Textile industry is at the crossroads

The China Post staff

The textile industry, among the declining traditional industries in Taiwan, is now facing a turning point on its way to transformation while the industrial development in Taiwan has undergone drastic changes for the past decades. High-tech industries emerge as the driving force of the island’s economy, while traditional ones are fraught with climbing production costs and shrinking world market shares.

Textile was once Taiwan’s locomotive industry that created tens of billion U.S. dollar trade surplus in the ‘70s and ‘80s. However, during the past six months, several major textile manufacturers on the island, such as Chung Fu Textile and Fu I Industry, have shut down their spinning factories in Taiwan.

In regard to the government favoring high-tech industries over the traditional ones Thomas Huang, chairman of Taiwan Textile Federation (TTF), once again urged President Chen Shui-bian to work out concrete plans to revitalize the island’s waning textile industry.

“In 1998, the government allocated NT$540 million to textile research,” said Huang. “During the same period, the government’s fund for the information industry was NT$5.7 billion, ten times more than the fund for the textile industry.”

Given the contribution of the textile industry to Taiwan’s “economic miracle” in the past decades, Huang, a veteran textile businessman, has vowed to lobby for more economic incentives and subsidies for the research and development (R&D) in the textile industry. In addition to the general sluggish development of domestic traditional industries, the textile industry is also beset with trade barriers imposed by Western countries in the global market. As Europe and the U.S. impose strict import quotas on textile from Taiwan and other Asian countries, many textile manufacturers on the island have been seeking for a production site abroad. Central America and Vietnam have become the most popular bases for Taiwan’s textile industry.

Three years ago, Nein Hsing Textile and Tainan Spinning were among the pioneers who ventured into Central America, toward which the U.S. have a looser import quota on textiles. As the U.S. 2000 Trade and Development Act came into force in early October, the import quota and tariff to the U.S. on textiles from countries with a per capita GDP lower than US$1,500 were removed, according to Nein Hsing.

In light of Central America’s abundant resources and investor-friendly environment, TTF is planning to rally the island’s yarn and fabric manufactures in November to jointly develop the market there. Taiwan’s niche in Central America lies in its advanced cotton spinning technology. Since the most popular textiles from Central America to the U.S. market is cotton-made clothing, Taiwan textile makers are poised for a comeback in the new continent. In addition to Central America, Vietnam is another paradise for Taiwan’s textile manufacturers. According to Lien Ming Textile, which has been present in the Southeastern Asian nation for seven years, the lure of Vietnam’s political stability and economic incentives granted to foreign investors will attract more Taiwan textile firms to settle down there. Moreover, after Vietnam signs its long awaited trade agreement with the U.S., the country’s textiles will be free of tariff and quota in the U.S. market. In other words, the prospect for textile investment in Vietnam is promising. In the future, the textile industry in Taiwan will witness a two-tier development. Production-oriented companies will gradually shift their production lines to mainland China, Vietnam and Central America, where production costs are much lower. On the other hand, companies that are capable of advanced R&D will stay in Taiwan and vie for the global market of high-grade, high value-added fabrics.