Cotton Plant Bulb
Page Tools: Button: Print Page Button: Share Button: RSS

Economic Integration

Customer Wants Contrary To What Brands Have Assumed

Consumer Preferences

The Harvard Business Review Blog Network has posted a three-part series based on a global survey of 7,000 consumers, focusing on the relationship between branded merchandise and those who buy the product.  The first addressed what consumers really want, and the second dealt with the response to customers who say they want a wider choice of products.

The third debunked three specific myths about what consumers want, namely:

  •  How much of a relationship do consumers want to have with a brand,
  •  Insight into what really builds a consumer/brand relationship, and
  •  How much interaction between brands and customers works best.

 In short, the survey revealed that customers are not really interested in a close relationship with branded merchandise.  Consequently, brand manufacturers more often waste time and risk alienating their customers by trying to encourage a relationship.

The survey pointed to shared values as a principle force behind the establishment of a relationship between brands and their customers.  Little more than 10 percent of respondents agreed that frequent interaction produced a lasting relationship.

Meantime, there seems to be no direct correlation between the number of times consumers are contacted by brands and a guarantee that the buyer will make the purchase and then prove to be a steady customer in the future.  Indeed, the survey revealed that too much contact can have the opposite effect.

Here are links to the three different parts of the series:

What Do Consumers Really Want? Simplicity 

If Consumers Ask for More Choice, Don’t Listen

Three Myths about What Consumers Want

Free registration may be required.

 

Questions:  Have academic surveys proven helpful for devising long-term business plans?

What are their strengths and weaknesses?


 


Yarn Rule Exception to TPP Talks Draws Objection

Trade Agreements

A proposal by The Hosiery Association (THA) to exclude knit-to-shape, assembly-only socks and hosiery from current yarn-forward rules of origin found in current Trans-Pacific Partnership (TPP) draft language has drawn stiff opposition from a trio of US manufacturing and textile trade associations.

In a letter to US Trade Representative Ron Kirk, immediately following the conclusion of the 14th Round of talks in Leesburg, Virginia, earlier this month, the American Manufacturing Trade Action Coalition (AMTAC), the National Council of Textile Organizations (NCTO) and the American Fiber Manufacturers Association (AMFA), said the idea is counter to the US textile industry’s long-held support for the current yarn-forward rule of origin in free trade agreements (FTA) for textile and apparel, which includes socks and hosiery, and “would be a massive blow to US and other TPP producers.”

“Yarn forward is the long-established rule of origin for our industry, incorporated into US trade and preference agreements dating back to NAFTA (North American Free Trade Agreement),” the associations said. “It encompasses all stages of production from yarn spinning to fabric formation and final garment assembly, all of which must be done either in the United States or in a FTA partner country to qualify for duty-free treatment.”

They insisted that “the rule is logical because the vast majority of the value of a finished textile or apparel product comes from its components, rather than from its final assembly. Allowing the highest value-added elements of the production chain to originate outside the contracting FTA countries transfers its benefits to third countries not party to the agreement and not obligated to contribute market-opening concessions in return.”

Contending that current rules of origin are too restrictive, limiting trade and investment, The Hosiery Association has proposed that hosiery manufacturers be allowed to source their man-made fiber yarns for socks and hosiery from non-TTP countries, except for 100 percent cotton and polyester products.  The Charlotte, North Carolina, trade group also maintains that under the current rules, most trade does not qualify for preferential tariff rates.

That assertion is disputed by AMTAC, NCTO and, AFMA, however, with the explanation that 2011‘s trade value of US imports amounted to US$578 million under the Harmonized Tariff System subheading for Panty Hose, Tights, Stockings, Socks and Other Hosiery from the NAFTA and CAFTA-DR (Central American and Dominican Republic free trade agreement) zones. Both regional trade agreements are yarn forward, therefore the qualifying imports incorporate yarns sourced within the FTA region and accounted for almost 98 percent of US imports of these products, said the groups. 

“In short, the THA proposal allows yarns currently made in large quantities in the United States to be sourced from third parties, notably China,” said the letter.  Consequently: “This proposal would be a massive blow to US and other TPP producers who manufacture acrylic, nylon and various other types of man-made fiber yarns. Producers of cotton, wool and blended fiber yarns used in these socks and hosiery would also be hurt.”

