Universal Supplies Co.

2005: The new Game of Textile

As pointed out on May 25, 2005, the argument between EU and China is over and between USA and China will soon be solved too.

This type of process has become a standard outcome for every case that involved multi national trade. So regular that we may be tired of such kind of news.

We may not be astonished because nowadays everything is virtual reality. Free may not be free completely. Open source may be bait and in the end we may pay more than we can expect.

People said that "don't teach old dog new trick". We may have to say "new dogs have to know old tricks". Politic will become entertainment very soon, but with so poor performance that we may need them to get some drama courses.

Updated on Nov 7, 2005



It is certain that everyone knows what is going on now about the argument between EU, USA and China.

No matter how, there will be a solution. A win-win final is the certain result.

There is an essay in Time magazine saying that such protection policy might lead to recession. We do not think that such threat will happen because retail business today is dominated by big corporations and they are able to get low cost product one way or the other.

India is waiting to gain in this match. With their positive move, it is most likely to have the orders slipped from China. But, we do not think that the overall gain would be too great.

As we have mentioned, this problem may indicate that the shortcoming of WTO. It is certain that there were many experts involved for the quota cancellation. It is time to access again why they could not forecast the outcome.

Updated on May 25, 2005



After three months into 2005, it seems that what worries most had happened. Textile export from China to USA jumped while a lot of countries including USA, said that many of their factories were closed and employees were jobless.

Does it really that in the future, only a few countries, China, India etc. dominate the textile industry? I think that the problem is the market today. Every retailers, big or small, local or international, local shops or online, are competing by lower price. Perhaps we can argue about whether it is the customers looking for lower price or retailers want to attract customers by low price. No matter which side took the first step, it is happened.

Low price, high quality would be the ultimate criteria. Under such pressure, retailers and importers must look for those manufacturers that meet such requirement. For business, it is not China or India that matters most.

The termination of the textile quota is not decided in a day, instead, the WTO has worked on it for years. When members agreed, they should have the intelligence to foresee what would happen afterward. That is why until now, we do not see any reaction to the new situation. Any action to perform as quota will prove the incapability of WTO and members.

On Apr. 4, 2005 Bush administration said that a new caps on imports of Chinese clothing would be enforced. In other words, it will be a new name of quota. Can this be done? Yes, USA has many cases and some were objected by WTO. Will this be a crisis for WTO? Perhaps, this is not a crisis for now. But, when agreements of WTO repeatedly turned down or unable to enforce, there is no way for WTO to carry on.

China may have to do something to ease this tension. Self imposed quota and export tax would hardly be effective. Importers can pass the order to Hong Kong or even other places for re-export. The best way is to have Chinese textile manufacturers expanding to other countries.

Updated on Apr. 7, 2005



WTO will enforce the termination of textile quota. EU will replace it with a license system. Some countries worried about the domination by China. China announced for an export duty to restrain the textile industry.

We are still a few days before the end of 2004 and any outcome would not be publicized within a few months. Who can tell what would happen? Some said that nothing changed. Some said that China would gain a lot. Some experts pointed out that the expansion of low price textile was not likely because there might not be any market growth due to the end of quota system. Recently, there is an article saying that textile female workers of developing countries other than China and India would lose their jobs and might be forced to join the sex trade for a living.

It is certain that any increase of import depends on the market, a very basic for economy. Without increase of demand, there will not be more supplies. So why everyone is worry about?

This leads to something more important. Why after going through meetings, negotiations etc. for years to cancel the quota system, when the participating members would gear up themselves ready to fight again afterward? What is agreement nowadays? If one would not be able to keep up one's word, why signed for the agreement. In the end, what is WTO now? Is it a place for delegates to say nonsense? Of course, there are several ways to safeguard the outcome. Tariff and anti-dumping measure are permitted tools.

Several studies pointed out that those developing countries that could invest for better machinery would be the winner. China is outstanding in this respect. In other words, developed countries already gain a handsome fortune for this. But the sale of machinery is not even mentioned. It is the same case as concentrating on loss of manufacturing jobs but not the job increase in retailing and related services.

There will be change. From now on, all brands need not diversify their production centers for quota. The best place of production in terms of quality and cost will be the winner. With today's supply system, there are numerous factors including distance, transportation etc.

Politic will have a role somehow, but it is only for propaganda purpose. We must remember that only businessmen can decide where to order, not politicians. There are tons of historic facts that restriction could not affect demand and supply. Even narcotic, banned by everywhere for years, remains in the market.

For certain period, the tariff and license system will work as quota. Just by arranging the procedure to issue license and preferential tariff can control the import volume and exporting countries.

According to the "A New World Map in Textiles and Clothing" published by OECD ??¦X§@?®i??, the textile industry is diversified into clothing and non-clothing applications called "technical textiles" including furniture and healthcare upholstery, thermal protection, seat belt, bed sheet etc. The report said that the technical textiles accounted for more than half of textile production, required expensive machine and skilled workers that concentrated in developed countries.

Besides, the EU would favor new members especially eastern European countries as well as those former colonies. It will not be easy for China or India to gain too much from EU market.

We can be certain that USA and EU countries would not accept to cancel the quota system without consideration of their interest. It may be naive to expect a huge gain for China, India etc. by the cancellation of quota.

Competition among developing countries would be great. But only those that have been chosen just for the quota and failed to improve their production would be the losers.

F. H. Tong Dec. 21, 2004