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Chinese count the costs
By Sam Ng

HONG KONG - While officials are reluctant to admit it, China's textile industry has been hard hit by the on-going SARS (severe acute respiratory syndrome) crisis. Since April, many countries have cut back on imports from China, with SARS in effect becoming a new trade barrier to China's textile products.

However, the domestic media tell a different story, saying that China's total trading amount in textiles and apparel products in the first four months of this year actually increased 24.6 percent in comparison to the same period last year and that the industry continues its fast growth. However, according to industry sources, the first quarter's data do not illustrate real losses because there's a time line that postpones the effect to coming quarters. Figures for the second and third quarters, therefore, could tell a different tale.

Guangdong province is China's biggest textile and apparel products exporter. In 2002, these amounted to US$10.06 billion, a net increase of $1.38 billion and 24.45 percent of the national total. China is the world's largest exporter of textiles with a 32 percent world share. Guangdong textile exports in the same year grew by 19.8 percent to $3.24 billion. The province's trade surplus in apparel and textile products is $5.62 billion, which is 70.8 percent of the provincial total.

But now the province's international orders have plummeted by as much as 20 percent, according to preliminary estimates. Many companies have no orders at all, and as many as a half of them have suspended production.

SARS hit Guangdong's textile industry suddenly and heavily. With exports hindered, companies began to focus on domestic markets in a bid to survive, increasing the number of their agents and directly dispatching salesmen to contact buyers. But this scheme fell victim to SARS, as before the World Health Organization (WHO) lifted its travel warning on Guangdong, activities between Guangdong and outside provinces were almost frozen. Drivers from Guangdong carrying products to other provinces had to wait 14 days in quarantine at the border, while drivers returning from Guangdong also had to go into quarantine for two weeks.

Although the WHO has clearly announced that there's no positive connection between SARS transmission and product imports, and that the disease should not be used as an excuse for setting trade barriers, the United States has cut off its relationship with Chinese producers in famous brand apparel processing since the end of April, and some textiles imported from China have been sealed off in foreign ports for a month. Some European countries have even made it clear that they will not consider importing any kind of textile products from China in the foreseeable future. For those already sent, some countries just refuse to accept them, return the goods or charge high compulsory quarantine fees.

Spanish authorities have gone a step further to demand that all textile imports from SARS-affected areas "mainland China, Hong Kong, Taiwan, Vietnam, Singapore and Canada" submit official certificate of disinfection and insect-killing issued by the health department of the country or territory of origin". Goods without certificates will simply be destroyed. Textile exports to the Middle East, meanwhile, are subject to a $3,000 charge per container, which wipes out China's price competitiveness.

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Jun 10, 2003


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