It has been some time since the huge public outcry triggered by the “Xinjiang Cotton” incident, but its effects are still continuing. On the one hand, we firmly oppose any actions that stigmatize Xinjiang cotton. On the other hand, the health and safety development of Xinjiang cotton and the industrial chain involved are of greater concern. Now, let us take an in-depth look at it from an industrial perspective: What is the production situation of cotton in Xinjiang? What does it mean to be BCI certified or not? What impact will BCI’s boycott of Xinjiang cotton have on my country’s cotton industry? Will Xinjiang cotton orders be affected accordingly? What measures have yarn companies taken to deal with it?
Xinjiang’s long-staple cotton is small in quantity and of high quality and in short supply
As the world’s As the largest cotton consumer and the second largest cotton producer, China’s cotton output in 2020/2021 is approximately 5.95 million tons, with a total demand of approximately 7.8 million tons, and an annual gap of approximately 1.85 million tons. Among them, Xinjiang’s cotton output is 5.2 million tons, accounting for approximately 87% of domestic production and approximately 67% of domestic consumption. For 26 consecutive years, Xinjiang’s cotton output, unit yield, planting area, and commodity allocation volume have ranked first in the country. The situation of “the world’s cotton looks to China, and China’s cotton looks to Xinjiang” has been formed.
Xinjiang’s long-staple cotton is the world’s top quality. It is very precious due to its small quantity and high quality. It is understood that under the same conditions, the growth cycle of Xinjiang long-staple cotton is 10 to 15 days longer than that of upland cotton and requires more heat, so it is of higher quality. Therefore, it is known as “the best cotton” and “white gold”. Because its fiber is soft and long, but its fineness and strength are much higher than ordinary cotton, its softness is even better, and it is especially suitable for spinning high-end products with high yarn count.
In 2015, Esquel Group funded and collaborated with a number of universities and scientific research institutions to complete the world’s first long-staple cotton gene The sequencing research project, through unremitting exploration and practice of cotton species and technology, has led to the birth of top-notch Xinjiang long-staple cotton that combines the best genes of global high-quality long-staple cotton.
Chen Haiying, chief representative of Esquel Group’s Beijing representative office, said that companies have always been maintaining the image of Xinjiang’s long-staple cotton. Shout out to long-staple cotton. “Xinjiang cotton is really good. We want everyone to know that Xinjiang cotton is not just imported fabrics, but Xinjiang cotton is the best.” Chen Haiying said that Esquel Group has been investing emotions and funds to support Xinjiang long-staple cotton. In the future, Esquel Group will continue to consolidate existing cotton research in Xinjiang, increase investment in Xinjiang, and promote this high-quality natural fiber from China.
Cao Huiqing, president of the Cotton Farmers Branch of the China Cotton Association, said that in recent years, Xinjiang’s cotton output has exceeded 5 million tons year after year, and the planting area has reached 38 million to 40 million acres. Most of Xinjiang’s cotton is supplied to large domestic textile companies. In recent years, many textile companies from the mainland have moved to Xinjiang, and the amount of cotton used by local textile companies in Xinjiang has increased significantly. At present, the national annual cotton demand is about 8 million tons, and domestic cotton production is about 6.5 million tons. There is still a gap, and cotton needs to be imported from India, Australia and other countries.
In Xinjiang, the degree of machine planting and harvesting of cotton fields is getting higher and higher, and the cost is also lower. Cao Huiqing introduced that Xinjiang is now promoting modular cotton planting and social services. A single phone call can call the cotton picker to provide door-to-door service. Machine harvesting costs 150 yuan per acre, with an average of 50 cents per kilogram. “Now there is no ‘decent work’ problem as pointed out by BCI. The cotton production areas in northern Xinjiang have achieved 100% machine picking, and the machine picking rate in southern Xinjiang has also reached 70%.” Cao Huiqing said.
BCI certification is intended to control the cotton supply chain
In fact, European and American countries boycott Xinjiang cotton It can be traced back to around March 2020. At that time, a number of American brands stated on their official websites that they would no longer cooperate with suppliers purchasing Xinjiang cotton due to the so-called “forced labor” and “discrimination against ethnic minorities” in Xinjiang.
