With the upcoming entry into force of the Regional Comprehensive Economic Partnership (RCEP), trade and investment exchanges in East Asia will turn a new page. As a new type of free trade agreement, RCEP is more inclusive than other free trade agreements, which will bring benefits to the development of many industries. Among them, the textile and garment industry will usher in new development opportunities.
For RCEP member states, how to seize this wave of development dividends brought to the textile and apparel industry by the entry into force of the agreement? What new cooperation can China and ASEAN carry out in this industrial chain? Can local governments and enterprises find opportunities for industrial transfer? These are all questions worth exploring.
RCEP is about to take effect, and the textile and garment industry will usher in new opportunities
As a traditional labor-intensive industry, the textile and garment industry is highly dependent on low raw material costs and labor costs. RCEP member countries have strong industrial complementarity in the textile and apparel industry. In the complete cycle system from raw materials to processing and manufacturing to final consumption, RCEP members can rely on the resource factors of developing countries in the region, the production base of intermediate goods and the technological advantages of developed economies, and make full use of the RCEP origin accumulation rules to form a regional The closed loop of the internal industrial chain, supply chain and value chain forms an industrial chain system that connects the previous and the next.
Enterprises can put various links of the industrial chain into production in different relevant member countries based on costs. As long as the added value of the products reaches more than 40%, they can enjoy preferential tariffs, further promoting production cooperation and industrial optimization among member countries, and allowing the market to The layout has more flexible space.
For example, major manufacturing countries such as Japan and South Korea can still meet the 40% regional value content requirement of products by making full use of the low-cost labor force in ASEAN countries such as Cambodia and Laos to deploy industries.
Labor costs, tax costs, and raw material costs in Southeast Asia are the main sources of cost advantages. After RCEP comes into effect, this advantage of the ASEAN region will be brought into play to a greater extent, providing good conditions for it to undertake the transfer of the mid-stream and downstream textile and garment primary processing industry chains in China, Japan, South Korea, Australia and New Zealand, and it can also accelerate the transfer of the primary processing industry chain of textiles and garments in Southeast Asian countries. Internal industrial development process.
At the same time, one of the biggest breakthroughs in RCEP this time is the realization of a zero-tariff agreement in the free trade area between China and Japan for the first time. Among member countries, China’s textile and apparel industry is mainly responsible for the mid-to-upstream industrial chain links. The main export areas for upstream raw materials and semi-finished products are Vietnam, Cambodia, etc. After processing and manufacturing, clothing companies are then transferred to developed countries such as Japan and South Korea.
According to data from the General Administration of Customs, China’s industrial textile exports to the Japanese market in 2019 were US$1.659 billion, accounting for 6.1% of China’s total exports. China has maintained a long-term trade deficit with Japan and South Korea, and is a very important export market for Japan and South Korea. Therefore, as far as Sino-Japanese trade is concerned, the implementation of RCEP may promote new breakthroughs in China’s textile and apparel exports.
China and ASEAN, seize opportunities and seek win-win results
Among RCEP members, China and ASEAN are close partners in the textile and apparel industry chain. At present, China’s textile industry accounts for more than 50% of the world’s scale, 70% of the world’s chemical fiber output, and 1/3 of the world’s trade. From the perspective of industrial integrity, China’s industrial chain basically covers basic aspects such as raw material production, processing and manufacturing. Links, chains are complete, and product varieties are complete. Most listed textile and garment companies have achieved full coverage of the upstream, midstream, and downstream of the global brand supply chain. From the perspective of manufacturing level, most of its fiber raw materials, spinning and weaving, clothing and home textile manufacturing and equipment levels are at the internationally advanced level. This advantage will most likely continue to grow as the economy opens up and costs decrease.
According to calculations by the Zhongtai Securities Research Institute, from an output perspective, China’s most beneficial industry after the implementation of RCEP is textiles and clothing (output increased by 0.86%). Although the textile and apparel industry chain involves many links, China’s textile industry market has formed a highly supporting industrial cluster in the southeastern coastal areas by virtue of its early development and large scale. In recent years, due to rising costs such as labor and rent, industries in eastern China have gradually transferred to Southeast Asian countries with more cost advantages. By taking over part of China’s textile and apparel production capacity, ASEAN countries can further promote their own industrialization process, promote textile and apparel exports, employment and economic growth, and seek development in production.
