China'S Textile Industry: "Going Out" Is Easier Than "Going In"

　　 Red bean, Tianhong, Bosideng, Shenzhou, etc. have set up factories and opened stores overseas

China spin Elite low-cost overseas expansion

"There are more than ten ministers of local countries in the mobile phone, which can be dialed at any time"

——Chinese textile enterprises need to manage government relations before expanding overseas

"At present, the labor cost of China's textile industry is 1~3 times higher than that of Southeast Asian countries, and the cotton cost is more than 30% higher. In addition, Southeast Asian countries enjoy low tariff preferences in developed countries. Even if the advantages of industrial system and production efficiency are given full play, the international competitiveness of low-end products has declined significantly." Recently, Wang Tiankai, president of China Textile Industry Federation, told reporters at the "China Textile Industry Implementation 'Going Global' Strategic Exchange Conference".

Wages are rising, raw materials are becoming more expensive, land acquisition is basically impossible... China's textile industry is facing a bottleneck in development. One contingency measure is to "go global", invest overseas, find a better way to allocate resources, and establish a more efficient cross-border supply chain.

　 The purpose of "going out":

Reduce costs, avoid barriers and build brands

The "going global" of textile enterprises involves many industrial fields - cotton spinning, knitting, wool spinning, chemical fiber clothing , home textile and textile machinery, but the purpose is basically the same - to pursue low cost, improve brand image, expand new markets, and seek high-quality assets

However, cost advantages such as labor and land are the primary motivation for many large enterprises to invest overseas.

Hongdou Group is one of the shareholders of Sihanouk Port Special Economic Zone (hereinafter referred to as "Sihanouk Port Special Economic Zone") in Cambodia. The park covers an area of 11.13 square kilometers and is an export processing base specially built for China's small and medium-sized enterprises in textile clothing, hardware machinery, light industry and household appliances.

"The monthly basic salary of our park is about $100." Chen Jiangang, vice president of Red Bean Group, said that compared with Shanghai, it is much cheaper, and the money saved can be converted into profits of the enterprise.

In contrast, the monthly salary of operators in Shanghai is 439 dollars.

Enterprises settled in the West Port Special Zone can get standard factory buildings and land with preferential prices, and also enjoy a series of tax preferences such as "no land use tax" from the Cambodian government.

Hong Tianzhu, Chairman of the Board of Directors of Tianhong Textile Group (hereinafter referred to as "Tianhong", 2678. HK), is considered to be an "eccentric" in the industry. He began to plan for the global layout of the enterprise very early. In 2007, he invested 400 million dollars in the construction of a spinning factory in Vietnam's Tongnai Province.

According to China's cotton purchase and storage policy, China has set a unified purchase price for cotton, but this price is often higher than the cotton price in the international market. Last year, when domestic peers were still worried about the high cost of cotton, Tianhong's profit increased sevenfold year-on-year to 486 million yuan - all because it could purchase cheaper raw cotton in Vietnam.

But Vietnam is only one step in the global chess game of Rainbow. Hong Tianzhu introduced that Tianhong also bought 20 hectares of land across Eurasia in Turkey, and plans to build 300000 ingot capacity; I bought 168 hectares of land in Uruguay, South America, and planned to build two factories.

The main reason for investing in these two countries is not the cost nor the market, but the opening of trade barriers. Originally, the tariff rate of textiles exported from China to Turkey was only 8%. In 2011, Turkey increased the tariff rate of some exports from China and other developing countries to this country to 28%; The same is true for investment in Uruguay, because as long as you set up factories in Uruguay to sell products directly, you can avoid the losses caused by high tariffs and other trade barriers.

In particular, investment in Southeast Asia - since 2011, the EU has implemented the GSP for the least developed countries. Some Southeast Asian countries can enter the European market without tariff, while clothing produced in China is subject to 12% tariff. By investing in Southeast Asia, the tariff on products exported to Europe can also be reduced.

In addition to reducing the cost of labor and raw materials and avoiding trade barriers, some enterprises "go out" to enhance their brand image.

