The president of Euratex, Mr. Jean de Jaegher, who is deputy chairman of Marzotto, listed nine “drivers” for a successful European textile and clothing sector during an IWTO “Round Table” session on the wool-textile implications and consequences of China's impending membership of the World Trade Organisation (WTO).
Mr. de Jaegher listed the following requirements for Europe to compete in the global trading environment:
1) Creativity and technical innovation.
He predicted that China would eventually become a major fashion-oriented competitor – not immediately because China first had a huge home market tu supply.
2) Focus on the final consumer.
3) Specialise in market segments.
4) Create lifestyle collections with strong brands to compete with Gore Tex and other specialist labels. Mr. de Jaegher remarked that Merino New Zealand had taken an intelligent approach delivering lifestyle or niche products and controlling the supply chain.
5) Create global partnerships from woolgrowers to retail and change the system of how wool is traded.
6) Set up fast-response supply and processing networks.
7) Institute a genuine pan-Euromed (European and Mediterranean countries) free-trade zone as a “domestic” market of 690 million inhabitants.
8) Access to new and emerging markets with real and fair trade reciprocity.
9) Develop human resources and skills.
He said this was a fundamental requirement to counter China's major competitive advantage in terms of labour.
Entrepreneur Mr. Liu Ruiqi, head of the Shanghai Heng Yuan Xiang Investment Co., whose legendary business career developed from ownership of a knitting-yarn spinning mill, said China's market would he integral with the global market. “It is the customer we have to please, no matter where we are based,” he remarked. Mr. Liu said a major problem for the wool-textile industry was the absence of a value chain.
“Profit margins are difficult at every stage,” he said. “According to traditional business practice, the rewards should start to increase from the grower to the manufacturer but with wool it is reversed with the retailer apparently making more profit than the grower. The industry must establish a value chain from upstream to downstream. When losses occur they are shifted to other parts of the chain when really you should be putting profit into the chain.
“If China enters the WTO, it won't harm the wool industry but the industry must be united and then we will be able to take part in the global economy.”
Mr. John Richards, deputy head of the textile unit in the European Commission's trade directorate, who has been closely involved in the textile aspect of the European Union-China agreement for accession, spelled out the timetable for safeguarded reductions in tariffs on wool clothing, yarn and fabric and the scheduled removal of the quota regime by 2005.
Mr. Richards said state control of China's silk trade would also cease by 2005.
Mr. Sun Ruizhe, vice-president of the China Textile Information Centre and president of the China Textile Development Centre, said China needed to encourage foreign capital and technologies and to learn from the success of companies like Marzotto.
“Small-batch, quick-response, right-first-time production, with reliability and repeatable quality, are the requirements which our customers demand,” said Mr. Sun, who also spoke of the need to acquire marketing expertise and to talk to international retailers, who were looking to change their supply sources to meet consumer demand for better quality and lower prices.
Mr. Sun Huaibin, a senior economist and a vice-director of the consultation department in the China National Textile Council, with special reference to wool, said membership would give China's wool-textile industry a better trading environment. The country would benefit from the elimination of quotas which presently allowed developed countries to control imports from developing nations. He foresaw intense competition as import tariffs were lowered.
Mrs. Ni Zhi Hua, a senior engineer, who is vice-chairman of the Shanghai Textile Holding Corporation and chairman of three of the group's companies, described membership as a mixed blessing for China. Among the gains, she said her group was preparing to increase wool-textile exports (by 35% for fabrics, 25% for woven apparel and 30% for knitwear) when restrictions were removed.
Mrs. Ni also looked ahead to strengthened co-operation with international wool-textile enterprises. “Through co-operation, we can take advantages from each other so that all concerned can achieve large profits,” she said.