The entire letter may be read here.


 


TPP Negotiators Cite Progress on Regional Trade Pact

Trade Agreements

Negotiators from nine Pacific Rim nations concluded their 14th round of Trans-Pacific Partnership (TPP) talks in Leesburg, Virginia, earlier this month, and although specifics on the deliberations remain scant, the teams dealing with individual chapters ranging from market access, customs and rules of origin, among others, noted continued progress toward a final agreement.

During the 10-day session negotiators from the United States and the other eight TPP countries – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam – worked toward agreement on the texts of the 29 chapters of the agreement.

The US Trade Representative’s (USTR) office reported delegates “continued to move forward in constructing the tariff and other specific market-opening commitments that each country is making on industrial goods, agriculture, textiles, services and investment, and government procurement. Along with this progress, the nine countries also reported a continued focus on other important issues from intellectual property rights to labor and environment and other topics that address core issues faced by manufacturers, service providers, farmers, ranchers, and workers in the 21st century.”

In the midst of the negotiations, ministers representing TPP member countries issued the following statement to their national leadership:

In the ten months since the nine TPP Leaders met in Honolulu, Hawaii and directed us to dedicate the resources necessary to conclude this landmark agreement as rapidly as possible, we have made encouraging headway toward completion of the agreement based on the broad outlines you approved last November. We have held four negotiating rounds since then and many plurilateral meetings of individual negotiating groups between formal negotiating sessions, as well as numerous bilateral meetings to find paths forward on specific issues. These meetings, extensive preparatory work intersessionally by each of our teams, and the active consultations with our stakeholders that we have conducted domestically to obtain input as we further developed our negotiating positions, have significantly narrowed the gaps between us in a wide range of areas, while continuing work on other issues where progress has been slower.

Your joint commitment to this milestone agreement served to focus our work and we have made significant progress on many of the 29 chapters under negotiation, including customs, cross-border services, government procurement, telecommunications, competition policy, small- and medium-sized enterprises, competitiveness and business facilitation, and cooperation and capacity building. The negotiating groups moved their work ahead substantially on other issues, including rules of origin, investment, financial services, and temporary entry. In addition, we continue to make progress in working through our differences on the other chapters. We are determined to build on the momentum we have achieved to close as many of these chapters as possible this year, recognizing that the agreement is a single undertaking and must result in a balanced package that all TPP countries can embrace.

We are pleased with our progress toward realizing each of the five defining features of this historic agreement, which we expect will set the standard for future trade agreements.

Comprehensive Market Access

We have continued to work to construct a high-standard market access package that provides comprehensive duty-free access to each other’s goods markets and simultaneously lifts restrictions on services, investment, and government procurement. The nine teams continued efforts to develop tariff packages that will open our industrial goods, agricultural, and textiles markets to one another. This work is progressing at varying paces for different countries. At the same time, we are developing packages that will provide access to each other’s services, investment, and government procurement markets. On services and investment, we are negotiating access to each other’s services and investment markets on a “negative list” basis, which assumes access unless countries take an exception. Although we have made sound progress since you met in December, this approach is new to some TPP countries, and we have additional work to do to achieve an ambitious outcome on services and investment consistent with our approach on goods. Some positive steps have been taken on government procurement, another issue that some TPP countries are including in a trade agreement for the first time. It is clear, however, that further work is needed across the market access negotiations to develop high-standard, balanced packages for each country, consistent with your clear vision guiding our negotiations. We now are focused on developing creative solutions so areas of sensitivity will not compromise the ambition set for this agreement, recognizing that only by doing so will we achieve our key goals of maximizing trade and investment among us and supporting the creation and retention of jobs for our citizens.

Regional Agreement

The nine TPP teams have had discussions on steps toward the construction of a single tariff schedule and have made considerable progress in the last ten months on agreeing on common rules of origin, which are among the most important features of this agreement to promote trade among our countries. We are working to develop simple and enforceable rules of origin that will encourage cumulation across the region, which promote production in TPP countries and make it much easier for our businesses, both large and small, to take advantage of the agreement. We also have made solid progress on other commitments throughout the agreement that will support the development of production and supply chains among TPP members, including on such issues as connectivity, services, customs cooperation, and standards. While our nine countries have different approaches to some of these issues, we are working closely and constructively to find compromises so that we can ensure this agreement will promote synergies between our economies and raise living standards for our people.

