November 1, 2004,
In a little less than 10 weeks, the final set of quota protections on textiles will drop, and the question that has bedeviled the industry in the United States and many other parts of the world has concerned China. Specifically, how far can China's textiles businesses grow their U.S. market share and how fast?
According to their new joint venture partner in the United States, China's exports to America of “fashion product” alone are expected to jump about 188 percent in the months after quota drops — from roughly $2.5 billion today to $7.2 billion.
I'm not going to get into the issue of pre-emptive safeguards here, nor the efforts on the part of some U.S. groups to enact them on several categories of goods. And I'm certainly not going to speculate about whether their efforts will be successful.
However it shakes out, one question that has arisen frequently is how China's collection of factories — many of them very small — will take advantage of the quota-free world. CNTAC is trying to help them along with its new joint venture, which last week was created as CNTextile JV to provide e-market trading, technology integration, training, production placement, production monitoring, trading company services and cross-continent investment.
Ambitious, certainly. Will all 300,000 factories represented by the council participate? Probably not. For one thing, there's a real technology gap between the leaders and the small fry — differences that are truly generational in scope.
There's also the on-going problem of electricity blackouts in some parts of the country. Once the lights go out, it doesn't matter how many orders the factory is getting through the joint venture portal.
Finally, as anyone who has sourced from abroad will attest, there's no substitute for having feet on the ground at the factory level.
But it is intriguing as an example of a government initiative to lift all players into the modern era. And I'm sure some companies — probably many companies — will do business with it. But it's hard to imagine this as the ultimate link to the factories of China's hinterlands.
But then again, the Red Sox won the series — so anything is possible.