Are the textile companies that were “shot” in the TPP and moved to Vietnam crying?
According to US media reports, on November 10, US President-elect Trump met with Obama to discuss succession matters. Afterwards, US Senate Majority Leader McConnell announced that the Trans-Pacific Partnership Agreement (TPP) plan led by the Obama administration was canceled. “Shot to death”. The Obama administration also announced that it will not push for the passage of the TPP in Congress during its term. Since Trump himself opposes the TPP, it can basically be concluded that the TPP has died!
Orders will fly southeast! China’s textile and clothing will be cannibalized
On October 5 last year, 12 countries including the United States and Japan reached the TPP (Trans-Pacific Partnership) agreement in the United States. The conclusion of this agreement triggered a strong response in the country. Since China did not join the TPP, some people believed that the TPP would “kick China’s butt” and that the United States and Japan would join forces to block China, which would have a disastrous impact on China. In particular, Obama’s claim that China cannot be allowed to formulate global trade rules has aggravated many people’s dissatisfaction and concerns.
If China stays outside the TPP, some industries will be transferred to TPP member countries. For example, in the traditional labor-intensive textile industry, mainland textile companies have transferred spinning and fabric production lines to Vietnam. The TPP may bring job losses and industrial losses to China’s textile industry. Among the various provisions of the TPP, the most eye-catching provision is “zero tariffs” – in principle, the TPP requires the elimination of all goods when conducting trade between member states. import duties.
In this sense, the conclusion of the TPP agreement is not good news for the Chinese textile industry. As a major country of origin of textiles, China will indeed be greatly affected, and Chinese textile and apparel export companies will face more competition and difficulties. For example, according to TPP regulations, all processes and raw materials after “starting from yarn” for textile products must be carried out in TPP member countries in order to enjoy zero tariff treatment in 12 countries.
Zhang Yansheng, chief researcher of the China Center for International Economic Exchanges, told reporters that this may force some textile companies to move their factories from China to TPP countries. Zhang Jianping, director of the International Cooperation Office of the Institute of Foreign Economics of the National Development and Reform Commission, said in an interview with the media that due to lower tariffs, Vietnamese textile and clothing products may become more competitive than Chinese products in the U.S. market. Malaysian economists believe that the Trans-Pacific Partnership (TPP) reached between Malaysia and 11 member countries, including the United States, Canada, Japan, Australia, Brunei, Chile, Mexico, New Zealand, Peru, Singapore, and Vietnam, will help improve Exporters in foreign trade, opening up the North American market, and many export-oriented industries, such as textiles, palm oil, rubber, and furniture, will benefit from this, but domestic small and medium-sized enterprises, indigenous, and state-owned enterprises may become losers.
Response calmly! Free trade between China and the five TPP members
As the largest country with a GDP of US$10 trillion and trade in goods, the Chinese market is extremely important to countries around the world and has become a partner that many countries cannot ignore. TPP signatory countries, including the United States and Japan, cannot give up economic and trade exchanges with China. Among the 12 TPP countries, 5 have reached FTA (free trade agreement) with China, and 7 have participated in the negotiation of the “Regional Comprehensive Economic Partnership” agreement including China. In addition, China has accelerated the construction of free trade zones and gradually built a free trade network that is based on its surrounding areas, radiates the “Belt and Road”, and is oriented to the world. In September this year, China successfully hosted the G20 Summit and became one of the major forces leading global governance; China The Asian Infrastructure Investment Bank proposed to be established includes 57 countries in the initial launch camp, covering the five continents of Asia, Oceania, Europe, Latin America and Africa, and is widely representative. Therefore, regardless of the strategic intention behind the TPP, the trend of globalization will not be changed, and any attempt to contain China will not succeed. As for the future development trend of TPP, we will continue to pay attention and respond calmly on the premise of adhering to common development and mutual benefit.
At present, it is difficult for textile companies to receive foreign trade orders and there is great inventory pressure. At the same time, due to many factors such as rising labor costs, fluctuations in raw material prices, and increases in loan interest rates, China’s textile industry will once again fall into a reshuffle pattern, and the export situation is not optimistic. On the other hand, the price difference between China and international cotton prices continues to be too high, and the cotton costs of Chinese cotton spinning companies are at a disadvantage in international competition. Not only cotton spinning companies, but also textile companies including downstream textile and apparel companies are facing huge competitive pressure. The cost of cotton is higher than that of the international market, which has long been a problem that has plagued the development of China’s textile industry. It has become more prominent in the past six months when other costs have increased rapidly, which has largely affected the international competitiveness of China’s textile industry. decline.
Because of this, Chinese textile companies such as Blum Oriental and Tianhong Textile had to resolve their corporate difficulties through the deployment of overseas production capacity, and they “left” and invested in Vietnam. After Vietnam and the United States signed the Trans-Pacific Partnership Agreement (TPP), the main manufacturing processes of spinning, weaving, and printing and dyeing are carried out in member countries and can enjoy export tariff reductions. The duty-free treatment will further amplify the global competitiveness of Vietnam’s textile manufacturing industry in the context of low processing cost advantages.However, with the demise of the TPP, this advantage of Vietnam may “no longer exist”! As Yang Weixin, chairman of Blum Oriental, said: Chinese companies cannot “go out” just for the sake of TPP, but “it is only right for the market and customers to let you go out.” He also reminded that Vietnam has no shortage of textiles. Spinners are currently short of fabrics, and knitting and printing and dyeing companies can go global next. However, Vietnam’s environmental protection requirements are very strict, even stricter than China’s. Wastewater must be 100% qualified before it can be discharged, so “the Vietnamese market is no longer so easy.” (CCTV News, Global Times) TPP was “shot” and moved to Vietnam Are textile companies going to cry?
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