Xu Yingxin: Overseas investment in the textile industry shows an accelerating growth trend

On April 2nd, the “Pakistan Investment Forum” organized by Industrial and Commercial Bank of China and Pakistani Habib Bank was held in Suzhou. The meeting attracted more than 40 enterprises from China and Pakistan and relevant departments to participate in the discussion between China and Pakistan. Investment development opportunities.

Assistant president of China Textile Industry Association, China Textile Industry Branch, executive vice president of the Council for the Promotion of International Trade Xu New Year, China Cotton Textile Association, North Na Zhu, vice president of the China International Trade Promotion Council of Textile Industry Branch Bernard Lim, China Knitting Industry Association vice Chang Zhao Hong attended the meeting.

Xu Yingxin said at the "Pakistan Investment Forum" textile sub-forum that China's textile industry has entered a new stage of cross-border layout, and overseas investment has shown a trend of multi-regional, multi-industry and multi-form acceleration. At the same time, the strategic goal of the transnational resource allocation of the textile industry is to achieve global integration of the industrial chain and global breakthrough of the value chain by “ going out ”.

According to incomplete statistics, by the end of 2014, Chinese companies have set up more than 2,600 textile and garment production, trade and product design companies overseas, distributed in more than 100 countries and regions, covering key regions such as Southeast Asia, North America, Europe, Australia and Africa. Investment companies come from coastal provinces such as Zhejiang, Jiangsu and Shandong. Foreign investment in the textile industry, covering almost the entire textile and garment industry chain, from cotton, pulp, hemp and other raw materials upstream to cotton, wool, chemical fiber and other intermediate products manufacturing, to the terminal clothing, textile products and textile machinery have Involved. The foreign investment forms of the textile industry include typical FDI forms such as greenfield investment, equity mergers and acquisitions, asset acquisitions and joint ventures. Although the accumulated statistical amount of foreign investment is only several billion US dollars, according to the special survey conducted by China Textile Industry Federation in the past three years, the overseas investment of China's textile industry has shown an accelerated growth trend.

Xu Yingxin said that according to the mastery of the “going out” situation in the textile industry, the current overseas investment in the textile industry mainly presents “two main lines”, “three characteristics” and “two key concerns”.

The main line of the two main lines is based on China's industrial capital. Through greenfield investment and cooperation, the cross-border layout of productivity will create a manufacturing base layout pattern of “China+surrounding countries” (focusing on Southeast Asia and South Asia), maintaining and upgrading the Chinese textile industry. An international leading edge in the global supply chain. The other main line is that China's textile industry capital promotes the vertical extension and control of the industry's overall industry through active overseas direct investment, mergers and acquisitions, raw material resources, design and development resources, brand resources and market channel resources at both ends of the industrial chain. Infiltrated into the high value-added fields of the world textile industry value chain.

One of the three characteristics is that the cotton spinning and knitting industry has become a hot spot for overseas greenfield investment. Over the past few years the cotton purchasing and storage of domestic cotton price policy has led to an average 30% higher than the international cotton prices, seriously undermine the international competitiveness of China's cotton spinning industry, 2012, 2013, respectively, imports of Chinese cotton yarn 1.53 million tons and 210 million tons, up The growth was as high as 69% and 37% respectively. Under this circumstance, domestic cotton spinning enterprises began to invest overseas on a large scale. The total investment in cotton spinning in Vietnam, such as Tianhong, Blum, Huafu, Xindadong and Yulun, has exceeded 1 million spindles. Cole's cotton spinning project in the United States has also entered the stage of production. At the same time, due to the hot part of the sewing industry labor-intensive features, I also knitted garment processing textile industry foreign investment. The key enterprises such as Shenzhou International, Jifa Group, Dongdu Group and AB Group all invest in green space in countries with low labor costs such as Cambodia and Vietnam. For example, 60% of orders from Dongdu Group have been undertaken by manufacturing bases in Southeast Asia. The number of local workers has exceeded 20,000.

Second, cross-border mergers and acquisitions of upstream raw materials and brand technologies are increasing. In terms of upstream raw material management, the acquisition of Australia's Kaby Cottonfield Farm and Fulida's acquisition of New Zealand's Dissolving Pulp Company in Canada are typical success stories. Brand and technology mergers and acquisitions, the acquisition of SMART and XINMA Youngor shares, Bank of cashmere industry to buy UK Duncan Spinners, wishful acquisition of listed companies in Japan Rena Corporation, Mazda profits Silk acquisition of French business MARCROZIER, Masifeier the acquisition of the Italian brand Krizia, Jiangsu Jinsheng's acquisition of all the assets and equity of Swiss Oerlikon Natural Fiber Textile Machinery and Textile Machinery Parts is an effort to acquire brand and technical quality resources through mergers and acquisitions according to the company's own needs.

