Download A Survey on the China`s Apparel Industry

A Survey on the China’s
Apparel Industry
Xingmin Yin
China Center for Economic Studies, Fudan University
220 Handan Road, Shanghai, 200433
Email: [email protected]
International Workshop
“Sustaining Development through Garment Exports:
Cambodia and the Least Developed Economies”
1
1. Introduction
 China’s economy has increasingly integrated with
the world economy.
 Export-oriented industrialization theory has had a
significant impact on economic policies in China
since the end of 1970s.
 China’s export ratio to GDP increased dramatically
from 5% tin 1980 to 35% in 2005.
 The export volume of manufacturing products
reached USD 762 billion in 2005, in comparison
with USD 18 billion in 1980.
 The apparel industry has contributed a great part in
the export promotion as well as the job creation in
China during the period 1990-2004.
2
Main Issues for This Study
 What have been the characteristics and
development of the apparel industry since
1999?
 How was China’s garment exports evolved,
particularly the foreign trade generated by
apparel sector that has accounted for 11-16%
of China’s exports since the mid-1990s?
 What have been changed for the clusters of
apparel production in regional levels?
 More questions……
3
2. Overview for China’s Apparel Industry
 China’s exports of apparel products
substantially increased its share in the world
market from 20.7% in 1997 to 26.6% in 2004.
 The growth of the apparel industry revealed in
exports is also observed in the employment
and output.
 From the national perspective, the apparel
industry only accounted for 0.56% of non-farm
employment in 2000, and 0.78% in 2004.
4
Indicators of China’s Apparel Industry
Year
Assets (billion yuan)
Amount
%
Employment
Person
%
Output
Amount
%
1990
19.5
1.22
1650
3.02
41.5
2.49
2000
175.9
1.84
2156
3.88
229.1
3.05
2001
190.6
1.87
2371
5.23
259.6
3.08
2002
207.9
1.89
2658
5.76
291.5
2.96
2003
237.7
1.86
2892
5.92
342.6
2.69
2004
277.1
1.84
3203
6.14
388.0
2.38
Unit of employment: 1,000 person; Unit of output: billion yuan.
5
 This sector increased 58% of assets, however,
the stable percentage of apparel sector to total
manufacturing assets was about 1.84% in the
period 2000-2004.
 Labor force employed in this industry increased
more than 1 million of new jobs within five years.
 The output of apparel sector has increased
quickly since 2000, however, and its share of
manufacturing output has been decreased from
3.05% in 2000 to 2.38% in 2004.
6
3. Export-Oriented Growth Pattern
 The world garment market has become a more
open market, subject to strong price and
quality competition.
 China including Hong Kong accounted for
36.4% of world clothing exports in 1997 and
38.0% in 2004.
 In regarding to exports of textile and textile
goods to China’s GDP, their combined ratio to
GDP was 4.24% in 1999 and 5.4% in 2004.
7
Export Growth of Apparel Products
Millions of US$
Million
70000
18
60000
16
14
50000
12
40000
10
30000
8
6
20000
4
10000
2
0
0
1985
1990
1991
1999
Exports of Garment
2000
2001
2002
2003
2004
Ratio to Total Exports (%)
8
 Before 1990, China’s apparel sector had already begun
its integration into the world market.
 The growth of exports was driven by a surge of exports
to the US markets in the mid-1990s, and thereafter from
a surge in exports to allover the world.
 The apparel industry did not account for a high share of
the total export, with the share of 16% in 1999 and
decreased to 11.05% in 2004.
 China’s apparel industry is a typical sector of exportoriented growth pattern. The ratio of exports to sales
had not been changed with about 55% for China’s
apparel industry.
9
Role of Foreign Direct Investment
 Many of the foreign-funded enterprises (FIEs)
are export-oriented.
 FIEs recruited unskilled labor from the rural
sector and skilled workers from the urban
sector.
 FIEs, creating half million of new jobs and also
accounting for 61% of new job creation for
apparel industry, provided more jobs for
unskilled labor over the period 2001-2004.
10
Employment and Output of FIEs
in Apparel Sector
Year
2000
2001
2002
Employment
Number
Percentage
(thousand)
(%)
/
1113
/
Output
Value
Percentage
(billion yuan)
(%)
/
111.21
48.5
46.9
119.45
46.0
/
132.18
45.3
2003
1448
50.1
158.95
46.4
2004
1617
50.5
185.27
47.8
11
 The proportion of FIEs in total sales was 48%,
while the share of exports reached 48% in
2004, two percentage points added to FIEs in
the exports of apparel products.
 FIEs involved the labor-intensive production in
the apparel industry: FIEs increased its weight
in employment from 46.9% in 2001 to 50.0%
in 2004, although they accounted for 45-48%
of total output and 45% of total assets during
this period.
12
Market Diversification
 A high value in market diversification means that a
country exports to a large number of countries.
 Japan has been the largest region for China’s garment
exports.
