Industry observation：The impact of the COVID-19 on China’s textile and apparel exports and countermeasures

At present， with the gradual control of the COVID-19 pandemic， the pace of work and production resumption of textile and apparel enterprises across the country except Hubei is accelerating. How is the export market after the pandemic？

Textile and apparel export market faces severe challenges

According to the China Textile Economic Research Centers analysis， due to the weakening of external demand and the rise of trade environment risks， Chinas textile export situation is more severe. According to Chinese Customs data， Chinas cumulative export value of textiles and apparel in 2019 was USD 280.7 billion， a year-on-year decrease of 1.5%， a growth rate lower than the previous years 5.3 percentage points， but an increase of 0.8 percentage points from the first three quarters of 2019. From the perspective of product structure， the value of textile exports was USD 127.25 billion， a yearon-year increase of 1.4%； the value of apparel exports was USD 153.45 billion， a year-on-year decrease of 3.7%. From the perspective of market structure， exports to emerging markets have performed better than traditional markets. In 2019， China‘s exports of textiles and apparel to countries and regions along the “Belt and Road”increased by 3.7% year-on-year， while exports to the United States， Japan， and the European Union decreased by 6.6%， 4.6% and 4.4% respectively.

We can compare and summarize the impact of SARS in 2003 and the COVID-19 outbreak on Chinas textile and apparel exports：

First， the time of the two outbreaks， the speed of spread， and the scope of the spread were different. The impact of COVID-19 was much greater than the impact of SARS on the economy and society. Second， the export environment at the time of the pandemic was different. Under the trade friction between China and the United States in 2019， the U.S. market is already the third place in Chinas export market， and Japan is the fourth place. However， there is also an outbreak in Japan. Third， the inherent conditions of textile and apparel exports were different. Unfavorable factors such as the trade friction between China and the United States， the relocation of Chinas textile and apparel industry overseas， the rise in the cost of production factors， and the disappearance of the demographic dividend have emerged. Therefore， in 2020 we will face the test of more complex environments.

In addition， during the outbreak in China， the United States tried to raise the barriers to entry in the U.S. market. This makes Chinas textile and apparel products export under pressure， and will face competition from other developing countries that can enjoy government subsidies when competing for the U.S. market； the textile and apparel industry chain will accelerate its transfer to Southeast Asia， Eastern Europe， and Africa. In the next step， the United States may also pay attention to various industrial subsidies in China and launch targeted trade investigations to further suppress the competitiveness of related Chinese products in the U.S. market. As foreign trade is squeezed， domestic demand may face a period of fierce competition， so supply-side reforms must keep up.

What implications does the pandemic have on product development in the textile and apparel and chemical fiber industries？

China is a large textile manufacturing country and a large chemical fiber manufacturing country. It has a complete industrial chain. Despite insufficient experience and emergency reserves in responding to public health emergences at the beginning of the pandemic， Chinas mask production capacity has now reached 116 million per day， which is fully capable to meet public health and pandemic prevention needs， and can also be exported to other countries where pandemics have occurred.

Another lesson we learned was that the business logic of masks， protective clothing and sanitary textiles has changed. Judging from several major pandemic events at home and abroad， first is that masks， protective clothing， etc. are included in the strategic material reserves of various countries； second， public health awareness and pandemic prevention awareness have increased， masks， sanitary textiles， etc. will slowly change from protective products to daily necessities， a huge market has formed， and industrial textiles have great potential； third， the marketing model has changed， the online consumption model has become more popular.

Current countermeasures and suggestions

Facing the 2020 pandemic crisis， it is a watershed moment for many enterprises， urging them to make comprehensive adjustments. Facing the production resumption and product structure adjustment in the pandemic situation， we propose the following countermeasures and suggestions for reference of textile and apparel enterprises：

First， local governments at all levels should implement sound monetary policy， active fiscal policy and vigorous reform and opening-up， and take reform as a breakthrough to help enterprises implement the national policies to deal with the pandemic.

Second， enterprises should seize the opportunity of the globalization of the industrial chain to begin to transform into regionalization， make full use of the “Belt and Road” initiative， and lay out the enterprises domestic and foreign production capacity and order receiving mechanism.

Third， from the current point of view， it still takes time for the textile and apparel upstream and downstream markets to substantially improve. In addition， the spread of foreign pandemic may affect global consumption. In the short term， the market situation is difficult to support the growth of textile and apparel exports. However， anti-pandemic textiles will have an explosive growth in the world. We must seize this favorable window period and promote the export of masks， protective clothing and other sanitary disinfection textiles to increase the global market share of industrial textiles in China. It is not impossible to make up for the decline in other textile and apparel exports and strive to maintain the same export data as in 2019.