Tight US textile quotas hurt mainland exports

PUBLISHED : Monday, 13 March, 2006, 12:00am
UPDATED : Monday, 13 March, 2006, 12:00am

Shipments from China decline as American importers source elsewhere

United States imports of many types of Chinese garments fell sharply in the first two months of this year as American buyers switched orders to other countries to avoid goods being embargoed at US ports for exceeding quotas.

US Department of Commerce data shows that imports of garments such as cotton knit blouses from China fell 77 per cent in January and 78.3 per cent last month.

Imports of men's cotton pants plunged 86.9 per cent in January and 76.1 per cent last month, while man-made fibre underwear tumbled 83.6 per cent in January and 76.7 per cent last month, according to the department.

In January, Shanghai's shipments of quota-covered textile products to the US fell 36.9 per cent to US$150 million, according to Shanghai customs data.

Jiangsu province's textile exports to the US were down for the first time in January, falling 13 per cent to US$240 million, according to the China Chamber of Commerce for Import & Export of Textiles.

'With numbers like that, for sure it's going to hurt some major Chinese apparel manufacturers,' said Douglas Sheridan, owner of Hong Kong textile trading firm BKMS.

For the first two months this year, imports of garments from Cambodia and India increased dramatically in categories where there were US quotas on the equivalent Chinese products, US commerce department figures show.

'Major US retailers avoided China and placed orders in places like Cambodia,' Mr Sheridan said.

'They saw the embargo last year and didn't want to risk that this year.'

He added that retailers such as Wal-Mart, JC Penney and Target were unlikely to switch orders back to China any time soon. 'There won't be an improvement for Chinese factories after January.'

The effects of weak Chinese shipments would be felt in the middle of this year, when some mainland textile factories would close and Hong Kong textile manufacturers with mainland plants would report lower sales, warned Mr Sheridan.

The sharp drop in US imports was a direct reaction to the huge increase in January last year when textile quotas were lifted.

Alarmed at the flood of Chinese textiles, the US reintroduced quotas on several Chinese textile items.

Nonetheless, some traders are bullish on mainland textile exports.

Neeraj Sawhney, director of Topnet International, a Hong Kong textile trading company, said mainland factories had reported receiving ample orders from the US and were busy producing to meet them.

'I have not come across Chinese textile factories going bankrupt. They are busy with orders,' said Mr Sawhney.

Alex To Man-yau, China president of Tradeeasy, a Hong Kong trading services firm, said the Ministry of Commerce in Beijing would next month auction fresh US textile quotas that he expected to be substantially increased.