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Mainland garment makers ready to increase production and dominate industry

The hundreds of young women hunched over  sewing machines on the factory floor of China's leading shirt maker explain why the world fears the mainland needle after the end of textile quotas.

The privately owned Youngor Group already turns out 2 million suits, 10 million shirts and 30 million other articles of clothing a year from a vast 'textile city' on the outskirts of Ningbo .

With the end of global textile quotas on more than 2,000 items, including cotton shirts, on January 1, Youngor president Li Rucheng   is ready to ramp up production and boost exports.

Mr Li, who is also vice-director of the Chinese Clothing Association, does not rule out that some companies and even countries might be forced to cede their textile business to China. 'The United States has its own industries. The United States has the Boeing plane,' he said.

On the production line, workers sit in rows surrounded by striped cloth suspended above their sewing machines. They cut and stitch sleeves for shirts which retail domestically for as little as 100 yuan.

The fabric comes from the company's own mills. When the shirts are finished, Youngor's trading company arranges export through Ningbo port, the mainland's second biggest by tonnage last year.

Some American companies are already calling on the Bush administration  to restrict clothing imports from China ahead of an expected surge.

The National Council of Textile Organisations estimates China will take an additional US$200 billion of the global apparel trade and 'virtually destroy' the US textile industry,  putting up to 650,000 people out of work.

The US lobbying group also claims China is illegally subsidising its textile industry.

But Mr Li puts part of the blame on US consumers and the retail stores that sell to them. 'China can create more jobs, that is true, but Americans want cheap products,' he said.

Youngor's sales surged nearly 30 per cent to 13 billion yuan last year.  Exports rose 15 per cent to US$600 million, although only 7 per cent of exports went to the United States. Japan and Europe were by far the biggest overseas markets.

Mr Li  denies the mainland has an unfair advantage with low-cost labour, saying other Asian countries are even cheaper.

In Ningbo, the average monthly salary for workers is about 1,600 yuan.  'Our costs are relatively high,' he said.

However, costs in China are still lower than the United States and Europe. Youngor can produce a suit for US$50. Inside the massive company showroom, suits of different fabrics sell for 1,300 yuan to 4,000 yuan and command even higher prices overseas.

Foreign consumers have never heard of the Youngor brand, but if they have worn clothing from  Gap or Hugo Boss, chances are it was made in Ningbo.

Not all foreign companies are upset by the end of the quota system. Overseas firms which are sourcing clothing from China or shifting production there  are not complaining. Before the quotas expired, a parade of clothing makers and retailers - including Sears of the United States and Britain's NEXT - made the journey to Youngor's corporate headquarters  to discuss possible co-operation.

In December, Beijing announced a planned tax of 0.20 yuan on textile items. The move satisfied few critics, and even mainland clothing companies said the tax would have little impact on curbing their exports.

'A 20 cent export tax won't solve the problem,' Mr Li said. 'There won't be a very big impact from the export tax. We will adjust.'

Youngor will adjust by changing its product mix and aiming for the higher end of the market. Such ambition helped the company grow from 20,000 yuan in assets and 20 employees when it was founded in 1979 to 5 billion yuan in assets and 25,000 workers.



Bullish times in 'textile city' as global quotas come to an end