Africa: The next textile industry center?

The African media Alafrica recently published the title "Ethiopia: The Next Textile Center? The review article pointed out in the article that due to the lower production costs in Ethiopia, Swedish multinational companies such as H&M, a clothing retailer, and Tesco, a British supermarket chain, have or plan to establish garment processing plants in Ethiopia.

Since 2007, the Ethiopian economy has achieved a leapfrog development. The Ethiopian government also regards the textile industry as a priority area for development and preferential investment encouragement: The country plans to export garment products by more than one billion U.S. dollars by 2016. For investments like H&M, the country also welcomes very much.

The article said that in recent years, Ethiopia has gradually emerged advantages in the textile industry. Due to the improvement of Chinese society, labor costs have also increased. Ethiopia's labor costs are lower than China's, and its geographical location is superior. It can “reach Europe quickly via the Suez Canal”. For another textile industry center, Bangladesh, this year's major crashes such as the collapse of the Lana Shopping Center and the fire at the garment factory have seriously affected its reputation and tumbled the local textile industry. In addition, Ethiopia also has significant production advantages such as high quality cotton and appropriate climate.

In fact, many countries in Africa have listed the textile industry as a key development industry and have demonstrated their respective advantages in the development of the textile industry: the textile industry is a traditional area in Egypt, Egypt has a relatively complete textile production chain, and the textile market scale is in Africa. In Lesotho, the textile industry has become the largest employment pillar, accounting for almost 50% of formal employment, and the labor force is mature. The government has introduced a series of regulations to encourage and protect foreign investment, including policies in the export processing zone. Special preference; Mozambique's advantages in attracting foreign investment in the textile industry are mainly the stability of the domestic political situation, the production of high-quality cotton, and the low cost of land and labor. More beneficially, the country can provide investors with market access for textiles...

So does this mean that the next textile industry center will be Africa? How far is Africa from the textile industry?

In this regard, Liu Yaozhong, the manager of the International Trade Office of the China National Textile and Apparel Council, believes that Africa’s development of the textile and garment industry has always been a common consensus. However, due to constraints of various factors, it will be time for Africa’s development to become the next textile industry center. day. "From World Trade Statistics of the WTO, we can see that Africa's import and export trade in textiles and clothing accounts for a small proportion of world trade. Over the past decade or so, Vietnam, Bangladesh and other countries in Southeast Asia are the world's textile and apparel. Participants in the free trade with significantly increased strength have become strong competitors for China's overseas textile and apparel orders.” Liu Yaozhong said. “In recent years, although some African countries have achieved rapid development in the textile industry, regardless of China, even if compared with Bangladesh and Vietnam, the disadvantages of African countries are still very obvious, including the imperfect industrial chain, weak industrial foundation, and comprehensive The cost of production is high," he said. “Industry competitiveness includes factors such as total factor productivity, degree of industrial chain improvement, energy and infrastructure support, product design innovation capability and even the country’s rule of law and property protection level, etc. Take China as an example, the international competition in the textile and garment industry The increase in power has also experienced decades of development. For Africa, it will also undergo a gradual development process."

The heads of Jiangsu Bauhinia Textile Technology Co., Ltd. also expressed similar views. As a private enterprise that has successfully exited the country and is widely recognized by the international community, Bauhinia currently establishes jute plantation and processing areas in Mali. Talking about the competitive advantages of the African textile industry, the responsible person believes that Africa does have an advantage in labor costs, but this is limited to simple labor. For skilled workers, wages are not low, even comparable to domestic labor costs. “I personally believe that Africa’s becoming the next textile industry center is not achievable in the short term. The textile industry is a complete industrial chain covering the production of raw materials, spinning mills, weaving mills, printing and dyeing plants, and garment factories. If there is no perfect industrial chain, the cost will increase a lot. Compared with the domestic market, the textile industry chain in most countries in Africa is not perfect. If you import raw materials from other countries and look for upstream and downstream companies, you will greatly increase production costs." She explained "To realize the maximization of benefits, only the upstream and downstream enterprises should be able to go abroad to form a complete industrial chain."

At present, some Chinese companies have set up industrial parks in Africa to allow domestic textile companies to "walk into Africa" ​​in a drogue style, bringing a complete industrial chain to the region and providing a safe, convenient and sustainable investment enterprise. Development platform.

In 2007, with the approval of the Ministry of Commerce, China's first overseas park, Yuemei Textile Industrial Park, was invested and built in the Karabakh Free Trade Zone in Nigeria; on March 30, 2009, Daheng, another textile company in Zhuji invested and established by Daheng Group. The foundation stone laying ceremony was held in Botswana Textile Industrial Park. In November 2009, Henan Shunde Industrial Co., Ltd. was awarded the Certificate of Overseas Investment by the Ministry of Commerce and the Mozambican Henan Yude Industrial Co., Ltd. was established in Maputo, the capital of Mozambique. Mozambique Hede Industrial Park in Henan Province is located in Marrakech, the capital of Maputo, and is mainly engaged in comprehensive industrial production such as textile and planting.

It is to see the great potential of the African textile industry that Chinese companies invest in Africa either individually or in groups. For those companies that are interested in investing in the African textile industry, the person in charge recommends that companies should fully consider the local water, electricity, transportation and other infrastructure and local investment regulations. “For us, the most painful thing is the energy issue. In Africa, Nigeria is relatively advanced in terms of power generation, but during the summer peaks, it is still a frequent power outage, which will increase investment costs. Our company in Mali is equipped with a small The power generation equipment. For some large companies, it is necessary to build a small power plant, these are the costs to be considered." She said.

Liu Yaozhong suggested that textile companies investing in Africa must carefully and carefully conduct due diligence and combine non-investment with corporate development strategies and must not be blinded. When choosing a country to invest, comprehensive consideration should be given to factors such as the degree of political stability, the environment of the rule of law, the degree of supply chain perfection, comprehensive production costs, talent reserve and logistics, etc., in combination with the selection of the company's development goals. In addition, he believes that when Chinese textile companies enter Africa, they should also consider the factors of market access costs and give priority to countries with preferential regional trade arrangements with export target markets. For example, if they mainly export to the United States, they should choose the African Growth and Opportunity Act ( AGOA) beneficiary countries.