The final quota for textiles exported to the United States: the industry is anxious and may become waste paper

The final quota for textiles exported to the United States: the industry is anxious and may become waste paper

As the production manager of a clothing company in Zhongshan, one of Xu Sheng’s important tasks for several months has been “finding quotas.” In addition to the online quota trading platform, he also visits several large local clothing export companies from time to time, hoping to find quotas for jeans to be exported to the United States.

The quota he needs is category 347/348 (men’s/women’s cotton pants) exported to the United States. The current price in the local market has risen to more than US$3.5 per dozen (12 pairs). Due to the large number of companies in need, supply is in short supply.

Jeans are a hot-selling product of Chinese clothing exported to the United States. According to U.S. Customs statistics, even though China’s apparel exports to the U.S. are extremely sluggish this year, Chinese companies have already used up 67.7% of their annual quota.

But Xu Sheng is still thinking about another part of the quota – the quota that the Chinese Ministry of Commerce has not yet conducted the third tender: “This year, there are a total of 25,442,951 dozen quotas in this category. From the end of last year to May this year, a total of two tenders were conducted. , the bidding quantities are 10,493,738 dozen and 10,197,256 dozen respectively. In other words, there may be 20% of the total annual quota that has not been released. If we can obtain quotas from government bidding, the cost will be greatly reduced. At the same time, it will be the end of the year soon , the price of quotas can also be reduced.”

In the two tenders for the 2019 clothing quota agreement for export to the United States in October 2007 and May 2019, the bidding prices determined by the Ministry of Commerce were both 13 yuan/dozen, and the current price has exceeded 20 yuan/dozen. After the crackdown, the cost for enterprises to use quotas suddenly increased by more than half.

Since August, companies have been asking the Ministry of Commerce through various channels when the third quota bidding will be held, but they have not received a positive answer. The reporter also inquired relevant persons from the Foreign Trade Department of the Ministry of Commerce through various channels, but received no affirmative reply.

However, what gives some relief to textile export companies is that on October 26, the person in charge of the Foreign Trade Department of the Ministry of Commerce announced that in accordance with the relevant provisions of the WTO, the Ministry of Commerce will no longer implement textile exports to the United States starting from January 1, 2019. Quantity and license management and textile export license management to Europe.

　The price of hype quota is higher than that of clothing

Many companies said that the more powerful products China exports to clothing, the more quotas there are in tight supply. “The current quota of 349 (women’s bras) has been sold for more than 4 US dollars per dozen, and the export price of such products is generally about 3 US dollars per dozen.” The person in charge of a company in Zhongshan said.

According to previous data released by the Textile Export Licensing Tender Committee of the Ministry of Commerce, the previous two tenders for 349/649 (brass) were 12,734,051 dozen and 7,074,028 dozen respectively, and a total of 67% of the total annual quota of 29,479,266 dozen was issued. about. According to data released by Textile.com, as of October 23, the customs clearance rate of this type of products has reached 60.8%. In other words, there are currently very few quotas for this type of products that Chinese companies can obtain from the market.

In the previous bidding by the Ministry of Commerce, the bidding price for this type of quota was RMB 2.3 per dozen. The current transaction price has risen to about RMB 40 per dozen. In just six months, the price has increased more than ten times.

The surge in prices was beyond the expectations of all companies. At present, there are generally two types of domestic textile export enterprises. One is to have its own sales company and fixed customer orders in the United States; the other is to export directly to American buyers. However, no matter which form, most enterprises adopt the “first Take the order and then look for the quota” approach. After the enterprise has used up the quotas tendered through the agreement, it then purchases the quotas from the market.

An export company in Nanjing said that the quota market in 2007 was relatively stable. Generally speaking, the market price at the end of the year was 10%-20% higher than the bidding price. Therefore, the company estimated a few months ago that the market price of 347/348
in October should be around 2 US dollars/dozen, which is approximately 14 yuan, and signed a contract with the buyer at this price. What they did not expect was that quota prices soared in a few months, and the execution of the contract actually led to losses.

The industry is anxious that quotas may become waste paper

It was learned from the Textile Industry Association that the Foreign Trade Department of the Ministry of Commerce, which is responsible for quota management, said when accepting inquiries from enterprises that it will first verify companies with abnormal export performance, and only after the verification is completed can the third round of bidding be conducted.

In 2006 and 2007, a large number of companies appeared in China, especially in Shenzhen, that forged export performance to defraud textile quotas. They used textile quotas to allocate them among bidding companies according to the total export amount of the previous year, forged export contracts, defrauded low-priced bidding quotas, and then sold them on the market when the quota prices rose, earning a high price difference.

Starting from the end of 2007, the Ministry of Commerce began to inspect textile export enterprises and canceled the bidding qualifications of enterprises that failed to pass the inspection.

Ironically, the person in charge of the aforementioned Zhongshan clothing company said that the quotas currently circulating in the market mainly come from two channels. One is companies with poor order situation this year and cannot use up their quotas, and the other is through false performance. Enterprises that defrauded a large number of quotas. When the Ministry of Commerce was determined to “verify first and then invite bids,” the companies they inspected took advantage of the Ministry of Commerce’s delay in inviting bids to earn high profits.

From January to September 2019, China Textile and ApparelThe US export growth rate was only 1.4%, a decrease of 28 percentage points from the same period last year. In order to protect labor-intensive industries, the Chinese government has raised export tax rebates for textiles and apparel twice this year. However, those companies that urgently need quotas believe that the increase in costs caused by the delay in issuing textile export quotas has offset the benefits of the reduction in textile export tax rebates.

Generally speaking, it takes 60-75 days for textile and garment enterprises to prepare raw materials and complete export. Many companies still remember that at this time last year, bidding for 2019 export quotas to the United States was already underway, so that companies could arrange production for the coming year in advance.

“According to past experience, it takes at least one month from the issuance of the announcement to the release of the official results of textile quota bidding. Therefore, even if the Ministry of Commerce issues a bidding announcement tomorrow, it will take early December for companies to obtain quotas.” Xu Sheng said : “This no longer means anything to us. Companies have no time to arrange production and ensure that products are shipped to the United States before January 1, 2019. By then, the remaining quotas will be a pile of waste paper. Because government actions give companies Who will bear the losses?”

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