Textile and garment manufacturers throughout Southeast Asia uttered a collective sigh of relief this month when the US slapped "safeguard" import quotas on four textile and garment items out of China.
The EU is expected to follow suit, re-applying quotas on at least nine items from China, following the Jan. 1 termination of the world's three-decades-old quota system on garments and textiles.
Under WTO rules, safeguards can be re-applied on textile and garment imports from a country if that country's exports create excessive "market disruption" during the first three years of quota-free trade.
The safeguard clause has given Southeast Asian exporters a much-needed breather in their battle against global garment heavyweight China -- which claimed 16 percent of the world's market last year and could easily capture up to 50 percent in the next decade.
"The safeguard is good for a while because it gives uncertainty to the buyer, but by the year 2008 this safeguard is gone," said Phongsak Assakul, president of the Thai Textile Manufacturing Association. "So we have been given a reprieve of three years to adjust ourselves. It's not forever."
Garments and textiles have long been a leading employer and foreign-exchange earner for Southeast Asia, and continue to be.
Last year Thailand's textile-garment exports earned the country US$6.4 billion. The sector was the top export earner for Indonesia last year, bringing in US$7.6 billion, and the Philippines second top foreign-exchange earner, at US$2.2 billion.
Over the past decade, the labor-intensive garment industry has also become a vital industry to the region's newcomers to the market economy -- Cambodia, Laos, Myanmar and Vietnam.
Vietnam's textile-garment exports last year reached US$4.3 billion. The sector is the largest industry in Cambodia.
Relative newcomers to the industry are arguably the most vulnerable because they are competing in the low-end of the market, cheap garments, where China is strongest, and they have not yet built up a fully integrated industry from raw materials to fibers, weaving and knitting, dyeing and printing, and finally textiles and garments.
Importers nowadays prefer to make their orders from one-stop services, or countries and companies that can provide the entire product from yarn to finished garment, at the lowest price.
This means that Southeast Asian countries such as Cambodia, which are producing low-quality garments and lack the upstream end of the industry, will be the first to suffer in a quota-free market, said Phongsak, who is also chairman of the ASEAN Federation of Textiles.
Cambodia's garment exports already reported steep declines in March and last month, according to the Garment Manufacturers' Association of Cambodia (GMAC). The industry has already laid off 25,000 workers this year as 10 percent of factories pulled out of the country.
In Vietnam, still a lower-end garment producer, the increasing competition both abroad and for the domestic market is likely to help weed inefficient state-run factories out of the industry.
"Private textile and garment companies have been adversely affected by Chinese competition in the market but less so than [less flexible] state-run companies," said Hoang Huu Chuong, director of Nhu Quynh Garment Co which employs 550 near Hanoi.
Employees, who earn between US$31 and US$70 per month, are worried about the threat from China.
"This is the first time I have seen such fierce competition from China. Sometimes I am worried that if the company has no more orders because of competition we will lose our jobs. That would be terrible for us," said Nguyen Thi Hoa Mai, a 31-year old ironing section worker.
"I have just got married so of course I am worried about that," Nguyen Thi Phuong, 25, said.
More established producers such as Indonesia, the Philippines and Thailand are preparing for the future by moving upmarket into higher quality garments.
"We anticipated the lifting of quotas several years ago and the influx of cheap garments form China," said Seafin Juliano, executive director of the Philippines Garments and Textiles Export Board. "We are now focusing on high-end global branded market like Prada, Christian Dior, etc."
It's the same case in Indonesia.
"We have to concentrate on the middle and slightly upper-end garment products, because we will absolutely lose to China if we try to play in the lower-end categories," said Redma, spokesman for the Indonesian Textile Association.
In Thailand, looming competition from China has forced the industry upmarket in recent years and is now forcing companies to work together -- something Thai companies are not renowned for.
"If we can get our act together we can respond by forming an alliance to make a supply chain that reacts quickly to what customers want, then I think we have a chance of surviving," Phongsak said.
For example, the Thai Textile Manufacturing Association has pooled its resources to hire an Italian garment consultant that is now advising members on what fabrics are going to be fashionable in one to two years.
Phongsak is also trying to promote a better integrated textile-garment industry in ASEAN, which by 2007 will enjoy zero tariffs on intra-regional trade in a market of 500 million people.
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
During the “426 rally” organized by the Chinese Nationalist Party (KMT) and the Taiwan People’s Party under the slogan “fight green communism, resist dictatorship,” leaders from the two opposition parties framed it as a battle against an allegedly authoritarian administration led by President William Lai (賴清德). While criticism of the government can be a healthy expression of a vibrant, pluralistic society, and protests are quite common in Taiwan, the discourse of the 426 rally nonetheless betrayed troubling signs of collective amnesia. Specifically, the KMT, which imposed 38 years of martial law in Taiwan from 1949 to 1987, has never fully faced its
RSS