COVID-19 brings challenges to China's textile exporters
By Chen Tong
Zhongyuan Group started its export business in 2019. Located in Qidong City, east China's Jiangsu Province, the company exported 1,000 to 2,000 tonnes of polyester every month before. But in recent months, orders from countries like Vietnam, India and Honduras dropped dramatically due to rising logistics costs and container shortage.
"Our waiting period for a container has increased from a week to a month. We can also see an increase in shipment costs by three, four or even five times for some regions. The shipment costs rise is a major issue for our export business," said Chen Yiren, assistant president of Zhongyuan Group.
One container from China's eastern coastal regions to the UK currently costs about $14,000. It costed only one-fifth of the price before the COVID-19 pandemic.
The higher fees are affecting foreign trade, and the situation is especially severe in the textile industry. Fabrics don't provide as much bang for their buck compared to high-end products, but the cost of containers remains the same regardless of what's inside.
For example, one container of Zhongyuan's recycled polyester yarns cost about $40,000, but shipment to as far as Honduras account for half of the total goods value.
"That high rate [makes] our buyers quite reluctant to purchase our products. They either wait to see if the shipment costs will decline, or they just look for raw materials somewhere else," said Chen.
What's happening at Zhongyuan Group is reflective of the state of China's textile exports. Data from China Customs shows China's export value for textiles recorded a decline of 26.78 percent in July.
Beside the rising logistic costs, the dropping demand of masks and protecting suits was the other factor behind the decline. Customs data shows that exports of masks and protective clothing accounted for only 6.3 percent of total textile exports in the first half of the year, compared with 22.4 percent recorded last year.
"More people in Europe, North America and Japan are being vaccinated and they are promoting so-called herd immunity. So their demand for masks has obviously dropped since the second quarter of this year. This is why July's textile exports obviously declined from last year," said Ivy Sun, partner expert at consulting firm Roland Berger China.
Textile exporters are hoping for the best. September and October are usually the "golden period" for the textile industry, as demand for fabric increases due to winter temperatures. But Sun says whether textile exports pick up in the coming months remains an open question, as the pandemic shows no sign of fading worldwide.