Textile, garment exports expected to see single-digit growth this year

China's textile and garment export industry is likely to see growth in both revenue and profits this year, but the gains likely won't surpass 10 percent, an analyst with Shanghai-based Sinolink Securities told the Global Times.

Zhang Bin, the analyst, said though that China's textile and garment makers won't see their profits return to the levels they enjoyed before the global financial crisis.

"Rising costs of energy and raw materials will erode order profits of export-oriented enterprises," he said.

Wang Yujian, a supervisor with the International Business Department of Shandong-based Luthai Textile, said the company is expecting an export value of $400 million this year, compared with $350 million in 2009.

But the rosy export predictions of major industry players like the Shenzhen-listed Luthai are offset by less favorable numbers at small enterprises, with single digit growth rate anticipated by industry analysts.

According to Xu Kunyuan, deputy director of the China Textile Industry Association, for textile enterprises above a designated size, the export delivery value fell 3.23 percent in 2009, while that of enterprises fell by 22.28 percent.

Affected by weak international demand, the growth rate of China's textile exports has been negative for 10 months in a row. Garment exports have been even worse, with negative monthly exports throughout the year.

The whole exports of the nation's textile and apparel exports last year were down 9.8 percent year-on-year, sinking to $167 billion.

Textile and apparel exports in January this year showed a positive growth rate compared with the same period last year, though lower from a month earlier.

Zhang said as demand for textiles and apparel in the European and US markets continues to pick up, textile and garment exports will gradually restore the growth trend this year.

Since the second quarter of last year, there has already been a letup in the fast decline of Chinese textile and garment exports to the EU, the US and Japan, with the whole-year figures standing at $36.06 billion, $26.4 billion and $21.33 billion respectively.

However, he said that the future development of the nation's textile and apparel industry will rely more on the domestic market.

The opening of the China- ASEAN Free Trade Area is expected to boost China's textile and garment exports.

More than 90 percent of the products traded between China and the six members of ASEAN will be tariff-free.

However, uncertainties remain. Wang of Luthai Textile said the company's projected export prices haven't climbed back to pre-crisis levels, and it's hard to see when they will.

Zhang said the high-speed export growth period the industry saw from 2002 to 2007 would be hard to recapture.

"Our market share in Europe and the US is too high to expand on a large scale, and exports will continue to be curbed by strict requirements on environmental friendliness and trade disputes," Zhang said.

Shenyin Wanguo Securities also projected 5-10 percent growth in export values this year, adding that more orders would be transferred to big enterprises and industry concentration would be higher.