Textiles are under trade protection pressure

When the emerging export industries such as photovoltaics encounter internal and external problems, the dominant industries have also become the object of foreign trade protectionism. Mexico recently filed a consultation request under the WTO Dispute Settlement Mechanism on China's textile and apparel subsidy policy, believing that China violates WTO rules to subsidize related industries. Insiders pointed out that as a competitor in the apparel and textile industry in China, Mexico intends to further enter the US market by suppressing the competitiveness of Chinese products. In the early hours of yesterday, the person in charge of the Treaty and Law Division of the Ministry of Commerce responded to this by saying that the Chinese side has received a request for consultation from Mexico and will properly handle it in accordance with the WTO dispute settlement procedures.

Textile companies are hit by trade protection

Mexico accuses China of actually subsidizing Chinese apparel and textile companies by exempting income taxes, value-added taxes and local taxes. It also claims that government agencies pay for and provide preferential treatment in terms of mortgages, land rights and electricity prices. The Mexican Ministry of Economic Affairs said on Monday that China's subsidies to the domestic textile and apparel industries violated WTO rules and had a greater negative impact on Mexico. According to the procedure, if Mexico and China fail to resolve their differences within 60 days, Mexico may require the WTO to form an expert panel to adjudicate.

It is understood that this is Mexico's fourth complaint to China over the WTO. In fact, Mexico is a competitor in many areas including clothing and textiles, and has been competing with Chinese companies to export products to the US market. Therefore, some analysts believe that Mexico’s move does not rule out the intention of further entering the US market by suppressing the competitiveness of Chinese products. According to U.S. Customs statistics, in the previous July, the share of Chinese-related products in the U.S. market was 37.2%, which was a year-on-year increase of 0.5%. The United States is Mexico's main export market, but by the end of 2010, Mexico slipped to sixth place from the US’s largest supplier of garment imports.

Externally affected people also have internal worries

According to industry insiders, if the Mexican side eventually wins the case, the Chinese garment and textile industry, especially exporting companies, will face pressure to further increase costs. Dongguan Ding, a staff member of the personnel department of clothing foreign trade companies in Dongguan with major customers in Europe, America, Japan, and Southeast Asia, told reporters that the plant he belongs to is a relatively large company in the region, but orders have fallen sharply this year. And the higher labor costs, the monthly salary of 3,000 yuan is very difficult to recruit people.

Sun Huaibin, spokesperson of the China Textile Industry Federation, believes that labor costs and capital costs have increased year by year, energy prices have continued to rise, and the pressure on small and medium-sized textile companies has continued to increase. Wang Qinhua, vice president of the China Business Federation, also stated that the severe international situation has adversely affected domestic textile and garment companies, especially those that are export-led. Many business orders have decreased, and international apparel brand orders have shifted further to countries with cheaper labor. Coupled with the increase in the price of raw materials such as cotton and the increase in labor costs, the profitability of the textile and apparel industry as a simple process has been squeezed.

Forced the transformation and upgrading of enterprises

It is not merely the textile industry that suffers from internal and external problems. According to data from the Ministry of Commerce, the traditional export industries such as bags, shoes, and electromechanical products also saw a slowdown in growth since the second half of the year, especially for electromechanical products. An electrical and mechanical trader participating in the Canton Fair told reporters that the current mechanical and electrical industry exports to developing countries trade faster than the developed countries, the growth of key products, export growth is limited, most electronic products to maintain low-speed growth, the growth rate of mechanical product exports generally slowed.

“On the one hand, the growth rate of product exports has generally slowed down. On the other hand, the industry itself has a situation of low price and disorderly competition, and the overall cost of exports for half of the enterprises has increased.” Related industry sources pointed out that the electromechanical industry as a traditional advantageous industry for export The impact of changes in raw material prices on costs has weakened, but the impact of lack of labor and rising costs is more pronounced. The person-in-charge of the Electrical and Mechanical Chamber of Commerce also emphasized that the protectionism of the importing countries has been strengthened, and that the establishment of trade barriers between Europe and the United States from terminal to network manufacturing is also an important factor that has adversely affected the foreign trade environment of mechanical and electrical products.

In response, Wang Qinhua said that if the traditional industries are not transformed and upgraded as soon as possible, the road to exports will become increasingly difficult to follow. At the same time, actively exploring the domestic market is also an important way for the stable development of the company.