↑ Textile and garment industry workers work on the production line
The unified, concise and clear rules of origin of RCEP have a very significant guiding role in the trade, investment and supply chain layout of Chinese textile and garment enterprises in ASEAN. It will further facilitate the cross-border trade cooperation of multinational enterprises and accelerate the acceleration of China’s textile and garment industry. Shifting the midstream and downstream production links to ASEAN countries with lower land and labor costs will help ASEAN countries build a primary industry production chain.At the same time, we will further integrate and reconstruct the country’s regional industrial chain and supply chain.
It can be seen that the industrial chain of the textile and clothing industry is relatively long and involves a large number of links. Only by continuously leveraging their own advantages in the development process can China and ASEAN countries achieve win-win cooperation.
Leveraging its location advantages, Guangxi is gearing up for development
As the only province in China connected to ASEAN by land and sea, with the increasingly close cooperation between China and ASEAN, Guangxi’s status as an important gateway for the organic connection of the “Belt and Road” has become increasingly prominent. Guangxi’s location advantages, resource advantages, industrial advantages, and market advantages in the textile and garment industry will also be further released.
From a location perspective, Guangxi’s geographical location determines that it not only has the advantage of linking up with the “Guangdong-Hong Kong-Macao Greater Bay Area”, but also has accumulated experience in cooperation with ASEAN, setting up a good platform for cooperation and communication between eastern enterprises and ASEAN countries. Promote domestic and international dual circulation.
From the perspective of resources, Guangxi’s cocoon production currently accounts for more than half of the country’s total, and mulberry silk production accounts for more than 30%. Among them, cities such as Yulin and Guigang have built China’s high-quality cocoon silk production base, the largest casual clothing production base in southwest China, and multiple knitted fabric weaving factories. As the largest sericulture production base county in the country, Yizhou District, Hechi City, Guangxi has been awarded the title of “China’s Hometown of Sericulture”.
From an industrial perspective, with years of accumulation and development in the garment and textile industry, Guangxi is well positioned to make progress during the second industrial transfer in the Pearl River Delta region. As of the first half of 2021, Guangxi already has 5 national-level textile and garment industry bases, nearly 300 textile and garment production enterprises above designated size and more than 7,000 trading enterprises, and the industrial cluster effect is gradually emerging. This is not only the result of the joint efforts of policies and enterprises, but also the result of Guangxi’s continuous activation of production capacity in the textile and garment industry.
Guangxi’s sericulture industry has provided a good raw material foundation for the development of the textile and garment industry. However, we should also objectively see that, overall, to develop the textile and garment industry, Guangxi has to face difficulties in terms of capital, technology, environmental protection, talent and other conditions. , there is still a lot of homework to be done.
For example, at present, cocoon silk processing in Guangxi is still mainly based on reeling. Silk weaving has just started, and a silk printing and dyeing factory has not yet been established. The infrastructure of production links such as processing technology and technology is relatively weak, resulting in a serious problem in the added value of the sericulture industry chain. At the same time, Guangxi’s population mobility is small, and labor costs are also one of the concerns for industrial development.
Therefore, it is necessary to seize the opportunity of production capacity transfer in eastern China, properly handle the competitive and cooperative relationship with ASEAN countries, and find its own positioning in China-ASEAN textile service industry cooperation. On the one hand, Guangxi must highlight its role in the prevention and control of the new coronavirus epidemic. Under normalization, policy advantages in cross-border economic cooperation and future cross-border labor cooperation; on the other hand, we must plan more scientifically, strengthen leaders, strengthen chains, and gather groups, and strive to improve the chain advantages of linking eastern industries. Build its own capabilities, thereby becoming a new high ground for undertaking production capacity transfer.
The entry into force of RCEP will have a huge impact on many industries, including textiles and clothing. However, the development dividends of RCEP cannot be “sit back and enjoy the benefits”. It needs to be used scientifically and grasped accurately. Therefore, whether it is China-ASEAN or various localities and enterprises, in addition to analyzing the positive benefits brought by RCEP to all walks of life, it is more important to “strengthen the body” and make adequate preparations in order to Calmly seize the new industrial opportunities in this great era.
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