Over 60% expect to invest more on R&D in next two years.
At the dawn of economic recovery in recent months, Chinese textile exporters are waiting for more pickups. The "China Textile &Apparel" journal of Adsale Publishing Limited announced the release of 2009/10 China Textile Market Outlook Survey Report, revealing impacts experienced by Chinese textile enterprises during the global financial crisis and their business outlook for the next two years. Industry trends in five aspects were also covered in the Report. The survey was conducted in cooperation of Synovate.

The survey took place in April and June 2009 in the form of individual face-to-face interviews and online questionnaires to collect views of totally 800 entrepreneurs, managers and professionals from the textile industry.

The "Surviving Tough Times: Now and The Future" Report discusses a) development and outlook of Chinese textile enterprises and b) how they coped with the global economic downturn that followed the credit crunch.

Chinese textile industry expected to enter an era of better quality in two years

As shown in the Report, Chinese textile players are working to enhance themselves and many of them are able to maintain their development amid the international financial crisis. Their endeavor is observed in five areas: technical application and R&D, investment, market development, product quality and human resources, in the hope of grasping more market opportunities when the economy revitalizes. These efforts reflect that the Chinese textile industry is entering an era of better quality, and the focus of the market competition is likely to shift from price and quantity to quality and product differentiation, leading to increased market integration and specialization.

• In the aspect of technical application and R&D, technolocial introduction and development will gain further importance among textile enterprises. About 67% of respondent enterprises reported their intent to invest more on R&D in coming years. Among them, textile processing firms are the most enthusiastic group in such investment, thus the demand of imported textile machinery is likely to remain in China.
• Second, capital investment is essential when enterprises desire to improve themselves. In the Report, it is found that Chinese textile enterprises are still confident in mid- to long-term investment despite the current unfavourable economy. About 55% of the respondents reported to prefer an investment payback period spanning between two to four years. About 63% of them agree that the changing international market is the biggest source of risk for their current investment decisions. It is anticipated that investment projects of these enterprises will gradually return on track when the economy is firm in the times ahead.
• Third, when asked about developing domestic and overseas markets, a number of respondents experienced that the fact that OEM (original equipment manufacturing) no longer meets today's market needs. Despite the hurdles, brand building is progressively important in the domestic market. Market competition used to be less severe in the Chinese market in the past, but it has become more and more tough for Chinese players to dominate the domestic textile and apparel market as the country opened its door to overseas companies. About 48% respondents agree that the domestic market is shared by more market participants from home and abroad. When opening overseas markets, about 53% of the respondents tend to appoint local distributors to reduce risk and cost.
• Fourth, product and quality is increasingly placed on the top of the agenda. About 86% of the respondents are found to view that quality is critical to the development, a significant percentage increase as compared to two years ago. They also expect that new products will contribute more to sales and profits.
• Fifth, in the area of human resources, more talents for technological development are needed across the country. The thirst for various types of talents is particuarly acute in East China.

Over 70% textile enterprises faced negative impact of global financial crisis.

Textiles is one of the pillars of China's manufacturing industry and the sector witnessed unprecedented challenge since late 2008 following the outbreak of credit crunch. The Report finds that majority of responding enterprises felt varied degrees of impact in the current crisis.

The Report shows that:

• About 77% of the respondents are negatively affected;
• About 69% of respondent enterprises face under-capacity;
• About 52% of respondent enterprises lower their sales forecast in next one to two years;
• Shrunk exports, rising costs, currency fluctuations and financing hurdles pose major risks to corporate development;
• About 61% of respondents expect the Chinese textile industry to return a firm footing within next two years;
• About 41% of respondents report to consider reducing exports and focusing more on domestic sales;
• About 42% of respondents say they will not give up exporting;
• Respondents in general hope the government will introduce supportive measures on the areas of raw material prices, export tax rebates, brand building and R&D; and
• The Report also shows that confidence of the domestic industry is strengthened by China's RMB4 trillion economic stimulus package and the plan to readjust and revitalize the textile industry.

Mrs Annie Chu, Publisher of Adsale Publishing Limited, commented that detailed survey results are available in the "Surviving Tough Times: Now and The Future" Report, which has been published billingually in Chinese and English this month. Analysis reports and hundreds of statistics tabulations, as well as updated industry information such as lists of leading enteprises in varied textile and apparel subsectors, textile indsutrial clusters and industry associations in the Greater China region are all inside this Report for all stakeholders of the Chinese textile industry.

This survey is supported by a number of industry associations, units and media in China and abroad. Patrons of the survey are from the international textile machinery community, including Brückner, DyStar, Loepfe, SSM, Uster and more.

More details of the survey analyses are available at:  http://emarketing.adsale.com.hk/Content/htmls/2009/TextileSurvey/24-39.pdf
http://emarketing.adsale.com.hk/Content/htmls/2009/TextileSurvey/50-58.pdf