The main basis for brands to make the above decisions is a report released by the anti-China organization Australian Strategic Institute (ASPI) in March 2020. The report said that 83 well-known brands were found to be using cotton products supplied by Huafu Fashion and Esquel Group, accusing millions of people of being forced into labor.
This has also become the case that in July 2020, the U.S. Department of Commerce announced that Xinjiang Aksu Huafu, a subsidiary of Fu Fashion Co., Ltd. Colored Textile Co., Ltd., as well as Changji Esquel Textile, a subsidiary of Hong Kong Esquel Group, and other Chinese textile companies are included in the entity list.
In September 2020, the U.S. House of Representatives passed the so-called “Xinjiang-related bill”, banning many Chinese cotton spinning companies The company exports cotton raw materials and products to the United States. This directly led to BCI, which provides alliance certification services for global cotton industry chain companies, to decide to “boycott Xinjiang cotton.”
BCI has always regarded itself as “high-standard cotton” and is committed to promoting standard cotton cultivation worldwide. and promotional actions. However, in the “Boycott of Xinjiang Cotton” incident, the organization’s behavior of arbitrarily stopping the issuance of cotton certification certificates to the Xinjiang region without checking for counterfeiting is confusing.
Cao HuiAccording to the website, as of the end of 2020, the number of BCI members has exceeded 2,000. Members are mainly retail brands, cotton merchants, yarn mills, grower organizations, etc. Many Chinese cotton spinning companies, including those in Xinjiang, are also members of the program.
However, most of these Chinese companies that have joined BCI are upstream or mid-range companies in the industrial chain. The reason why they join BCI is mainly because they hope to occupy a more favorable competitive position in the export trade market through the supply chain alliance formed by this organization. Almost all member companies in the lower reaches of the industrial chain are European and American companies. Once European and American companies really boycott Xinjiang cotton, cotton spinning companies involved in export trade business will inevitably be affected.
In order to cope with the uncertainty risks from the international market, a common choice for textile companies is to transfer the supply chain. As early as a few years ago, my country’s large textile and clothing companies began to build factories in Southeast Asia, where manufacturing costs are lower, or in places further away such as Mexico, to lay out a global supply chain network to adapt to European and American companies seeking lower-cost supply chains. The demands of partners. Huafu Fashion and Esquel Group have both taken such actions.
Huafu Fashion began to set up subsidiaries and invest in building factories in Vietnam as early as 2013. Not long after it was included in the “Entity List” by the United States, Huafu Fashion increased its investment in Vietnam and announced the construction of a 500,000-spindle new yarn project, thus forming two production bases in Xinjiang and Vietnam. The Xinjiang factory selected Xinjiang cotton As raw materials, it serves Chinese companies; while factories in Vietnam will use locally purchased cotton to mainly serve overseas customers.
The Esquel Group has already had production bases in Sri Lanka and Vietnam, as well as sales offices around the world. .
Industry insiders said that for the affected yarn companies, it is also a good idea to switch to domestic sales to undertake orders from downstream Chinese brands. A way. However, for large companies that accept global orders, it will take time to completely make up for the loss of overseas orders through the increase of domestic orders.
“For them, domestic orders are still too small now.” Industry insiders believe. However, it is worth noting that the price of high-end and high-quality Xinjiang cotton may become more favorable due to the “boycott”, thereby benefiting midstream and downstream companies. On the one hand, due to the impact of the boycott, Xinjiang’s cotton exports have decreased, so the amount retained in the domestic market will increase to a certain extent, which will have a certain impact on the balance of supply and demand, resulting in slightly lower prices. On the other hand, cotton exported to domestic sales no longer needs to be “gold-plated”.
Some data show that the price per ton of cotton certified by BCI can be tens of yuan higher than that of ordinary cotton. A few hundred dollars. “When companies in all aspects of the industry chain begin to accept domestic orders, then we no longer need to pay for the premium generated by the aforementioned certification.” Industry insiders analyzed. </p