　　 Bosideng It is a well-known cold clothing brand for domestic consumers, but it is rarely known abroad. Ding Jianxin, the global vice president of Bosiden Group, introduced that after working for Nike and Adidas for many years, Bosiden decided to go out with its own brand image - from the first exclusive store opened in cooperation with Greenwood in 2008 to the flagship store built with an investment of 35 million pounds before the opening of the London Olympic Games in 2012, Bosden has 80 brand chain stores in the UK. {page_break}

　 "Going in" is more difficult:

Abide by the rules and be good at public relations

But the foreign moon is not necessarily more round than the domestic one.

Shenzhou International Group Holdings Co., Ltd. (hereinafter referred to as "Shenzhou International", 2313 HK) Wang Cunbo, the executive director of the company, also invested in Cambodia to set up a factory, said: "The infrastructure there is relatively poor, the transportation and communication are obviously behind the domestic, and the cost is relatively high; the labor efficiency is low, the labor experience is insufficient, and there are many novices; in addition, the supporting facilities of Cambodia's entire industrial chain are also relatively poor, although the wage cost is low, the cost advantage is not particularly obvious from a comprehensive calculation. ”

What is more difficult than "going out" is "going in". In addition to abiding by local laws and systems, enterprises should also integrate into the local humanistic environment.

"The boss of a well managed enterprise in the local area seems to be able to deal with anyone in the local area - whether bankers or politicians. Even when we get off the plane and enter the customs, he winks at us and we pass the customs." Speaking of the different experiences of the two textile enterprises "going out" in Southeast Asia, Sun Huaibin, deputy secretary-general of China Textile Industry Federation, sighed with emotion.

"In another enterprise with a state-owned enterprise background, the management personnel are basically not involved in various social activities in the local area. They have their own meetings in the company all day and ask 'how to do'. They fail to integrate with the local culture, so it is difficult to survive and develop." Therefore, Sun Huaibin concluded that textile enterprises not only need capital to go in, but also need to develop Make good use of the cultural resources of the investing countries and regions.

Many enterprises invest overseas and take the high-level line first to build good relations with the government. It is said that Red Bean brought the children of some senior Cambodian officials to China for training for two years, and then sent them back to work in the Xigang Special Zone - hoping to cultivate a force with feelings for the Xigang Special Zone to support the subsequent development of the park.

However, this alone is not enough. "There are more than a dozen ministers' phone numbers in the mobile phone, which can be dialed at any time. It is not necessarily smooth." As the vice president of Huajian Group, Haiyu talked about leading the domestic leading shoes An exporter sighed when he was building a factory in Ethiopia.

"When we bought a batch of materials, the customs clearance personnel said that it was toothbrushes and we had to pay taxes; the punching machine said that it was weapons and we could not enter. I called the deputy customs director and held a meeting with them for six hours. Later, I invited more than 20 people from the other side to visit the factory to learn what we were doing here and what we would do in the future, so that we gained initial trust." Haiyu said.

Wang Cunbo said that when Shenzhou International first came to Cambodia, it was worried that there were many local trade union organizations and frequent strikes and demonstrations, which would affect the normal operation of enterprises if they were improperly handled. For this reason, Shenzhou International attaches great importance to the localization of the management - in addition to the high-level staff sent from China, more local staff are trained to grow into the management.

Shenzhou International pays its employees equal pay for equal work, regardless of the country or nationality, as long as the job responsibilities are the same, the salary and treatment will be the same, which has won the recognition of local employees. At present, Shenzhou International Cambodia Project has not experienced strikes, production stoppages, etc.

"Going out" is sometimes a good move, sometimes not necessarily. Hong Tianzhu commented: "In essence, it is a strategy. Don't just emphasize going out. It is not applicable to any enterprise. If an enterprise has difficulties in domestic competition and survival, it can't talk about going out, because it needs capital, an international team, and cooperation from the international market."

China is the world's largest textile producer and exporter, but it is relatively weak in human resources, especially in the lack of international management talents. "Foreign language talents are not a problem, but there is a shortage of versatile talents who can go to other countries for marketing and innovation."

"The most valuable achievement of these 'going global' enterprises is that they will cultivate a group of international textile workers belonging to China," said Zhang Xiaoji, a member of the CPPCC National Committee who has long been concerned about the textile industry.

In view of the problems encountered by textile enterprises in "going global", President Wang Tiankai said that the industry association would conduct in-depth research, actively strengthen communication and coordination with relevant government departments, study countermeasures and suggestions, reduce enterprise investment risks, and maximize the protection of the safety of textile industry capital.