Third, “going out” is closely integrated with the Chinese market. China's textile industry “going out” is based on the healthy development of domestic business, and the two cooperate and support each other. The final sales location of many overseas investment businesses is the rapidly developing Chinese market. Most of the cotton yarns produced by Tianhong, Yanyin and Kohl Group overseas were sold back to China. Many overseas brands and technology investment mergers and acquisitions also adhere to the "China market power to graft global resources" strategic concept.

Two key concerns are that global trade policy reform is profoundly affecting the reshaping of the global textile supply chain. Regional trade agreements such as TPP will pose major challenges to the development of our industry. Since the Doha Round was deadlocked, regional free trade agreements have had a huge impact on global trade in goods. Because most of the products such as bi-directional zero-tariff, China - accelerated my cotton, the garment can be part of the production relocation to Vietnam and other countries of the ASEAN Free Trade Area objective, on the other hand has also led to domestic fabrics and accessories exports to ASEAN countries grew, ASEAN quickly surpassed Japan to become my third largest export market, and China and the ASEAN textile and apparel industry chain are undergoing deep integration. In the next few years, due to the huge market capacity of the United States and Japan, and the rules of origin of “from yarn identification” and even “confirmed from cotton”, the signing of TPP may further accelerate the large investment in cotton, fabrics and clothing industries in Vietnam and Malaysia. Chinese enterprises need to continue to follow the trend. In addition, Japan, EU preferential use of national tariff policy, to Cambodia, Myanmar, Vietnam and other countries zero-tariff or low tariff, up 6-10 percent of tariff concessions to entice buyers to purchase orders under the premise of meeting quality The transfer of orders in these countries has accelerated the pace of overseas investment by my company.

Second, the company's foreign investment is increasingly rational and cautious, and attaches great importance to overseas financing, comprehensive cost, investment security and full-risk management. In the special investigation of industrial foreign investment in China Textile Association, the financing cost of overseas investment has always been a hot issue. The overseas investment mergers and acquisitions of enterprises are trying to make full use of the current time window of low dollar financing cost. For example, the comprehensive interest cost of Yanyin's cotton textile project loans in Malaysia is significantly lower than the domestic financing cost. Meanwhile, the company also attaches great importance to due diligence and investment feasibility analysis of many factors adequacy and labor costs, labor productivity, supply of raw materials, industrial chain, sales and marketing, management and human resources into consideration and calculate the overall cost, pay attention to investment The real advantage of the destination. In addition, investment security and risk prevention and control are the most important factors for enterprises. It is very important to fully understand the legal system, political environment and cultural customs of investment sites. When talking about cooperation with the Pakistani textile industry, Xu Yingxin said that Pakistan is an important member of the world textile industry, and the textile industry is also Pakistan's most important pillar industry. At the same time, building and promoting greater progress in the China-Pakistan Economic Corridor is a major task of the “One Belt, One Road ” national strategy.

China's textile industry will do its utmost to support the China-Pakistan Free Trade Zone upgrade to achieve high-level two-way free trade in the textile and apparel sector, which is also conducive to improving the enthusiasm of Chinese textile companies and Pakistan to capacity cooperation. At the same time, we also fully support the “China-Pakistan Industrial Park” project jointly established by ICBC and Pakistan partners and the further promotion of the “Pakistan ICBC Ruyi Textile and Garment Industrial Park” project, in the park promotion, information interaction, financial support and risk control programs. Recommend to do some practical service work. Shandong Ruyi Technology Group chairman Qiuya Fu said at the meeting, Shandong Ruyi Technology Group to invest and build factories in Pakistan is the best choice for business, not only in Pakistan has rich labor resources and energy, and workers have a very positive attitude towards work Enthusiasm, while China and Pakistan have a stable diplomatic relationship and a deep friendship. It is understood that Shandong Ruyi Technology Group plans to invest 2 billion US dollars in Pakistan, and has already invested in the Pakistani ICBC Ruyi Textile and Garment Industrial Park project in Pakistan. The project is currently in normal operation.