Toxins found in Chinese-made clothes
UK trading standards are on alert after Chinese-made clothes in New Zealand were discovered to have up to 900 times the safe level of formaldehyde in them, according to the Mail on Sunday. Clothes made in China have been found to contain high levels of a potentially dangerous chemical used to protect clothes that have to be shipped great distances against mildew. However, long-term exposure to high levels can be harmful, causing problems ranging from minor skin rashes to some types of cancer. Tests discovered formaldehyde concentrations up to 900 times above the safety limit in children's and adults' woollen and cotton clothes from China.
The latest safety alert over cheap Chinese goods was sounded in New Zealand. It has been passed on to trading standards officials in Britain. Formaldehyde resins have been used on fabrics for decades to make wrinkle-free and stain-resistant-garments. The chemical can be used, for example, to keep the crease in trousers. Bryan Lewin, chairman of the Trading Standards Institute, said: "We would expect trading standards departments here to carry out tests to establish formaldehyde levels. At the same time, there is a general-requirement on importers, manufacturers and retailers to ensure that the consumer products they are selling are safe."
21 August 2007
Made in China
China's trade surplus hit £11.4bn in May, marking a 73% on the same period last year. The figure - close to February's $23.7bn all-time high - beat forecasts. China's trade surplus has rocketed in recent years, with overseas sales of low cost Chinese consumer goods growing significantly, especially in the US. The data could fuel tensions with the US, where politicians accuse China of having an overly weak currency to boost exports.
They argue that the presence of cheaper goods in the shops for US consumers is outweighed by the harm caused to US firms. The latest figure puts the annual rate trade surplus at $216.7bn, up from $207.3bn in April. At current levels, the surplus could tip beyond $320bn - marking a tenfold increase on 2004's level, said Capital Economics analyst Mark Williams, who said the trend was "astonishing".
12 June 2007
Retail boom in China
Retail sales in China grew at an annual rate of 15.5% in April according to official figures, beating forecasts and marking the fastest pace since 2006. The month's sales hit 667.3bn yuan (£44bn); the growth in sales has been boosted by the expanding Chinese middle class, which has greater disposable income.
Qian Wang, an economist at JP Morgan Chase in Hong Kong said the figures showed "the solid expansion momentum in domestic consumption and private consumption" as incomes have increased in urban and rural regions. Sales of jewellery increased by 30.8 per cent from April 2006, while fashion grew at is annual rate.
16 May 2007
Challenge for UK retailers entering China
The recent entry of some of the UK's largest retailers into China and India has underlined growing interest in emerging markets as a means of achieving growth. According to The Retail Bulletin, Andrew Halper, head of Eversheds' China Business Group, stated: “China is currently the largest of the emerging markets and looks set to eventually become the biggest consumer market in the world. However, to date, only some 200 or 250 million Chinese are able to participate in a modern consumer lifestyle, and therefore, a vast under-developed market of another billion or so people remains. This is an enormous retail opportunity.
“Yet, there are many challenges facing international retailers as they seek to penetrate this emerging market. In particular, China is many markets, not just one, with varying consumer tastes. Some international retail operators investing in China have built state-of-the-art distribution centres on a regional basis. Others have concentrated on first or second tier cities only, while others have opted for networks of individual suppliers and retail outlets. The solutions adopted will vary widely, depending on the nature of the products. Distribution concepts that have proven successful in the West may not always be transferable to China.”
Chris Wormald, head of Eversheds' franchising practice stated: “Retailers with strong concepts and brands in their domestic markets are often approached by overseas who see the potential in their own market. For some retailers this is a progressive move - they may have mature or “maxxed-out” operations in their home market and international expansion is a new route to growth. “However, retailers should be wary of viewing global expansion too simplistically - while a massive market opportunity, it is made up of many separate, national country-based markets.
Chris Wormald concludes "Franchising is the cloning of a successful business format into a new market using the capital, people resources and management skills of an experienced local operator, who is prepared to invest, and drive the business in its local market. There is no way that operators such as Mothercare who now have some 300 overseas franchised stores in nearly 40 countries, could have achieved such extensive and profitable market penetration without using franchising as an expansion technique.
