Ｄｏｕｂｌｅ－ｅｄｇｅｄ Ｓｗｏｒｄ－Ｃｈａｌｌｅｎｇｅｓ ａｎｄ Ｏｐｐｏｒｔｕｎｉｔｉｅｓ

In this Shi Jiazhuang Royal KingApparel Group fashion show and franchiserecruitment event， Liu Lianhong， presidentof the association of clothing industry tradeof Hebei province made his presence anddelivered a key speech involving the statusquo of Hebei garment industry， opportunitiesand challenges it faces， practical solutionsand expectation as well， which impressed allthe present a lot. After the event 1 had a faceto face interview with him:

Q: what do you think of this event andwhat is the significance of it?

A: 1 think this fashion show andfranchise recruitment event is significant， forit sets a tone for the whole Hebei trousersindustry development. We should encouragethis self-reliance and innovative spirit. Onlyby adhering to the way of brand construction，scientific marketing and technology-centeredcan a company even an industry survive andmaintain robust growth. I recommend thisbusiness conception should be applied in thewhole Hebei's garment industry.

Q: then what's the currentsituation of Hebei garmentindustry?

A: Garment industry isa driving force and majorcontributor to Hebei's overalldevelopment. At present， thereare over 4000 garment enterprisewith more than 400 thousandworkers and 400 thousand set ofadvanced facilities. According tostatistics， in 2006， the total outputof different kinds of garmentsexceeded 1.5billion pieceswith 2.352billion RMB andranked 8th in China. Since theimplementation of 11th ten-yearplan， Hebei's garment industry has gained amomentum， which can be seen in followingaspects:

a) We lay sustained scores on brandconstriction. Now provincial famous brandskeep emerging and already become a trend.

b) We know backwards that productionand science should be in close touch. Taketrousers production as example， producinghigh value-added products like iron-freetrousers， environment-friendly trousers topthe list of their production;

c) We already fostered a mature andspacious market covering over 30 countriesand regions around the world and 28provinces across China.

But there are still some negativeperformances: industry restructure is notup to standard; repetitive and low-levelproduction is still evident; management andstrategy-making still lag behind， furthermore，unorganized market gives rise to disordercompetition.

Q: Then how could you solve theseproblems?

A: Central government encourages newmode of production with brand constructionand technology application as new growthareas， and Hebei garment industry is in favorof this strategy. Taking trousers industry asan example， in the past， we mainly processedtrousers for those world famous brands andrarely made any researches on actual marketand demand， however， after a long time ofproducing trousers for those famous brands，many companies have accomplished originalfund and experiences accumulation， plus withincreasing consciousness of pursuit in tasteand individualities， so we will take advantageof the upgrade of consumption structure toupgrade our trousers industry structure andbreed brand of our own.

On the other hand， we should increaseproportion of technology in production anddevelop new techniques and materials so asto realize high return rate with lower cost.

Q: As we know， since 1st， July of thisyear， China's apparel export tax rebate ratedecreased from 13% to 11%， which casttremendous ramifications on Chinese textileindustry， so what is the Hebei market'sresponse to this change?

A: reduction of export tax rebate rate，combined with continued appreciationof RMB， rising labor cost and increasingconflicts in international trade really dousedthe margin growth of Hebei's textile industrysignificantly and made all companies feelat loss， especially those small and medium-sized ones vulnerable to changeable marketwho are facing or already experiencingbankruptcy. Though it takes time for all thecompanies to figure out the way to adaptnew rules and made anti-measures but， insome extents， those seemingly unfavorablefactors can phase out companies with weakcompetitiveness and phase in stronger oneswith corresponding strategies to integrateresources and resuscitate Hebei's garmentmarket. So like a coin has two sides，reduction of export tax rebate rate is not acomplete wet blanket， on contrary， it aidsHebei garment industry to reshuffle in apositive way.

Q: you just mention that Hebei garmentindustry is facing increasing conflicts ininternational trade， could you talk about it indetails and how do you overcome it?

A: Hebei's garment export is facingtough challenges， which consist of twoparts: one is from our destination countries，like USA and Europe who adopt a seriesof safeguard and anti-dumping measures，meanwhile countries like Brazil， Turkey andSouth Africa also make close surveillanceon our export to them; the other is fromour rivals like India， Vietnam and Malaysiawhose charges for making a trouser is0.5 dollar cheaper than ours， under suchcircumstance， our competitive edge lapsedgradually.

We decide to solve these problemsthrough four aspects:

First， as 1 mentioned before， we willendeavor to enhance our brand establishmentand improve our existing brands position，meanwhile， MA and integrate those smallor medium-sized companies to cement ourwhole strength and core competitiveness;optimize technical structure and control thenumber of export products and prices.

Quality is a solid， bottom-line contributorto a product， so we will pay more attentionsto that. Cutting costs and increasing speed-to-market， while improving agility andenhancing total operational efficiencies alongthe way.

Secondly， technology update can sustainus in the times of difficulties. We shouldpay more attention to relevant trends in atimely manner so as to improve productiontechnologies.

Thirdly， wooing foreign investment viasome favorable polices or setting up businessin foreign countries proper are the best formsof minimizing conflicts and reducing cost.Hebei enterprises have markedly expandedforeign market with growing number offranchised shops opened overseas.

Fourthly， we can foster domestic marketto cushion the international trade shock;domestic market is always our frontier thatwe will never ignore.

Q: what is your expectation to Hebei'sgarment industry or are there any cautionsyou think companies should notice?

A: though there are huge pressures，but we still boast advantages like relativelycheaper land and labor. Besides， with efficientintegration of different kinds of recourses，we already formed seven specialized industryclusters like men suit and leisure garmentand children's dress and to name.

We should prevent that with the updateand increasing application of technology，production capacity surplus may be abottleneck problem， so we should avoidthis and fostering a more mature domesticmarket is definitely a wise choice for ourdevelopment in the years ahead.

Challenges and opportunitiesare powerful vehicles that release ourunconscious energies to brood， to integrate，to improve， and to grow. People alwayscompare challenges as double-edge sword，which can damage your enthusiasm andsharpen your spirit， however， l prefer toreckon it as a fire， which can incinerate yourhope whereas rekindle it into a bigger flameto promise a brighter future.