For more than 40 years of reform and opening up, China's Textile industry has been at the forefront of building a leading modern manufacturing system in the world, becoming the largest manufacturer and exporter of textile products in the world. gender. In recent years, China's textile industry has gradually entered a new phase. Since the U.S.-China trade war began in early May 2018, the United States has shown efforts to shift the focus of textile and apparel production out of China by directing major textile importers. Transfer orders via tariff measures. This is an American effort to bring the focus of textile production to Southeast Asia and South Asia. In addition, facing factors such as: increasing cost of textile production in China, the Government's encouragement under the "One Belt, One Road" Initiative,

OVERVIEW OF OVERSEAS INVESTMENT IN TEXTILE AND GARMENT INDUSTRY

According to preliminary statistics, the total foreign investment capital of China's textile and garment industry is about USD 10 billion. Offshore investment is allocated to 100 countries and regions, including major regions such as Southeast Asia, Africa, and North America. China Textile and Garment invests almost entirely in textile links. The main forms of foreign investment include typical forms of FDI such as direct investment, investment in green production, merger and acquisition, and joint venture.

There are currently two main forms of offshore investment by Chinese textile enterprises. One is investing in countries that are part of the "One Belt, One Road" initiative, as well as exploiting the advantage of cheap labor. Southeast Asia and African countries are the two regions that have attracted the attention of Chinese textile enterprises. The second is investing in projects, companies holding high technology. For example, the Shandong Ruyi Group has acquired Australia's Kaby Cotton Group and the Fulida Group has acquired the New Zealand Soluble Pulp Company of Canada. In terms of research and technology development, Jinsheng Group has acquired a part of the world textile giant Oerlikon. Tianyuan Garment Co., Ltd. has built a fully automatic T-shirt production line in Arkansas, USA with the latest technology in the US. In the field of terminals, M&A brand, Youngor,

CHARACTERISTICS OF FOREIGN INVESTMENT COOPERATION

First, sectors such as weaving, dyeing, spinning, and chemical fiber production are the first priority. In the past few years, the policy of applying quota mechanism on cotton import has led many Chinese spinning enterprises to move abroad. It is estimated that Chinese spinning enterprises such as Tianhong Textile Group, Shandong Lutai Group and Blum Oriental are currently investing in Vietnam, with an investment of about 3 million spindles. The cotton spinning project of the Kohl Group in the US and the cotton spinning project of the Jinsheng Group in Uzbekistan have been put into production. Because Vietnam, Cambodia, Myanmar, etc. have lower labor costs and favorable trading environment, many Chinese Textile Corporations target these countries as an ideal place to invest. In recent years, companies like Dishang Group,

In addition to cotton spinning, some weaving and dyeing facilities are also speeding up the movement to foreign countries. For example, Cixi Jiangnan Chemical Fiber has invested in a recycled polyester fiber project in South Carolina, USA, and the Hengyi Group has invested in a 10 million ton chemical fiber production project in Brunei.

Second, from an investment perspective, Southeast Asia is currently the most important region in foreign investment activities with Chinese textile enterprises. Current priority investment order model is: Southeast Asia + Africa + other countries. In terms of ranking of countries and regions attracting investment, Vietnam ranked second with a total investment capital of US $ 1.071 billion, accounting for 17.2%. The United States is currently the most invested destination among Western developed nations, with a total direct investment of US $ 214 million. Ethiopia and Egypt are the two countries receiving the most investment among African countries. With the push of the "One Belt, One Road" Initiative, Chinese textile enterprises have increased their investment significantly in countries along the geographic area under this initiative.

