Textile exporters call for action, not slogans

PUBLISHED : Monday, 09 March, 2009, 12:00am
UPDATED : Monday, 09 March, 2009, 12:00am

Mainland textile exporters said a small increase in tax relief for them would not be enough to rescue the sector from the effects of the global economic downturn, and incentives, not words, were urgently needed.

'We hope government will map out policies that can really benefit us rather than offer mere slogans,' said Mao Yongxiang, a manager with Zhejiang Cathay International.

'What the government should also do now is help exporters enhance their brand awareness in the global market and subsidise them on research and development,' added Mr Mao, who recently attended the East China Fair in Shanghai.

The comments followed an announcement last month that the tax rebate for the country's textile exporters would be raised by 1 percentage point from 14 to 15 per cent.

The move would be part of a plan to rejuvenate the country's troubled textile sector, once a bright spot thanks to cheap labour costs and manufacturing scale.

However, weakening overseas demand and unwillingness from banks to offer credit are overshadowing the sector, with many companies complaining about government inertia.

During the East China Fair, the country's second-largest commodity trade fair, which ended on Thursday, deals worth US$2.24 billion were signed, down 39 per cent from a year earlier.

Orders from companies in the United States were down 47 per cent, at US$310 million.

Exhibitors said they saw fewer visitors from the US and Europe, and deals done with Japanese buyers declined 27 per cent to US$656.9 million.

'We did not expect to sign many deals at the fair this year, because we already imagined how bad it would be,' said Maggie Wang, a manager at Jiangsu Hubao Group.

'But we did not close factories or cut payroll, because we are exploring the domestic market.'

Mr Mao said Zhejiang Cathay had already laid off 2,000 workers, more than 30 per cent of its workforce, following a 30 per cent decrease in overseas orders.

Beijing is facing mounting pressure as the unemployment rate rises and is concerned to avoid social disorder.

It was reported that the China National Textile and Apparel Council is lobbying the central government to further raise the tax rebate to 17 per cent as manufacturers strive to survive the crisis.

'A further increase in the tax rebate hinges on the government's stance on the unemployment problem,' said Li Junsong, a China Securities analyst, who warned that additional tax rebates could also trigger new trade frictions with other leading economies.

Apart from tax rebates, company officials suggested Beijing should reduce sales taxes and keep the yuan exchange rate stable in order to make Chinese-made goods more competitive on global markets.