Cross-Cutting Trade Issues

We are moving toward conclusion of each of the four dynamic cross-cutting issues we are including in the TPP, and our efforts have been greatly facilitated by the significant APEC work already done in these areas. In the past ten months, we have made promising movement forward toward agreement on the chapters that address: (1) regulatory and other non-tariffs barriers, including related to goods, industrial and agricultural standards that increasingly are the major barriers that companies face in gaining access to foreign markets, and we have significantly narrowed the gaps between us on new ways to improve regulatory practices, eliminate unnecessary barriers, reduce regional divergence in standards, promote transparency, and conduct our regulatory processes in a more trade-facilitative manner, as well as to cooperate on specific regulatory issues covering certain sectors of interest to the nine countries; (2) competitiveness and business facilitation, including focusing holistically on ensuring that we are developing the production and supply chains that will enhance our competitiveness and maintain jobs in our markets; (3) ways to expand the participation of small- and medium-sized enterprises in regional trade, including through enhancing their access to specific relevant and user-friendly information and resources about the TPP; and (4) capacity building and cooperation to help those TPP countries that need it to implement the high ambition of the agreement and thus fully realize its benefits, as well as additional commitments on development that would contribute to each of our economic development priorities, building on development work in other fora, input from stakeholders, and new proposals from TPP members.

New Trade Issues

Since you last met in November, we have continued to consider carefully how best to address new issues that have emerged in global trade. We have spent considerable time discussing, for example, developments in information technology, and commitments that can help harness the new digital economy to enhance our competitiveness, promote trade, and support our small- and medium-sized businesses link to the global economy. We also have been considering ways to advance our common interests in capturing the benefits of green growth and new technologies. In addition, we continue to weigh appropriate approaches to ensuring a transparent and pro-competitive business environment. These, and other issues under discussion, are new and complex issues, but we are pleased by the commitment of the nine countries to engage seriously and seek outcomes that will promote trade and investment in these areas, and benefit all of our businesses and peoples.

Living Agreement

We are pleased by the interest of Mexico and Canada to join the TPP negotiations and warmly welcome their participation, which will add to the strength of our initiative and help us to advance our goal of enabling the TPP to serve as a possible platform for economic integration throughout the Asia Pacific. We continue to discuss with other countries their interest in potentially joining the negotiations in the future. At the same time, we have made significant progress in reaching agreement on establishing a structure, institutions, and processes that will make the TPP a living agreement, and allow it to evolve as appropriate in response to future developments in trade, technology or other emerging issues and challenges. We also are considering the most productive and efficient approach for future joint work in areas of common interest.

Next Steps

We recognize the priority that the Leaders of our nine countries accord to concluding this agreement. Having made significant progress across the agreement, we are now working to address the remaining issues, which include many complex, new, and sensitive areas on which careful consideration and thorough consultation is needed. We will continue to commit the resources necessary to do so, as you have directed us, and also to integrate Mexico and Canada into the negotiations efficiently so that we can bring this negotiation to a successful conclusion as soon as possible.

The 15th round of TPP negotiations will be held in Auckland, New Zealand, December 3-12.

Mexico and Canada will join the TPP negotiations in early October when the nine current members are expected to conclude their domestic procedures.

 


India Allows Majority Ownership To Outside Multi-Brand Retailers

Supply Chain

Following an almost nine-month delay, the Indian government has approved foreign direct investment (FDI) of as much as 51 percent for multi-brand retailers, such as Walmart, Tesco and Carrefour. New rules also will be implemented in the aviation sector, which will allow international airlines to invest in domestic carriers.

In an effort to counter the still strong opposition, which prompted New Delhi postpone implementation in December last year, state governments will be allowed to opt out of the FDI scheme in the retail sector.  Concern has been expressed that small local retailers will be overwhelmed by the large, multi-national corporations, a point that has been countered by supporters who maintain that local enterprises will far out number the multi-nationals and also offer more specialized services.