20 April 2007
China's textile industry sees surge in profit
China's textile industry reported profits of 11.2 billion yuan (about 1.4 billion U.S. dollars) in the first two months of 2007, up 38.7 percent on the same period last year. Statistics from the National Development and Reform Commission (NDRC) said the added value of the textile industry grew 17.9 percent year-on-year in the January-February period. The profits were achieved despite higher cotton costs in the first two months. By the end of February, the price of cotton in China stood at 13,032 yuan per ton, up 179 yuan from the end of 2006.
Textile website analyst Li Jun said that the rising price of cotton showed that there was strong demand in the market. Textile exports were buoyant in the first two months of the year, growing 30 percent to far outstrip the forecast of 15-20 percent. Textile exports posted a year-on-year rise of 25 percent to reach 147 billion yuan last year. China Securities Journal commented on March 28 that the country might reduce the garment export rebate rate by two percent in mid-April, which would help to rein in the soaring trade surplus. However, NDRC officials later denied such plans.
Chinese textile enterprises recorded profits of 88.3 billion yuan in 2006, up 28 percent from a year earlier. NDRC experts forecast that China's textile industry would grow by more than 15 percent in terms of output value, profits and exports year-on-year in 2007.
4 April 2007
China to be greatest consumer of luxury goods
Market research company TNS says that China will account for one-quarter of world demand for luxury goods by 2016. With China already taking approximately 12% of world output of luxury goods at the end of 2006, this would amount to a doubling of its share over a decade.
Jim Sailor, Managing Director of TNS China, said: "If the sales value in China of top luxury brands grows at the same speed seen in recent years - of between 10% and 20% per annum - by 2016 the nation could be buying up to 25% of the world's luxury goods each year."
Despite China's growing receptiveness to luxury goods, TNS warns marketers of luxury brands not to expect quick and easy returns. It says an extremely strong international presence is required before luxury brands - including watches, fashion apparel, perfumes, cosmetics, jewellery, automobiles and premium spirits - can establish themselves in China. In line with this, the most successful products are those that have already built strong brands around the world, such as Louis Vuitton, Versace, Chanel, Giorgio Armani, Lancôme, Swarovski, Cartier, Tiffany & Co, and others.
"You have to do your homework. Brand-building in China requires the same kind of patience, sustained investment and strong distribution as other markets," said Mr Sailor. "Consumers are savvy. Niche brands especially will need to work hard and certainly cannot assume they are going to be immediately recognisable."
"In China right now, the luxury brands are for the super rich - the people that see them when travelling to New York, London, Paris and Rome, then come back to China and buy them," said Mr Sailor. "But we have shown there is significant market potential among middle-class Chinese. Middle-class demand will boost the success of luxury goods in China, although brand owners may need to create 'affordable luxury' categories to address lower purchasing power."
15 March 2007
Destination China
Luxury retailers are converging on China like bees to a honey pot. Dolce e Gabbana has revealed that the label is expanding there under a wholly owned subsidiary. This year, the company opened boutiques in Beijing and Shanghai and will open a second store in Hong Kong in December. In a similar vein, Italian brand Valentino has just announced its plans to expand in the Chinese market after having chosen Hangzhou in the Zhejiang province for its first store there. The boutique will offer the brands Valentino, R.E.D. and Garavani Valentino for men and women, as well as watches, eyewear and fragrances. Within the next twelve months, the company will open another six stores in the country. Before the end of this year, a Valentino store will open in Beijing , said chief executive Matteo Marzotto. Stores in Shanghai , Tiajin and a second store in Beijing will follow next year.
China is the fastest growing emerging market in terms of luxury goods. Current, it only has 6 percent of that market but both analysts and purveyors of luxury goods anticipate substantial gains to be had as Chinese wealth increases. The number of Chinese millionaires, currently estimated at 235,000, is to grow at an annual rate of 12 percent, says Eric Gerritse of MeesPierson. The female population of China is a rapidly growing customer base for luxury retailers. In 1998, 25 percent of luxury customers were female. In 2003, that percentage had increased to 44 percent.
