China'S Garment Industry Is Facing Pressure Of Trade Diversion Effect When TPP Hits.

Whether TPP, RCEP, BIT or the TIPP negotiations between the US and Europe mark the speed of the world trade free trade zone strategy, which compels the Chinese garment industry to occupy the advantageous position of the world garment industry chain as soon as possible, pform from a big garment manufacturing country to a strong garment producing country, and eliminate backward production capacity.

In the future, the advanced manufacturing industry will usher in new opportunities. Intelligent manufacturing and flexible manufacturing will be more applied to garment manufacturing. In the field of independent brand design, manufacturing and other fields, a strong textile and garment enterprise will be spawned. The fashion manufacturing mode will also be upgraded and extended from FOB processing, OEM to ODM and OBM.

So, on the coming day, when China joins TPP and other "high standard" FTA, the Chinese clothing industry will have the confidence and confidence that we are ready.

When it comes to clothing, one of the member states of TPP is Vietnam.

At present, Vietnam's exports of clothing and textiles to TPP members account for 70% of the total exports of similar commodities. After the entry into force of TPP, Vietnam's tariffs on clothing and textiles exported to the United States will drop from 17.5% to zero.

Some agencies predict that after the entry into force of the TPP agreement, Vietnam's exports to the TPP market will increase by 1 times.

By 2025, Vietnam's exports to the United States will reach $55 billion.

After the adoption of the TPP agreement, Wu Huihuang, Minister of industry and trade of Vietnam, expressed the expectation that domestic exports of textiles, clothing and footwear would increase.

He said, "Vietnam will take this opportunity to join the world market supply chain formed after the entry into force of TPP."

According to this situation, it is very likely that Vietnam will steal some orders from Chinese textile and garment enterprises.

"The manufacturing cost of Vietnam is lower than that of China," said Julia Hughes, chairman of the American Fashion Association. "When tax concessions can provide 12%-32% tax cuts, there is a huge impact."

Data show that China's share in the US apparel market in 2010 was 39%, which has fallen below 37% in the middle of 2014, while Vietnam's share in the US apparel market has risen to more than 10%.

Although it has strong geopolitical characteristics, TPP's power and influence in economic and trade can not be underestimated.

The core of TPP lies in free trade. In principle, the tariff is abolished, and it is intended to become the largest free trade area in the world. 90% of the goods of member states are immediately zero tariff, and all products will be subject to zero tariff within 12 years.

Not only commodity trade, TPP agreement covers almost all major topics of international trade and economy, including e-commerce, government procurement, competition policy, state-owned enterprises and designated monopolies, intellectual property rights, cooperation and capacity building, competitiveness and business promotion, pparency and anti-corruption, etc. it is a comprehensive, three-dimensional and upgraded deep level agreement.

The specific requirements of TPP include freedom of trade and services, currency convertibility, tax equity, privatization of state-owned enterprises, protection of workers' rights and interests, protection of intellectual property rights, and protection of environmental resources.

Objectively speaking, this trade pfer effect does exist, and with the advance of TPP, this effect will become more obvious.

But clothing companies should bear in mind the correct attitude towards TPP: strong themselves, looking for opportunities and meeting challenges.

Starting from TPP's "internal contradictions", because of the strong geopolitical characteristics of TPP, this kind of political nature just has an impact on the economic characteristics of TPP. The big powers are playing with small countries, rich countries playing with poor countries, and implementing high standards in the interior. In the process of implementing TPP agreements, there will inevitably be shock waves and internal contradictions.

For the rich country, the United States needs to make certain concessions, and for the poor countries, it will face external shocks and fluctuations.

Vietnam is the "poor" country in TPP. The apparel industry chain is not perfect enough and strong, and a large number of textile materials rely on imports.

On the role of cutting, sewing and exporting, the added value of products is not high enough, and the competitiveness and scale of garment enterprises need to be improved.

According to the rules of origin of TPP, Vietnam's yarn, weaving, printing and dyeing and other links need to be completed in Vietnam or TPP partner countries to enjoy preferential tariff for TPP, while Vietnam's clothing enterprises mainly rely on processing, raw materials mainly rely on imports, and the development level of textile supporting industry is relatively low, so it is difficult to fully enjoy the preferential treatment brought by TPP.

This is the opportunity for China's textile and garment enterprises. China's garment industry has a relatively strong industrial chain. It can take the opportunity to speed up the export of Vietnam's industrial capital, increase investment and build factories and exports in Vietnam, and further pfer its capacity to Vietnam. By taking advantage of this shock wave to strengthen its own international layout, it enjoys TPP tariff preferences and promotes itself to become a pnational enterprise with more international operation capability.

In fact, such a high standard agreement of TPP will ultimately benefit the "strong".

A big voice against TPP is that TPP will become an umbrella for big enterprises, because big enterprises have the ability and conditions to use their rules to safeguard their own interests, making the stronger the stronger.

The FT also published articles suggesting that TPP is unlikely to help poor countries.

The article argues that high productivity and good infrastructure tend to be much more important than low tariffs in order to make producers more competitive.

For poorer countries, if they do not have the foundation of the clothing industry, low productivity and poor pport network, they will not be able to reduce tariffs enough to make their products competitive.

In the view of TPP's influence on China, China has also demonstrated its view that the evolution of the international trade pattern is ultimately determined by the adjustment of the international industrial structure and the international competitiveness of the products of various countries.

To put it simply,

Return to agreement, only oneself is strong is the absolute principle.

This is true for countries, industries and enterprises.

Vietnam should also be able to see this point and not just hang on the tree of TPP.

Vietnam's minister of industry and trade, Wu Huihuang, said at a news conference on the day of the TPP agreement that Vietnam is committed to implementing the provisions of the TPP, in addition to Vietnam being involved in the negotiations on the RCEP (regional comprehensive economic partnership agreement).

If RCEP is successfully signed, Vietnam will also implement the terms of the agreement.

RCEP, sponsored by ten ASEAN countries, invited China, Japan, South Korea, Australia, New Zealand and India to participate in the "10+6". Through the reduction of tariff and non-tariff barriers, the free trade agreement of 16 countries in a unified market was established.

If RCEP talks, it will cover about 3 billion 500 million people, and the sum of GDP will reach US $23 trillion, accounting for 1/3 of the global total. The covered areas will also become the world's largest free trade area.

To some extent, ASEAN led RCEP is more related to ASEAN's future.

Moreover, compared to the high standard mode of TPP based on the difference between the rich and the poor of the Member States, RCEP pays more attention to win win and complementarity. Industrial cooperation should be the focus of RCEP. It is an important goal of RCEP to build an industrial chain with complementary advantages among different countries and to promote the upgrading of the industry in opening up.

This is obvious to China's clothing industry, Vietnam's clothing industry and other RCEP member countries' clothing industry.

For China

For example, we still have more powerful countries to support it. Besides RCEP, we have FTA and free trade area. Now China has signed FTA with eight countries in the TPP 12 member states. China and the United States are working on BIT (Sino US investment agreement negotiations) and so on.

It can be said that the opportunities and space for Chinese garment enterprises to go out are huge.

Compared with the outside world, we should turn our attention to the domestic market. China and the global economic slowdown will be a fact. But compared with the overseas purchasing power during the Chinese national day and the constant increase of the overseas clothing brands in the second half of the year, the Chinese market and the increasingly hot cross-border electricity suppliers, we will understand that the domestic market is not short of consumption and demand. What we lack is effective supply, and the lack of better products and services.

The domestic garment industry should regard the TPP agreement as a challenge and opportunity to push its own industrial upgrading and enterprise pformation, and accelerate the pace of pformation and upgrading.