Indeed, in a statement to a textile-oriented website, Mr. S.V. Arumugam, Chairman of the Confederation of Indian Textile Industry expressed gratitude to Mr. Anand Sharma, Minister of Commerce, Industry and Textiles “for his tireless efforts to get this important economic reform through, in spite of uninformed opposition from several quarters.”  He said that” the decision would encourage organized retailing, which in turn would result in more centralized procurement operations, improved supply chain management and reduced involvement of middlemen between producers and retailers.”

Foreign retailers must meet certain conditions, however, in order to participate in the FDI program, among which are:

  •  A minimum investment of US$100 million,
  •  Half of the investment must be for infrastructure, such as cold storage and  warehouses, and
  • At least 30 percent of goods sold must be sourced from local producers.

A 51 percent FDI for single-brand retailers already is in place, and the 30 percent local sourcing requirement also will be applicable.  However, the government will grant a waiver, so long as a manufacturing plant is built to ensure jobs will remain in the country.


 


Reports Detail Apparel Growth Sectors, Forecast How Market To Develop

Supply Chain

Just-style.com this spring and summer has offered a pair of reports written by Euromonitor International detailing the current challenges of getting clothing and footwear to market.  Growth sectors are identified, and factors driving change along the supply chain also are identified.

The first report: Apparel Routes To Market: Part One - Global Distribution Overview is previewed as follows:

“Historically, apparel brands looked to retail specialists to distribute their products; however, the boundaries are now blurring, as many brands move across into retailing and retailers become known as fashion brands. In the middle are those brands which have tried to embrace both perspectives from the outset. It appears that retailers dependent on others’ apparel brands are losing ground, so as the retail landscape evolves, the battle to follow the right distribution strategy is intensifying.”

In Part Two - Brands Squeezed by Changing Retail Environment:

“The volatile economic environment and rising pricing pressures make apparel retail a difficult environment to operate in. With independent specialists struggling, the power is shifting from wholesale to own stores and online operations. Key distribution strategies are already being put in place by successful companies, and represent an outward-looking vision, while at the same time keeping on top of the detail of the business and keeping a balance while embracing different routes to market.”

The reports are designed as a global briefing to provide an insight into to the size and shape of the apparel market, highlight topics currently being discussed and emerging trends, as well as important industry issues. They identify leading companies and brands, offer strategic analysis of key factors influencing the clothing and footwear market, such as changes on the supply side, economic/ lifestyle /demographic influences and pricing issues. Forecasts illustrate how the market is set to change and criteria for success.

The reports provide data coverage on market sizes (historic and forecasts), company shares, brand shares and distribution data.  The also help to understand the competitive environment and the market’s major companies and leading brands.  

For more than 40 years, Euromonitor International has published market research reports, business reference books and online information systems. It has offices in London, Chicago, Singapore, Shanghai, Vilnius, Dubai, Cape Town, Santiago, Sydney, Tokyo and Bangalore.  With more than 800 analysts worldwide, Euromonitor International maintains it “has a unique capability to develop reliable information resources to help drive informed strategic planning.”

Information about purchasing the two reports may be found here and here.


 


Chinese Textile Group Reports Poor First Half Results

Weiqiao Textile Company Limited, the world's largest cotton textile producer, has announced its first half 2012 financial position, and the results reaffirm news reports this summer detailing how the Chinese economy has struggled across many sectors.

The company’s exports continued to rise, albeit at a slower pace than during the same six months in 2011, but weak demand throughout the global textile market held revenue to remembi 7,709 million, about 4 percent below the January-June 2011 period.  Gross profit fell to remembi 419 million, which representated a decline of no less than 58.8 percent on the year.

In its semi-annual financial report Weiqiao noted that the textile industry in China was significantly affected by the weak global macroeconomic situation. Factors such as soft demand in both overseas and domestic markets, the cotton price gap between domestic and overseas markets, and intensified international competition caused a decline in the textile industry in China. Consequently, the entire industry experienced a slowdown in production growth and domestic sales, greater downward pressure on exports and declining earnings.