 The US and the EU belong to the strong quota
imposing regions for garment exports from developing
economies.
 The US market for China has been slightly decreased
from 13.31% in 2000 to 12.59% in 2004, while the
EU market for China has been increased from 10.38%
to 12.75% at the same period.
13
China’s Garment Exporting Destinations
Region
2000
2001
2002
2003
2004
HK
6.60
5.82
8.31
9.78
11.29
11.49
11.84
11.98
13.44
15.09
EU
3.24
3.35
4.24
5.95
8.49
USA
4.79
4.92
4.82
6.51
8.26
26.12
25.93
29.34
35.68
43.12
72.52
70.92
68.29
65.54
65.77
36.02
36.56
42.97
54.43
65.56
Japan
Subtotal
Percentage (%)
Total
Unit: USD billion.
14
Breakdown of Market Diversification
23.02
17.22
12.6
12.95
34.21
HK
Japan
US
EU
Other
15
4. Employment Creation and Related
Performance
 What is comparative advantage for China’s
apparel industry?
 The labor force is fairly young and educated, as
the average worker reported about nine years
of formal education.
 In comparison to other developing economies,
China was well placed to take advantage of the
labor cost and other factors that related to
institutional reforms and industry policy.
 More factors……
16
Employment Growth of Apparel Industry
Million
3.5
3
2.5
2
1.5
1
0.5
0
1999
2000
2001
2002
2003
2004
Number of employment: million person
17
 China increased exports generated a surge in
employment, where it went up from 2.03 million in
1999 to 3.20 million in 2004, namely, creating 1.17
million jobs in apparel industry.
 The increase of jobs in the apparel industry is equal
to approximately a 12% increase of the 6.9 million
workers in all manufacturing industry during 20012004.
 Electronic and communication industry increased its
employment from 1.96 million in 2000 to 3.33
million in 2004, creating new jobs of 1.37 million.
18
Brief Assessments on Efficiency
 The export-orientation does not induce increased
efficiency in the use of labor when surplus labor is
drawn from the rural area to the export sector.
 Performance for apparel industry seems to
worsened in consideration of overall performance of
manufacturing industry.
 The proportion of apparel productivity to
manufacturing had continuously decreased from
85% in 1995 to 43% in 2003.
 The profit share of apparel to manufacturing had a
decline path from 3.16% in 2000 to 1.84% in 2004.
19
Labor Productivity (yuan/person)
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
1995
2000
2001
Apparel sector
2002
2003
Manufacture
20
Wage Movement
 Average manufacturing wages have increased
continuously from USD 619 in 1995 to USD
1329 in 2002.
 In predicting wages for apparel workers, we
assume that labor productivity can be selected
as a substitution indicator, which can be
assured to be “level of wages”.
 As expected, workers in the apparel industry
earn a lower wage that that of a manufacturing
worker, as this industry produces low value
goods and employs a mainly unskilled
workforce.
21
Changes of Capital Intensity
 Manufacturing accounted for about 75-78
percent of industrial capital in the context of
China.
 As a direct effect of five years of sustained
employment growth in the apparel industry,
overall capital-intensity declined very clearly
except for the year of 2004.
 Generally, the growth of output was much
faster than that of employment and capital
accumulation.
22
Comparison on Capital-Intensity
(Yuan/person)
400000
350000
300000
250000
200000
150000
100000
50000
0
2000
2001
2002
Apparel sector
2003
2004
Industry
23
Employment, Output and Capital
Accumulation in China’s Apparel Industry
(1999-2004, 1999=100)
100
80
60
40
20
0
1999
2000
2001
Capital
2002
Employment
2003
2004
Output
24
5. Industrial Clusters and Concentration
 China’s apparel industry is highly clustered in four
coastal regions: Guangdong, Jiangsu, Zhejiang and
Shanghai, which accounted for nearly 72% of national
output in 2000 and 67% in 2004.
 With fast growth of an industry new entrants are
encouraged to enter through the attraction of high
profits, and also barriers to entry may appear less
formidable in an expanding market.
 The number of enterprises from 7064 to 10901
revealed the lower degree of industrial concentration.
 On average, 298 employees for one production unit in
formal data, not for all firms in apparel industry.
25
Concentration of Apparel Industry
by Regions:2001
20%
22%
20%
10%
28%
Guangdong
Jiangsu
Zhejiang
Shanghai
Other
26
6.Conclusions
 Export growth has created considerable job opportunities
for China with a large volume o workforce. Clearly, an
increasing export is expected to help the developing
economies to create more jobs.
 Export expansion in the China’s apparel industry has
based on FDI. Therefore, a friendly situation fro FDI is
needed for the developing economies.
 The future of China’s apparel industry depends, to a
large extent, on its specialization in specific products and
its choice of system.
 It can be forecasted that resources in apparel industry
will be shifted into other sectors and non-coastal regions
of China.
27
Thank You!
28