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Decline in China’s Status as a the Largest Export Destination for Textile and Apparel and Its Implication

Author Rhee, Imja Date 2014.08.06 Issue No 596
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As the export of textile and apparel to China sharply fell recently, the status of China as the largest destination for the export of Korean textile and apparel, has declined while Vietnam emerged as the largest export destination for textile and apparel, which indicates leading export market is changing.

In addition, the export of textile materials to China is on the decrease whereas the export of apparel is on the increase, indicating the structural change in the export items.    

 

Decline in the export of textile and apparel to China stems from the fact that the destination for export of textile materials has sharply shifted to Southeast Asian countries, notably Vietnam from China, thanks to the movement of production facilities from China to Southeast Asian countries which was triggered by the deteriorated business climate in China such as labor cost hike in China and difficulties in securing workforce.


Not only that, the increased capacity of China to produce textile materials and rise in its textile material self-sufficiency rate as well as  sophistication of Chinese textile materials resulting from technological advancement, are leading to the decline in demand for Korean textile materials in a long-term.

Not only that, the increased capacity of China to produce textile materials and rise in its textile material self-sufficiency rate as well as  sophistication of Chinese textile materials resulting from technological advancement, are leading to the decline in demand for Korean textile materials in a long-term.

 

However, it is difficult to expect a sharp rise in export from the investment in Southeast Asian countries such as Vietnam, just as Korea enjoyed the export inducement effect from its investment in China, whereas China is reemerging as a promising market for export of textile apparel thanks to the rapid progress of Korea- China FTA and Korean Wave and so on.     


The effect of expanding export to Southeast Asian countries would be limited in a long-term as the textile and apparel industry in Southeastern countries is more rapidly growing than that in China during its growth period, due to the expanded simultaneous penetration of Korean garment and textile material industries into the market, sharp rise in labor cost and incidental expense, the aggressive strategy of Southeast Asian countries to domesticate their textile materials and expansion of production facility,

The effect of expanding export to Southeast Asian countries would be limited in a long-term as the textile and apparel industry in Southeastern countries is more rapidly growing than that in China during its growth period, due to the expanded simultaneous penetration of Korean garment and textile material industries into the market, sharp rise in labor cost and incidental expense, the aggressive strategy of Southeast Asian countries to domesticate their textile materials and expansion of production facility,

 

Therefore, it is necessary to pursue finished products (fashion apparel)-driven export structure and target Chinese domestic market in earnest to tackle the recent decline in export to China and overcome the limitation of processing trade. Doing so would enable Korea to steadily expand the export of entire Korean textile apparels. 

 

To increase the export of fashion apparel to China, it is urgent to establish systematic and comprehensive support system utilizing ‘Korean Wave’, boost the penetration of ‘Made in Korea’ fashion apparel into Chinese domestic market and build up the infrastructure for mobile and online shopping.