The report noted that exports of China's textile products during the first six months of the year continued to increase, though at a much lower rate. It cited statistics from the Administration of China Customs that showed exports of textile products in the first half of 2012 were approximately 1.3 percent higher, compared with the corresponding period of 2011, at around US$46.5 billion. The growth rate declined by approximately 27.5 percentage points from approximately 28.8 percent in the corresponding period of 2011.

During the first half of 2012, Weiqaio's production volume of cotton yarn, grey fabric and denim were approximately 206,000 tonnes, 498 million meters and 42 million meters, respectively, which represented a declince of about 37.6 percent, 14.1 percent and 16.0 percent, compared with the corresponding period a year earlier. 

Commenting on the first half of 2012 interim results performance, Ms. Zhang Hongxia, Chairman of Weiqiao Textile, said: 

"During the period, cotton prices in the domestic market remained at a low level while declining sharply in overseas markets, making overseas cotton much cheaper than domestic cotton, which led to greater competition pressure on the domestic textile industry. Therefore, it was difficult to lift the prices of textile products, which significantly affected the Group's overall profitability."

In the future, Ms. Zhang said the company will continue to face challenges, but there is reason for a modicum of optimism.

"Looking ahead, we expect the global economy to continue to pose challenges, and this will likely cause demand from international markets to remain weak,” she said. “On the domestic front, surging labor and other production costs, funding difficulties, and other issues are not expected to be resolved in the near future. The trend for the cotton price gap between domestic and overseas markets remains uncertain. As such, the operating environment for the textile industry in China will most likely remain challenging. 

“With growing domestic consumption, demand for various middle and high-end textile products and apparel is expected to grow. And following recent reserve requirement ratio and interest rate cuts, it is expected that more favorable policies to stabilize the economy will be issued in the second half of 2012, which would support the steady development of the textile industry in China,” said Ms. Zhang. 

“Although the operating environment for China's textile industry in the second half of 2012 will remain challenging, we believe the industry will show low, but positive growth."

 

 


Apparel Supply Chain Embracing Change

Supply Chain

In it’s latest issue, TextileWorld.com’s Associate Editor Sarah Thomasson reports on a survey of corporate executives throughout the apparel supply chain, which covered a variety of issues contributing to success or failure.

Among those, officials acknowledged that technology has become a critical aid in consumer purchasing, with goods available at any time via the internet.  The use of technology also has contributed to the following:

  • Product research on-line by the consumer,
  • Price comparison in retail stores with the use of smart phones,
  • Immediate product feedback (positive and negative) by consumers, and
  • The use of video-sharing and social networking websites that can be advantageous or disadvantageous.

Meantime, unlimited selection of products vying for the consumer dollar means brands and retailers must understand buyers and their desires.  Additionally, American consumer selectivity and attention to value have grown in recent years, as well as emphasis on sustainability across the supply chain and the desire to purchase products made in the United States.

Ms. Thomasson reports that attention to strict inventory control has become critical in the retail community, which has affected the entire supply chain.  Consequently, this has produced a greater need for flexibility and focus on consumer trends.  Speed of supply has become paramount.

Partnering along the textile and apparel supply chain has become a relatively new innovation as brand manufacturers and retailers recognize the improvement in cost/benefit ratios.  

With respect to product sourcing, rising labor and transportation costs in Asian countries, which for years have enjoyed the position of No. 1 supplier to the US and Europe, have prompted companies on the two continents to look closer to home.  Moreover, ‘local’ sourcing aids in the monitoring of sustainability at the manufacturing level.

Finally, the article notes that those along the supply chain who embrace change are better positioned to succeed over the long term.  Although there are those who choose to react to events as they occur along the supply chain, who will not realize the greatest returns, the broader outlook is positive, and enthusiasm continues to grow.

The entire articles can be read here.

Questions:  In addition to the internet, what other technological or other innovations are on the horizon that will help improve efficiencies along the supply chain?

Considering the high cost of labor was one reason textile and apparel manufactures in the US moved sourcing to Asia and Indian Sub-continent, what are the chances latest efforts to source locally will succeed?


 


New Study Optimistic For Future Global Economy

An organization within the federal government charged with strategic, long-term thinking  is in the process of completing a comprehensive report aimed at the state of the world in 2030.  Some of the forecasts, revealed by Mr. Christopher Kojm, head of the National Intellengence Council (NIC), may appear overly optimistic.