Luxury groups in counterfeit protest
LVMH, Burberry Group, and 21 other companies are trying to protect rising sales in China by asking Beijing city officials to force mall owners to shut down traders the second time they are caught selling fakes. Xiushui Clothing Market Co., owner of the 1,000-shop Silk Market, and two other centers agreed in June to enforce the ``two-strikes'' rule.
LVMH, the world's largest luxury-goods maker, plans to open two to three stores a year in China, where sales are rising 50 percent annually. The country's economy grew 9.9 percent last year, the most among the world's biggest economies, giving its 1.3 billion citizens more disposable income. ``The Silk Market case symbolizes that China can no longer tolerate counterfeit products sold so openly in the capital of a nation that is rising in global importance,'' said Paul Ranjard, a lawyer in charge of intellectual property protection at the European Union Chamber of Commerce in Beijing. ``We have to watch carefully to see if the market actually implements this accord.''
Closing local traders won't crimp China's fake goods industry, which costs overseas companies an estimated $60 billion a year, said Stephen Vickers, chief executive officer of Hong Kong-based risk-management consultant International Risk Ltd. International crime syndicates order counterfeits from Chinese factories, sometimes posing as company representatives, he said.
China made 50 percent of the counterfeit goods seized in the EU in the first 11 months of last year, down from 70 percent in 2004, according to the EU Tax and Customs Commission. Of $138 million in knockoffs confiscated by U.S. Customs in 2004, 63 percent came from China, inspectors said. Even when Chinese authorities close a factory making fakes, ``another one appears somewhere else,'' LVMH Chairman Bernard Arnault said in Beijing in November. The cost to luxury-goods makers is impossible to calculate, according to the Quality Brands Protection Committee, a Beijing- based anti-piracy group that represents 150 companies with more than $50 billion of investments in China.
Chinese Vice Premier Wu Yi vowed to crack down on counterfeiters when she met with then-U.S. Trade Representative Rob Portman on April 11 in Washington. President Hu Jintao repeated the pledge to President George W. Bush during an April 20 visit to the White House. Emert, the Tennessee auto-parts importer, said his purchases are just a ``drop in the bucket'' against total U.S. consumption of counterfeit goods. ``The U.S. government should focus on stopping counterfeit goods at the U.S. borders,'' he said. ``Leave markets like Silk Street alone. It's for our shopping pleasure as tourists.''
17 August 2006
Chinese shoe import regulation in disarray
The European Commission's plans to regulate imports of leather shoes from China and Vietnam are in disarray, after EU member states rejected its latest proposals. The Commission wants to introduce a formal system of import duties, to replace emergency measures introduced in April. The temporary system was introduced following allegations that shoes were being "dumped" - or sold for less than it cost to make them - by manufacturers eager to gain a share of the EU's markets.
The Commission said at the time it had clear evidence that both China and Vietnam were unfairly subsidising their shoe industries.Trade Commissioner Peter Mandelson said the emergency tariffs were necessary to prevent European manufacturers being driven out of business by a wave of cheap imports.
Initially, the Commission suggested introducing a quota system. It would have allowed 140 million pairs of shoes from China and 95 million from Vietnam to be imported into the EU duty-free. Additional imports would have attracted duties of up to 29.5%. But this idea was rejected by a committee of the EU's member states. The opposition was led by the shoe-producing countries, who said it was too lenient. There were also questions of its legality under international trade rules.
The Commission returned to the table with plans for a new scheme, under which imports from China would attract tariffs of 16.5% and imports from Vietnam 10%. But on Thursday, this plan was also rejected, with 14 member states lining up against the Commission. Among them were countries such as Britain and Germany, who believe the proposed tariffs are too harsh. Commission officials admit that the EU is deeply divided on the issue, and they are now considering what steps to take. A spokesman for Mr Mandelson said the Commission would continue to seek a solution and still planned to issue formal proposals within weeks.
But he admitted: "There are clearly no guarantees that this is achievable. Member states duly recognise the sensitivity of this issue, so getting a majority is not easy." For their part, retailers have welcomed the news. The British Retail Consortium said it urged the Commission "to finally bury this plan that has caused so much uncertainty for retailers and consumers alike".
