Regular product upgrades, functional differentiation will become a new expectation of knitting value

On May 30, 2018, the State Council executive meeting chaired by Li Keqiang decided to reduce the import tariffs on daily consumer goods from July 1 this year. This is the fifth time since 2015 that China has lowered some tariffs on consumer goods. The main categories of commodities include household appliances, textile shoes and hats, kitchen supplies and other items. The average tariff rate for clothing, shoes and hats is reduced from 15.9% to 7.1%, and the downward adjustment is 55.35%. Therefore, as soon as the news came out, the entire textile industry suddenly became a big shock. So what is the impact on the domestic textile after the implementation of the New Deal?

1. Overview of global apparel import and export

According to the World Trade Organization data, in 2016, the world's major countries' garment exports exceeded US$443.83 billion, of which China's garment exports were US$161.25 billion, accounting for 36.28%. 25. Although the share has fallen sharply, it continues to rank first.

2. Overview of China's garment import and export

From the perspective of China's garment import and export, the total export volume has shown a downward trend since 2014. This is mainly related to the fact that the middle and low-end textiles and garments have been eroded by Southeast Asian countries in recent years. In 2017, the total export value of China's garments was 158.188 billion US dollars, a slight decrease of 1.81 year-on-year. %25, from January to March 2018, China's total export clothing was 31.731 billion US dollars, an increase of 0.33%. From the perspective of imports, although the base is not large, it shows a gradual growth trend, and it has a complementary relationship with exports. In 2017, the total import value of China's clothing was 7.178 billion US dollars, an increase of 8.88% over the same period of last year. The amount was US$1.917 billion, an increase of 19.1% year-on-year.

3. Analysis of China's garment importing countries

In 2017, China and Vietnam accounted for a large proportion of the countries and regions where China’s garments were imported. The sum of the two was 30%, of which the amount of clothing imported from Italy was US$1.06 billion, accounting for 15%, and the amount of clothing imported from Vietnam was 10.43 billion US dollars, accounting for 15%.

4. Imports of Chinese clothing products

In the year of 2017, the volume of knitted garments traded was 2.614 billion US dollars, the trade volume of woven garments was 3.623 billion US dollars, and the trade volume of hats was 76 million US dollars. The import trade volume of the three countries increased compared with 2016. In the first quarter of 2018, the import value of knitted garments was 750 million US dollars, the import value of woven garments was 906 million US dollars, and the import value of hats was 0.2 billion US dollars. In recent years, the proportion of imported woven garments has always been greater than that of imported knitwear, and it can be seen from the figure that imported knitwear and woven garments are increasing year by year. Although caps account for a relatively small proportion of Chinese clothing imports, the annual import value also shows an increasing trend.

5, tax reduction involves the measurement of the amount of tax reduction of products

China's largest garment exporting country in the world, the import volume is relatively small, but even if the tax rate is lowered by more than 50% 25, ​​the amount is not a decimal, according to the total amount of China's clothing imports in 2017, 7.178 billion US dollars, only One item of clothing will reduce tax expenditure by $632 million. From the point of view of individual commodities, with the downward adjustment of tariffs, the price of commodities is also expected to be lowered. In addition to enhancing their own competitiveness, it will allow some high-end, even luxury goods, or self-defeating bodies to better enter the public's field of vision. To promote the promotion of household consumption.

6. Industrial competition environment in neighboring countries and regions

As a major producer and exporter of textiles and garments, China's population dividends have recently disappeared, labor costs have continued to rise, and environmental protection has continued to be high. As a result, the competitive advantage of domestic textiles and clothing has gradually lost, and the market share of low-end and mid-end products has been eroded by Southeast Asian countries. The number of textile and garment factories in China in Southeast Asia and South Asia has also increased significantly.

So is the adjustment of the tariffs good or bad for the current situation? The tax reduction measures introduced this time are China's trade-offs from the trade perspective after the Sino-US trade war truce. On the surface, the price advantage of domestic related products may be further weakened, resulting in the market share continuing to be squeezed. However, this is not the case. First, China’s textile and apparel imports are not much, accounting for only 4.54% of exports. 25 Secondly, domestically imported clothing, shoes and hats are mainly high-end and even luxury goods, which are not yet obvious with domestic products. Qualitative competition, so reducing the impact of tariffs on domestic products is relatively limited. On the contrary, in fact, in the long run, the downward adjustment of import tariffs is to force enterprises to carry out transformation and upgrading, and work hard on product quality and competitiveness to achieve bigger and stronger.

(Article source: China Textile Network)