other large household textiles.

Under such a trading environment, China's textile enterprises are facing more trade substitution and investment transfer, and the large number of orders from the United States has shifted from China to Southeast Asia and South Asia. The impact on China's textile industry can not be underestimated.

The transfer of overseas orders will inevitably lead to the transfer of manufacturing capacity to overseas. The US tariff levy is to guide the transfer of the existing textile and garment supply chain from China to Southeast Asia and South Asia.

If fully assisted by the United States, Southeast Asian and South Asian countries are expected to successfully establish a more perfect textile industry chain system in 5 to 8 years. China's textile industry will face a very serious risk of international order loss, and at the same time, it may lose substantially the leading international comparative advantage in the textile industry.

According to the Ministry of commerce data, in 2018, the overall foreign investment of China's textile industry slowed down, down 17% compared to the same period last year, but the investment volume of the key countries along the belt and road, such as Indonesia, Vietnam, India and Kampuchea, increased by 256%, 116%, 22.3% and 14% respectively. There are many overseas textile enterprises that are worried about the situation of Sino US trade friction.

Two, the competition of the international comparative advantage facing the textile industry is becoming increasingly fierce.

Under the background of the global total demand growth is weak, China's textile and garment industry is facing the practical difficulties of rising comprehensive cost, shortage of industrial workers and resource and environment constraints, and the leading international comparative advantage has been significantly weakened.

At the same time, the global trade policy reform is deeply affecting the supply chain remodeling of the global textile industry. Some regional trade agreements also pose a great challenge to the healthy development of China's textile industry.

If the bilateral FTA signed by Vietnam and the EU will enhance the competitiveness of Vietnam's textile and clothing exports to the European Union, the European Union and Japan will accelerate the transfer of some international orders from China through giving preferential preferential tariff policies to some Southeast Asian countries.

The new round of industrial revolution and consumption revolution has come to light, which shows that China's textile industry is very urgent to break through the low end of the value chain.

At present, China's textile industry occupies a dominant position in the manufacturing chain of the global supply chain, but it still lacks the dominant position in the high-end textile industry value chain, such as intelligent manufacturing core technology, global high-quality raw material resources control, aesthetic original design and fashion leading ability, international brand and market channel control.

With the rapid and large-scale penetration of overseas consumer goods fashion brands in the Chinese market in recent years, the pressure on capital accumulation and development potential of domestic clothing brands has become increasingly prominent. In the future, the high quality development of China's textile industry will face many challenges.

Opportunity and vision

For China's textile industry, the "six corridors, six roads, many countries and many ports" are all along the road.

("six corridors") refers to the six major international economic cooperation corridors of the new Eurasian Continental Bridge, China, Mongolia, Russia, China, Central Asia, West China, China, South China Peninsula, China Pakistan and Bangladesh, China, India and Burma.

The "six way" refers to the comprehensive information network of railways, highways, shipping, aviation, pipelines and space.

"Multi port" refers to a number of cooperative ports that guarantee the safe and smooth passage of large sea transportation routes, indicating overseas key investment areas and countries.

In particular, the "China South Central peninsula" in the six major economic corridors is the investment gathering place of China's textile industry's capital green space. The economic corridor of China, Pakistan, China, India, Burma and China Central Asia also has abundant resources for developing the textile industry. In Africa, such as Ethiopia, Egypt and other pilot and demonstration countries, also have great potential to develop the textile industry.

The "five links" index system of "one belt and one road" is accelerating the construction of a deeply integrated international and domestic market and a more suitable offshore investment environment. It can provide better quality factor resources supply and unified market for the linkage layout of domestic and foreign textile enterprises.

With the input and mutual commitment of many political, diplomatic and economic resources, it will also create a safe and stable medium and long term economic and geographical environment for our textile enterprises in the countries along the line.

At present, the world is undergoing a great change in the past hundred years. Under the joint promotion of technological innovation and trade and investment cooperation, the global industrial chain, supply chain and value chain are deeply intertwined, and the division of the global industrial division is reshaping, and international competition is becoming increasingly fierce.

But the general trend of world development is still "open sharing, win-win cooperation".

To successfully achieve the strategic goal of building a strong textile country, we must take advantage of the global perspective for the transnational allocation and control of advantageous resources. We need a group of genuine textile transnational conglomerates to go abroad, grow up and mature on the world stage, and develop into a global conglomerate with continuous profitability and innovation ability.

This also requires the joint efforts of Chinese textile people, textile enterprises, trade associations and government departments.