It added: "We are hopeful that this is an indication of a new free trade direction for Europe." It was an opinion echoed by Horst Widmann, president of the Federation of European Sporting Goods Industries. He said: "Member states have realised that anti-dumping duties on Chinese and Vietnamese footwear will not help anybody." The European Commission has no choice but to look very carefully at this result. At stake are not only the interests of European consumers and the competitiveness of the European industry, but the very credibility of the rules."
But while retailers may be pleased at the current situation, European shoe manufacturers are likely to be very concerned. So although time is running short, the Commission can expect to come under intense pressure to find an acceptable solution.
8 August 2006
China may cut import tax
China is considering cutting tax rebates on some of its exports in order to tackle its record trade surplus, state media have reported. Rebates for energy and resource intensive sectors such as textiles and metals could be cut by 2% on average. The move would help China to reduce its reliance on trade and investment as well as help to curb pollution and conserve energy.
But, the plan is likely to be attacked by domestic traders and firms. The proposals are expected to come into force in September or October. "The Chinese government wants to see a trade balance. We don't deliberately seek a rising surplus," Xinhua state news agency quoted trade ministry spokesman Chong Quan as saying. China 's trade surplus for the first six months of the year already stands 50% up on the same time last year at $61.45bn, and trebled during the whole of 2005.
The surplus is also a sore point in relations with the US and Europe, who claim that rebates enable China to dump cheaper goods on their markets - pressuring domestic companies and triggering job losses. The rebates were introduced in 1988 during the Asian financial crisis at a level of 6% but are now at 15% and becoming an increasing burden on the coffers of China 's central bank. Between 2001 and 2005 export rebates reached 1.19 trillion yuan ($148.7bn; £80bn).
The news comes days after the US rejected calls for the government to investigate claims of unfair working practices in China . Unions had petitioned the Bush administration to launch an inquiry into allegations that the Asian country was violating international labour standards. The unions also claimed that these practices had led to 1.29 million job losses in the US as a result of companies outsourcing to China .
The government turned down the request saying that conditions in the country were improving - with wages rising and improved safety inspections being carried out. Meanwhile, commentators said the petition was a bid by unions to up the pressure on the Bush administration ahead of the US elections. Unions are unhappy about America 's record $202bn trade deficit with China which they say is hurting US companies and workers.
Chinese minister to hold Euro negotiations on shoe imports
China's Vice Minister of Commerce, Gao Hucheng, will visit Europe next month for high-level negotiations with the European Union (EU) on the controversial anti-dumping duty on Chinese shoes, reported several media sources on Friday. The European Commission (EC) released a proposed plan last weekend that will impose a 23 percent duty on Chinese leather shoes beyond a proposed limit of 140 million pairs.
The EU's proposal will be decided by member countries prior to October 6 and would come into effect on April 1 next year if it is approved. Under the current anti-dumping duties imposed several months ago Chinese shoes will be charged a 19.4 percent duty beginning in September.
Chinese shoemakers have been highly critical of the new EU proposal. Wu Zhenchang, head of a Chinese shoemakers' alliance, said Chinese footwear producers object to the EU's plans. He says the proposal violates the EU's own anti-dumping rules and contravenes conventions of the World Trade Organisation, which China joined in 2001. Wu says the alliance has submitted its defense to the EC. The EU proposal will allow just one Chinese shoe company, Jin Lv Shoes, to import with a lower duty of 9.7 percent, while 140 other Chinese shoemakers will be charged the much higher duty.
Yu Shengxing, a lawyer with the Chinese shoemakers' alliance, said the EU Anti-dumping Commission had refused a request to consider the issue on a company by company basis. However, it did eventually exclude Jin Lv shoes from the higher duties. Spokesman Chong Quan with the Ministry of Commerce said the ministry will support the appeal of Chinese companies and will continue negotiations with the EU.
Following the imposition of anti-dumping duties exports of shoes from the province of Guangdong , China 's top shoe-making province, dropped from more than 10 million pairs in January to just over 5 million in April, according to the provincial customs office.
China’s exports reach all time high
China's trade surplus with the rest of the world hit a record $14.5bn in June, beating the previous month's record of $13bn and beating analysts' forecasts.
The figures will fuel the debate over whether China's currency, the yuan, is kept artificially low to boost exports.
Exports were up by 23.3% from June last year, while imports rose by 18.9%.
