Employees work at a garment factory in China's textile center, Shaoxing, in Zhejiang province. zhang Jing / China Daily

Textile hub in Shaoxing braces for new challenges

Textile is often referred to as a "sunset industry", but residents in Shaoxing, Zhejiang province, regard the sector as an immortal Chinese phoenix "reborn" from its own ashes. About 70 percent of the world's clothes are manufactured in China and about 60 percent of that come from Zhejiang and Jiangsu provinces, figures from the Shaoxing Entry-Exit Inspection and Quarantine Bureau show. With its comprehensive industry chain, Shaoxing is known as the center of the textile world.

Shaoxing has a population of about 4 million and more than 40,000 foreign-trade textile companies. About 70 percent of the local government's fiscal revenue comes from its textile industry.

Xu Yongkang, head of the marketing department with Zhejiang Jishan Printing & Dyeing Co Ltd, has worked in the industry for more than 30 years.

"If you can't find a certain material in Shao-xing, you won't be able to find it in any other place of the world," Xu says.

"The textile industry is a barometer of the economy. It is so sensitive it can predict an economic recession and its recovery."

In October 2008, when the world was reeling under the financial crisis, China's textile industry started to pick up instead as the US dollar exchange rate against the yuan hit its bottom.

It was a bull market for China's textile industry in 2009.

"But the predictor seems to have lost its sensors since 2010," Xu says.

"The rapid appreciation of the yuan and domestic inflation have dealt a blow heavier than that of the 2008 financial crisis.

"The yuan has gone up by 1.78 percent in two months since December 2010 and the CPI in January was up by 4.9 percent. To make things worse, prices of raw materials in the upper stream are going up all the time. We have orders coming in, but we are not making any profit."

According to Xu, the cost of cotton per ton was previously 26,000 yuan (2,829 euros) in 2010, but now it costs 35,000 yuan, up by 34.6 percent. On the other hand, the cost of labor has risen by 20 to 50 percent. A textile worker's wage was 2,000 yuan per month in 2010, but now even 3,000 yuan per month may not sound attractive.

Provinces such as Anhui and Sichuan, where most of the migrant workers used to come from, are now holding on to their labor force as more companies from affluent coastal provinces head westward to set up factories there with lower production costs.

A senior manager with a foreign-trade enterprise that takes orders from US fashion brands such as Abercrombie and Fitch, surnamed Cheng, says some local governments are taking the State's policy of energy conservation and emission reduction to an extreme. As government at different levels get a specific quota for electricity usage each month as an index of their performance in energy conservation, they will cut off power supply to factories to meet the quota.

"Sometimes, a textile factory can work for only three to four days per week. Workers are laid off when there is no electricity. All this has added to the predicament of the textile industry," Cheng says.

Xu says that apart from those domestic plights, more competition is coming from outside China.