Speaking at the Aspen Security Conference in Colorado last week, Mr. Kojm suggested that global poverty could almost vanish, as the middle class doubles to 2 billion people worldwide and the 1 billion people around the world who currently live on less than US$1 per day is halved.

"We see the rise of the global middle class going from one to two billion," Mr. Kojm told forum participants in a preview of the report.  The unclassified version is scheduled for release by the end of the year, according to the Associated Press, which reported from the forum.

"Even if some of the most dire predictions of economic upheaval" in the coming years prove accurate, the NIC still foresees "several hundred million people...entering the middle class," he said.

Moreover, Mr. Kojm suggested that this rising middle class will have little tolerance of authoritarian regimes.

"Governance will be increasingly difficult in countries with rising incomes," he said, noting that "middle-class people have middle-class values and aspirations" for greater individual empowerment.  Access to social media and other technological tools, that have not previously been available, will help the growing middle class achieve its goals, which could include the overthrow of repressive governments, such as what the world is witnessing in Syria today.

The NIC chief  also said that education levels will continue to rise, and graduation rates for women are poised to exceed that of men, based on the current trend.

Meantime, there are clear challenges to progress by the world’s poor.  Mr. Kojm pointed to food demand, which he said will rise by 50 percent during the next 18 years. Although global population is forecast to grow by just 17 percent, from 7.1billion to 8.3 billion, middle-class people want middle-class diets, which are heavy in meat, requiring more water and grain to produce, he said.

Consequently, "nearly 50 percent of humanity will live in water-stressed regions by 2030," said Mr. Kojm.  However, new technological developments could help close the gap between food and water shortages. 

The NIC head said the rural-to-urban migration will continue, with 60 percent of the world’s populace living in cities by 2030, against 50 percent currently.

The National Intelligence Council reports to the Director of National Intelligence and provides the President and senior policymakers with analyses of foreign policy issues that have been reviewed and coordinated throughout the Intelligence Community.

More details in the NIC report entitled “Global Trends 2030: Alternative Worlds” can be found here.

Questions:  If the global middle class can double over the next 18 years, how can the worldwide cotton industry best prepare for an almost guaranteed increase in demand for the natural fiber?

Which areas of the world are best suited to benefit from the clothing demand created by a rising middle class populace?


 


Nine-Nation Trade Talks Conclude Latest Round

Trade Agreements

The 13th and latest round of negotiations between the nine countries forming the Trans Pacific Partnership (TPP) concluded earlier this month in San Diego, California.  The following is taken from a statement issued by the US Trade Representative’s office with the conclusion of the round.

The United States and its eight TPP partners made important progress toward conclusion of the more than 20 chapters under negotiation between the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. The TPP Agreement is an important trade initiative by the Obama Administration, which is aimed at: 

  •  supporting jobs for American workers by boosting US exports to the rapidly  developing Asia-Pacific region, 
  •  promoting manufacturing, innovation, and entrepreneurship, and 
  •  settling on an agreement that safeguards worker rights and the environment.

This week’s talks made further substantial progress across the chapters, reflecting significant preparatory work done by each of the TPP countries since the previous negotiating round in Dallas in May. Negotiating groups made particularly significant progress in a number of chapters, including customs, cross-border services, telecommunications, government procurement, competition policy, and cooperation and capacity building. In addition, the negotiating groups moved their work ahead substantially on other issues, including rules of origin, investment, financial services, temporary entry, and other issues. 

The nine countries also continued intensive discussions on the ambitious tariff packages they are seeking to conclude that will provide access to each other’s industrial goods, agriculture, and textiles markets. They also advanced their discussions of how to promote regional supply chains to further augment the benefits of the agreement. 

Meantime, congressional Democrats and organized labor have criticized the talks, claiming a lack of transparency.  

However in the USTR’s statement, Ms. Barbara Weisel, chief U.S. negotiator, said the US government recognizes the importance of obtaining as broad a range of input from the public as possible throughout the TPP negotiations. This negotiating round featured numerous opportunities for nearly 300 people who had registered to meet with US and other TPP negotiators. 

