11th November 2020
UK government still hasn’t produced a lorry drivers’ guide
In the first three months of this year, we saw a massive drop in Chinese apparel exports to the US. It doesn’t mean the end of China’s dominance.
There’s a common claim about every country that wants to be the next China. Whether from governments, trade associations or foreign consultants, we’re constantly being told: “X country could easily take over as the world’s dominant apparel manufacturer. All it takes is…”
Just as constantly, that “all it takes” never transpires – because the group demanding it simply hasn’t got the power to make it happen.
We know already that China’s low first-quarter exports were an insignificant glitch in. But let’s take the other major Asian apparel exporters who’ve recently had their apparel export prospects appraised.
Leading Asian exporters:
|APPAREL EXPORTS 2015 ($BN)|
With a million new people a month joining its workforce, and job opportunities falling during 2015 in all industrial categories except IT and textiles/apparel, India needs garment making jobs more than anywhere else.
So far, its apparel exports are just half of Bangladesh’s, and less than a tenth of China’s. Though India has been remarkably unsuccessful in creating garment-making jobs, its propaganda claims India’s apparel and textile industry will create 30 million new jobs over the next ten years.
In the 12 months to December 2015, it created just 72,000.
The World Bank in April thought the answer was for the government to:
Most Indian factory owners are also insistent India makes concessions to the EU for a Free Trade Agreement (FTA), and want cheaper and more reliable energy. But two years after Narendra Modi came to power with a lengthy list of reforms, none of the changes relating to textiles and apparel have been enacted. He just doesn’t have the parliamentary backing to get most of his ideas through.
Most Indian factory owners are also insistent India makes concessions to the EU for a Free Trade Agreement (FTA) with the EU and US. But Indonesia started implementing an FTA with Japan in 2007, almost precisely as Japanese importers decided to cut their imports from China. Since then, it has won about 10% of the apparel exports to Japan that have been lost by China – far less than much smaller Vietnam and Bangladesh.
Pressed early in May, Ade Sudrajat, chairman of the Indonesian Textile Association, admitted he had a much longer list of changes he wants: government investment in dyeing, finishing, fabric printing and logistics, a lower school leaving age, nationalistic public purchasing policies, cheaper power.
Few would disagree with McKinsey’s 2011 list of needs for Bangladesh’s continuing growth in apparel exports:
Or with the World Bank’s list in April:
These lists also included a few things that weren’t in a government’s gift – like programmes for better factory productivity or properly trained second-tier factory management.
The Bangladesh government’s reaction to this, though, has been merely to complain that not enough Western governments give its companies duty-free access to their markets. Bangladesh is now the world’s largest apparel exporter after China – but it still exports just one-fifth the number of garments China does.
According to Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS), his country’s government should:
The reliance on government seen in Bangladesh, Indonesia, India and Vietnam is unfashionable these days in the West. But the depth and efficiency of China’s government-funded infrastructure has been central to its domination of world textile and apparel manufacture – as it was in the post-World War II industrialisation of Japan and South Korea.
The only major buyer that has an FTA with China is Australia: the calls for FTAs from other countries are simply attempts to get Western taxpayers to subsidise a competitive edge against China.
If good infrastructure – whether physical (like highways and ports, for example) or institutional (like honest and efficient Customs administrations) – guaranteed a plentiful supply of good value clothing makers we’d all be buying from Germany. If trade deals were essential, we’d all be buying from Haiti, one of the few manufacturing countries with duty-free access to all developed countries. Those few – Lesotho, Madagascar, Tanzania, Uganda, Ethiopia and Haiti – account for just 0.9% of world apparel trade.
China dominates our industry because it’s got low costs and higher productivity than its neighbours. Matching China’s infrastructure won’t create productivity: only properly motivated owners and workers can do that. But retaining weaker infrastructure or greater political stability than China makes it impossible to match that productivity.
The “all it takes” programmes are unaffordable or politically unrealistic. It’ll be decades before China’s anywhere near handing over its leadership.