Currently, Africa is becoming a new hot spot for foreign investors with Chinese textile enterprises. Textile enterprises such as Jiangsu Sunshine, Yimian and Luwang have invested in Africa. During the Beijing Summit under the 2018 China-Africa Cooperation Forum, the Chinese Government proposed seven major actions. The first is to take actions to promote industry and encourage Chinese businesses to increase industrial investment in Africa, especially in traditional manufacturing or emerging industries. This goal is undoubtedly a strong driving force for comprehensive cooperation in the field of textiles between China and Africa. Monday, A group of Chinese textile backbone enterprises has committed to become a multinational enterprise by actively investing in textile globally, as well as integrating high-quality production resources. For example, the Tianhong Group has been actively investing, establishing production facilities in Vietnam, Cambodia and Nicaragua, with a production capacity of about 4 million spindles and 1,400 looms. Typical companies that continue to promote international investment include the Lutai Group. Since 2014, Lutai has established manufacturing facilities in Cambodia, Myanmar and Vietnam, including all stages from spinning, weaving, dyeing, finishing and processing of apparel production. Currently, Lutai's clothing processing factories in Cambodia and Myanmar have an annual production capacity of 6 million pieces and 3 million shirts, respectively. The Group's garment factory in Vietnam is built in three phases with a planned production capacity of 9 million units in phase 3 and the first two stages of 6 million pieces. In addition, Lutai has also established a spinning, weaving and dyeing facility in Vietnam. The first phase of 60 thousand spindles and the second phase with a capacity of 76 thousand spindles was put into production. A fabric dyeing project with a production capacity of 30 million meters is under construction. With the establishment of a number of domestic and foreign manufacturing facilities, Lutai Group has improved the efficiency, ability to provide quality services to customers around the world. The first phase of 60 thousand spindles and the second phase with a capacity of 76 thousand spindles was put into production. A fabric dyeing project with a production capacity of 30 million meters is under construction. With the establishment of a number of domestic and foreign manufacturing facilities, Lutai Group has improved the efficiency, ability to provide quality services to customers around the world. The first phase of 60 thousand spindles and the second phase with a capacity of 76 thousand spindles was put into production. A fabric dyeing project with a production capacity of 30 million meters is under construction. With the establishment of a number of domestic and foreign manufacturing facilities, Lutai Group has improved the efficiency, ability to provide quality services to customers around the world.

In the context of an aging Chinese population, along with increasing labor costs, Vietnamese workers with a monthly salary of only half, even one-third of Chinese workers, Along with the good quality of labor and the relatively stable political environment, it is considered the second ideal production location for Chinese textile enterprises. In addition, Vietnam has the advantage that it has formed a network of partnerships with major importing countries through free trade agreements. Recently, Chinese enterprises have gradually tended to avoid trade barriers, so they prefer to select countries with tariff advantages. In addition, Vietnam also has attractive incentives for exemption and reduction of corporate income tax. According to Vietnamese policies, for businesses with an investment of US $ 300 million, or annual revenue of US $ 500 million, or provision of more than 3,000 jobs, will enjoy tax-exempt privileges for the first 4 years of the project and a 50% reduction of corporate income tax payable for the next 9 years. These advantages make Vietnam an attractive destination for Chinese enterprises in the production shift, especially for Chinese companies that specialize in exporting textiles to the US. However, the fact that when Vietnam attracts more and more FDI enterprises, labor costs and land and factory rent in Vietnam are increasing rapidly. Many Chinese textile enterprises complain that the current factory rent in Vietnam is maintained at 4 USD / m2, not much different from the first-class cities in China. In addition, Vietnam has begun to show signs of labor shortage, when not only textile and garment enterprises compete, but also other industries such as electricity and electronics compete for labor and attract more workers of textile and garment industry. Vietnam has other weaknesses such as capacity constraints, lack of skilled workers and infrastructure bottlenecks.

CHANGES AND CHALLENGES

Currently, the domestic and international market situation poses a difficult problem for the Chinese textile industry. In particular, the US-China trade conflict has not yet ended, causing Chinese textile and apparel industry to adjust industrial structure, as well as to transform and upgrade the industry. It is expected that in 10 years, Southeast Asia and South Asia will be able to build a more complete textile industry and then the Chinese Textile and Garment industry will face the risk of losing orders to competitors.

In addition, the competitiveness in the world textile market is increasingly fierce. In the context of weak global demand growth, China's textile and apparel industry is facing a range of other problems such as rising production costs, labor shortages as well as restrictions on environmental pollution. The competitiveness of Chinese textile and apparel internationally is significantly weakened. At the same time, changes in global trade policy are profoundly affecting many market participants. For example, the EVFTA Agreement will increase Vietnam's textile and garment exports to the EU; or the EU for some countries like Bangladesh to benefit from the GSP preferential tax policy. In addition, the global technological revolution and the consumer revolution have begun to take shape, posing challenges for the entire textile and apparel supply chain of the world.

For the Chinese textile and apparel industry, the "One Belt, One Road" project has been helping to concentrate abundant resources for the development of the textile and apparel industry. The project will combine many political, diplomatic and economic resources, intangible in the medium and long term to create a safe and stable economic and geographic environment for Chinese textile enterprises. in countries along the project route. The current world is undergoing a major change in the past 100 years. Under the joint push of innovation, science and technology as well as investment cooperation, global industrial chains, deeply integrated supply chains and value chains, global labor division is being reshaped. and increasingly fierce international competition. However, the general trend of world development is still "open sharing, cooperation based on mutual benefits".

Source: vinatex.com.vn