On the first day of the negotiating round, a Direct Stakeholder Engagement Forum was held, which enabled representatives of industry, non-governmental organizations, academia, and the general public to meet directly with negotiators to discuss specific TPP issues. 

The chief negotiators from all nine TPP countries subsequently held a briefing with stakeholders, and Ms. Weisel also participated in a roundtable discussion hosted at the University of California, San Diego. Moreover, there were additional meetings between negotiators and interested parties throughout the negotiating round.

During this round, US Trade Representative also notified Congress of its intent to enter into TPP negotiations with Mexico and Canada on July 9 and 10, respectively. This notification triggers a 90-day period during which the Obama Administration will consult with Congress on objectives related to these new entrants to the TPP negotiations. Mexico and Canada will join the TPP negotiations once current TPP members successfully conclude their domestic procedures.

The 14th Round of TPP negotiations will be in Leesburg, Virginia on September 6-15. 

 

 


Top China Official Pushes Innovation To Boost Economy

Supply Chain

The validity of warnings regarding China’s stumbling economy by economists and other market analysts bears merit in light of recent comments by the country’s premier.  

Mr. Wen Jiabao has toured several provinces this month encouraging workers, researchers and industrial leaders to be more innovative in their research and development of new techologies, as a means to reverse a falling economic growth rate, thus improving the country’s social and economic infrastructure.

Reports from China’s Xinhua News Agency suggests Premier Wen has taken a lead role in exhorting the nation to perservere through the difficult times, calling for “greater efforts to strengthen the vitality and dynamism of economic growth,” according to Xinhua.

Mr. Wen acknowledged that the economy is progressing at a slower, though more stable pace, but insisted the growth rate “is still within the government target range set early this year, and stabilization policies are working." 

Beijing has lowered its target for gross domestic product (GDP) growth this year to 7.5 percent, compared with 9.2 percent in 2011, because of ongoing economic difficulties in the United States and an expanding debt crisis in the Euro Zone countries.

Hampered by poor external demand and government efforts to reign in a previously runaway property sector, GDP growth slowed to a three-year low of 7.6 percent in the second quarter.  

China has imposed a strict ban on real estate speculation in order to hold prices at affordable levels.  Residential construction, however, has slowed sharply and there are varying reports of how low real estate prices have fallen across the country.  

The Central Bank has cut regulated bank lending and deposit rates twice since last month, and a small rise in activity has been witnessed.  Meantime, a number of China’s largest cities are reported to have loosened the prohibition on real estate speculation, which has drawn the attention of the central government and brought warnings of punishment, if the national policy is not reinstated.

The premier also addressed tax reform during his series of meetings.  He said the central government will continue to introduce “proactive fiscal policies” centered on structural tax reductions to lighten the burden on small and micro-sized firms.  Structural obstacles between supply credit and demand also will receive attention.

In meetings with 30 corporate officials and industry association chiefs, Mr. Wen again emphisized the need for increased innovation, in the face of falling foreign demand for traditional Chinese export products, coupled with increasing production costs.

However, when a textile manufacturing chief executive from Jiangsu Province offered the idea of tax relief to make prices more competitive to counter the drop in demand, the premier appeared to offer only soft support, saying the government will pursue aggressive fiscal policies to support companies, but structural tax reductions should be aimed at boosting innovation.

Data for the first four months of 2012 show a sharp drop in Chinese exports of textiles and apparel, according to the China National Textile and Apparel Council.  

Valued at US$71 billion, January-April exports were only 1.07 percent greater than at the same time a year earlier, and there is a growing fear that manufacturers are losing market share abroad.  Textiles shipments were only 0.15 percent higher at US$30.73 billion than at the same time in 2011, while apparel exports were placed at US$40.27 billion, which reflected a rise of 1.77 percent.

 

Questions:  If China has indeed lost export market share for its textile and apparel products, have other countries have stepped in to fill the gap, or is this more a reflection of current worldwide economic malaise? 

What are the implications of a Chinese economic recession?


 


Displaying 11 to 20 of 66 records
<< Prev  1   2   3   4   5   6   7   Next >> 

LOGIN
Founders members please log in for additional content.