China’s textile industry body Secretary General predicts six months for country’s situation to normalise
There was a strange atmosphere on the opening day of the Texworld and Apparel Sourcing trade shows in Paris on February 10. The stands of many Chinese exhibitors were half-empty, scores of people were wearing protective face masks, and sanitizing gel was being distributed, as the coronavirus outbreak featured extensively in the thoughts and talks of exhibitors and visitors alike. By coincidence, it was the day in which the Beijing government began the arduous task of repatriating its citizens from their holiday destinations, as countless of them were stuck where they spent the Chinese New Year festivities. It was the prelude to a slow resumption of business activity in China, after the whole world witnessed the surreal sight of empty city centres throughout the country. Against this backdrop, Zhang Tao, secretary general of CCPIT-Tex, the textile industry’s sub-council within China’s Council for the Promotion of International Trade, travelled to Paris for the Texworld and Apparel Sourcing trade shows. Meeting with FashionNetwork.com, he politely declined to shake hands and, after enquiring about how the coronavirus outbreak was perceived in Europe, he agreed to talk about the delicate situation in his country.
FashionNetwork.com: What is the current situation in the Chinese textile industry?
Zhang Tao: As you know, ever since the coronavirus was first detected, industrial and commercial activity in the textile sector has been severely affected. We are experiencing something extraordinary, despite having already had to deal with the SARS outbreak [in 2002-03], and China’s central government has asked our industry, and others too, not to hamper the fight against the virus. This meant bringing business activity to a standstill. But the textile industry is also playing an active role in the fight, through the work of face mask producers. Clearly, this crisis will continue to have an impact on business in the short term, but I’m confident that, in the long run, we will manage to return to a normal state of affairs. The stability of the international textile supply chain is important for our companies, and equally so for the world’s consumers.
FNW: From Monday February 10, Beijing is organising the return of Chinese citizens to their home provinces. In theory, businesses should re-open. Is this really happening?
ZT: I think everyone has now heard about Hubei and Zhejiang provinces, where the virus was first detected. With a view to preventing the virus’s spread, many companies and e-tail sites had stopped trading, locally to start with, then across the whole country. I think it will take time before everything will go back to normal. Everyone in China is waiting for the epidemic to peak, the precondition for an easing of protective measures. But I’m sure that the situation in the first quarter of this year could have been much worse.
FNW: Is the current situation likely to jeopardise the future of some companies?
ZT: Yes indeed. I’m thinking especially of small and medium-sized companies, now faced with two very tough challenges. First of all, they cannot begin trading again without liquidity. It's a luxury they can no longer afford, after closing down for a few weeks. Then, they need to manage their employees’ return to work. By incorporating the necessary health protection measures in their operations, and also by finding alternatives for jobs normally carried out by employees who may still be stuck somewhere else in the country. The situation is indeed extremely risky for these companies.
FNW: The industry having virtually ground to a halt, are material availability problems to be expected?
ZT: I believe that the larger players will be able to rely on their inventory. The industry does depend on companies upstream in the supply chain, something that can be problematic when output stops. Of course, the main players generally have enough inventory, but in any case, this is only a solution for a limited period.
FNW: Chinese companies own several other textile producers in the Asia-Pacific region. Could the latter provide a workable temporary solution to the shortages?
ZT: I think such companies and their subsidiaries will be a feasible alternative for international clients. There are Chinese-owned producers in Burma, Vietnam, Sri Lanka and other countries. But in the long run, we will be faced with the same problem. In order to produce, these manufacturers are in fact heavily dependent on supplies coming from Chinese spinners and weavers. It must be said that, by increasing wages, China has fostered the current trend towards sourcing diversification. Hence I’m not worried about buyers, because they are extremely capable of adapting and finding solutions.
FNW: Once Chinese manufacturing will start up again, is an impact on costs to be expected?
ZT: Yes, there is very likely going to be an impact, because returning to normality will have a cost. And, again, things will not go back to normal in just a few months. In my opinion, it will take at least six months before the situation will more or less normalise. Yet, once again, this is an unprecedented situation, and we still need to wait a little more to understand all its consequences.
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