US politicians and businessmen have often criticised the US-China trade imbalance, which hit $202bn in 2005.
The figures came from the Commerce Ministry, which has warned Chinese firms to be wary of the antagonism caused in the West by the growing strength of China's economy. In January the Ministry told companies to keep a low profile when buying businesses in the West and said too much publicity could add to the price of an acquisition, creating what it called the "China Premium." Song Guoqing, an economist at the Chinese stock exchange predicted that the surplus would continue to grow throughout 2006. Such a trend could increase the pressure for protectionist measures in the US, where China's trade surplus has been blamed for the loss of manufacturing jobs.
10 July 2006
China accused of delivering cheap product to Europe
Brussels has accused China of "dumping" cheap leather shoes on the European market and has imposed temporary tariffs on imports. It is currently examining other cases of possible trade distortion involving items such as plastic bags, with a view to similar action.
As a member of the World Trade Organization and a key player in the global economy, China must respect trade rules, Mr Mandelson said.
This required it to give fair treatment to European firms doing business there and honouring intellectual property laws.
Failure to act by Beijing in this area would only fuel calls for greater protectionism in Europe, Mr Mandelson warned.
"China sometimes talks as if it is at the edge of the WTO system looking in," he said. "But China now is the system."
The EU is China's largest trading partner, while China is the EU's second largest trading partner after the United States. However, the relationship has become increasingly unequal with the EU's trade deficit with China growing to more than 100bn euros (£70bn).
In return for China accepting the responsibilities that come with being a global economic power, Mr Mandelson suggested that Europeans needed to turn down the rhetoric over cheap imports and unfair competition.
He said many European firms now used China as a low-cost manufacturing base to export to the rest of Asia, while complaining about the threat to jobs in their own markets from Chinese goods.
"Europe must accept the Chinese challenge to adapt and compete.What do we mean when we say that cheap Chinese exports are threatening European livelihoods?"
7 July 2006
China third largest luxury market
China is currently the third largest consumer of luxury and fashion goods. A recent survey has shown that the Chinese market is booming and is attracting some of the world's leading luxury brands to establish a strong presence in that country. The survey was revealed during the China-France Fashion and Luxury Management Forum, where leading fashion manufacturers met to exchange ideas.
Sales of luxury goods in China reached $2 billion (£1.1 billion) last year and are expected to grow 20 percent annually after 2008. The Chinese luxury goods market will surpass the $11.5 billion by 2015 and will represent 29 percent of global consumption. Approximately 10 million to 13 million of the Chinese population spends money on luxury goods, and according to the survey that number is bound to increase with the company's rising economy and growing urban population.
3 April 2006
US considering separate textile discussions with China
The Bush administration is considering the possibility of separating textile discussions in on-going multilateral trade negotiations amid warnings that China will soon monopolize the textile industry. New data compiled by the National Council of Textile Manufacturers shows that at China 's current growth rate it will have 70 percent import market share in the United States and European Union in categories not covered under the current U.S. comprehensive textile agreement reached in 2005.
U.S. manufacturers have been calling on negotiators to handle talks separately in non-agricultural market access discussions in order to prevent China from monopolizing the entire market. They claim without any action by WTO negotiators to curb China 's growth, surging cheap imports will dissolve other export markets for the developing world after the three-year quota system expires.
According to figures by the NCTO, Chinese apparel categories where quotas were removed in 2005 increased Beijing's market share in the United States from 16 percent to 39 percent, and, in the EU from 27 percent to 48 percent. Industry leaders also say the only solution is to maintain quotas on Chinese apparel exports. For example, in apparel categories where quotas had been re-imposed on Chinese exports they only grew by $2.1 billion
"The global textile and apparel sector is simply too critical and too sensitive to be handled in a generic fashion as part of the overall non-agricultural market access (NAMA) negotiations," said U.S. textile groups. "Failure to address the unique needs and concerns of this industrial sector could have disastrous consequences for all involved, most especially for smaller developing and least developed nations."
Quotas on Chinese apparel products cover nearly 60 percent of apparel imports into the United States and 50 percent of apparel imports into the European, which is nearly a $60 billion export businesses that the developing world will quickly lose once these quotas disappear.
6 March 2006