China's textile industry: Added value upgrade, stability highlights, new opportunities for global expansion

Trend three: talent, technology, capital to export, head textile enterprises overseas expansion to build a new growth curve

With the increase in the share of China's leading textile enterprises in international brands, and in line with the supply demand of the global market of brands, Chinese enterprises have opened the process of overseas expansion. On the one hand, Southeast Asia and other regions have relatively low labor cost advantages and tariff concessions, on the other hand, they lack the corresponding mature talent, technology, industrial support and capital accumulation. China's leading enterprises take the domestic industrial base as the core, copy and export to the outside, and well combine the advantages of overseas and domestic industries to obtain greater room for growth.

Southeast Asia imports intermediate goods and textile equipment from China for terminal processing. However, in this process, China still mainly controls the production of intermediate links in the textile industry, and continues to export to Southeast Asia. According to uncomtrade statistics, in 2019, Vietnam is the first/second largest country in China's textile equipment/textile intermediate exports, accounting for 15%/10%, India is the second largest country in China's textile equipment exports, accounting for 12%, and Bangladesh is the fifth/third largest country in China's textile equipment/textile intermediate exports. The ratio is 5.2%/5.4%, which is a big change compared with 2005. At the same time, taking Vietnam as an example, in 19 years, the proportion of Vietnam's textile equipment/textile intermediate imports from China was as high as 57%/52%, while in 2005, it was mainly imported from Taiwan.

International brand supply chain migration: Rapid migration from China to Southeast Asia in the past 10 years. From the perspective of the change in the distribution of Nike footwear production, Vietnam has increased from 2% to 50% in the past 25 years, and China has decreased from 43% in 2000 to 22%. From the perspective of Nike apparel production distribution changes, the proportion of Vietnam has increased from 15% to 28% in the past four years, and the proportion of China has decreased from 26% to 23%. From the Adidas situation, 98% of the current footwear and 91% of the clothing production are from Asia, of which the proportion of shoes produced in Vietnam increased from 31% in 2010 to 43%, the proportion of shoes produced in China fell from 39% to 16%. The share of garments produced in Vietnam rose to 19% from 10% in 2013, while China's fell to 19% from 36% in 2010. PUMA is similar. It can be seen that in the past 10 years, the international big-name shoe and apparel supply chain has migrated from China to Vietnam.

Head manufacturers keep up with the wave of industrial migration, continue to export talent, technology, capital, and build a new growth curve. Bound to the international brands of the Chinese mainland and Taiwan head footwear manufacturers, in the early days followed the wave of the fifth global industrial migration in Vietnam, Cambodia, Indonesia, India and other Southeast Asian, South Asian countries continued to export talent, technology, capital, expansion of production bases, the use of local favorable labor costs and tax policies to achieve rapid expansion. In 2019, Fengtai's production in Vietnam/India/Indonesia accounted for 52%/26%/13%, Yue Yuen's production in Vietnam/Indonesia accounted for 44%/39%, Huali's main production capacity is in Vietnam, and about 16%/16% of Shenzhou's production is distributed in Vietnam and Cambodia. In the long run, China's labor costs will continue to rise, the trend of industrial chain migration is irreversible, the early layout of Southeast Asia's leading manufacturers will have a significant first-mover advantage.