Looking Ahead With Sun Ruizhe

Q&A with Sun Ruizhe, president of China Textile Information Center/China Textiles Development Center. Interviewed and Edited by Carmen Pang, Executive Editor

Executive Interview
Interviewed and Edited by Carmen Pang, Executive EditorSun Ruizhe Looking Ahead

Sun Ruizhe, president of China Textile Information Center (CTIC)and China Textiles Development Center, shares his views about the China textile industry. The following is an edited version of the interview.TWA: What is CTIC?Sun: CTIC was formed after the reorganization of the former Ministry of Textile Industry in 1998. It is the largest of the 22 divisions within the China National Textile and Apparel Council (CNTAC). We provide services to the Chinese textile industry in three main areas:

• Information technology services - In 1997, the Chinese government began to upgrade and transform the industry. The textile industry is very important to China in terms of employment and revenue generation, therefore the government wanted the industry to adopt information technology. We are the industry’s Internet content provider and Internet service provider. We also provide e-commerce and enterprise resource planning (ERP) know-how and services. In addition, we maintain an electronic databank that provides the government and the industry with information such as statistics, production data, and import/export numbers, etc.
• Policy making - We play a behind-the-curtain role in drawing up five-year plans for the industry.
• Publication - We are the No. 1 publisher in the textile industry in China. Our titles include Textile Information Weekly, China Textile Leader, China Textile Abstracts, among others. We just launched Home Textile Weekly and China Garment this year.

In addition to the above, we also work in the business area of textiles development. We do not develop actual textile products, just the research behind them. Our teams give guidance and set up quality and testing network with laboratories to raise the standard of the whole industry. For example, we have a central lab in Beijing, one in Guangzhou for southern China, and we are constructing another one in Shanghai for eastern China.TWA: With the elimination of textile quotas, many textile manufacturing countries are fearful that the marketplace will be dominated by China. What are your views?Sun: It is true that much manufacturing will move to nations with low labor cost, which include China now. But the majority of Chinese textile exports are still low- to mid-range products. Western countries will still dominate when it comes to products with high added value and products that require small quantities and quick response time. China is too far away. Today, sourcing is not in the Chinese manufacturers’ hands. The creativity allowed among Chinese suppliers is limited. The Western retailers have the sales channels, the brands and the control over design, core technology and raw materials. Moreover, many countries think because it is post-quota, therefore trade barriers are gone. This is not true, tariff barriers still exist - they are just different policies. For example, North America has NAFTA, the European Union has preferential policies. Plus, there are political considerations as well, such as the U.S. safeguard system.TWA: What about the fair-trade argument based on social issues, such as the value of the Chinese yuan, workers’ rights, environmental compliance, etc.? CTIC/China Textiles Development Center, Linmark Group Ltd. and Hudson Bay Co. have announced to cooperate in the development of social compliance systems for China. The parties will provide the Chinese textile industry with assistance in areas such as labor protection,environmental issues, management, and others.Sun: China is undergoing development that the West has passed through already. In the early days of development, all countries have the same type of experience. In the West today, there is an awareness for these social issues. In China, we’re in the early days of development. For example, some private companies do understand it’s not good to squeeze workers, so they pay over time.Moreover, everything has to be seen from the Eastern and Western cultures’ point of view. The understanding is different and the reality is different - even if the West has a code of conduct, it may not work in China. China will develop “social compliance” accreditation that combines both common civilized items and reality and culture.First, we need diplomacy to solve the differences. Second, we need to teach the industry to be aware of the differences and be prepared. Third, we need to develop and promote a set of Chinese code of conduct.TWA: What are some challenges facing the Chinese textile industry?Sun:The first challenge is in terms of the infrastructure. These include power, raw material and labor shortages, especially along the coastal areas.On the problem of raw material shortages, such as cotton and wool, China is encouraging the use of chemical fibers. Right now, our chemical fiber spinning is at capacity and we are self-sufficient.Labor shortages will be a problem because it will result in labor cost increases. Along with these cost increases, the expertise level has to increase as well.China’s labor cost is already high compared to other low-cost manufacturing places. We have to ask what is China’s competitiveness?As the industry develops, another danger is unhealthy competition - prices that keep lowering are not healthy.Another challenge facing China is there are many workshops around the world with high-value brands, but we don’t. We don’t have any high-value international brands. One of CTIC’s goals is to promote to international retailers products that comply with the “Fabrics China” standards, which are developed partly by the organization.TWA: What are the advantages that the Chinese textile industry has?Sun:In much of China, you can have a whole garment made from cotton to button within a 50-kilometer radius. As a vertically integrated supply chain, China is very good. The problem is, in terms of added value, we are still very weak. The workshops in these vertical supply chains are not original places for innovation.In 2003, China imported $4.6 billion worth of textile machinery. But these were not for value-added processes, such as dyeing, printing and finishing. At CITME 2004, the China and Japan halls were most popular because people were looking at exhibits more for increasing production capacity for weaving and spinning; other technologies, such as processing, didn’t attract people. This is a problem because Chinese companies are still looking at growth based on production capacity increase because it’s easier. Sun Ruizhe (far right) with CNTAC chairman Du Yuzhou second from left) and former China Textile Minister Hao Jianxiu (third from right)TWA: What does the future hold for the Chinese textile industry?Sun:The textile industry in China is worth about 2 trillion yuan, about 25 percent of which is for export. In 2005, we expect about 15 percent to 20 percent growth. It is a reasonable expectation, but we also need to manage growth. China would love to maintain a reasonable growth rate, but I think the marketplace will curb any crazy development.In terms of textile machine manufacturing, China will become a base. Our markets now are ASEAN and African countries and we just need time to allow growth.In the future, I see bigger companies because of mergers and growing business. There will be some state-owned but more private companies. For example, in the man-made fiber industry, less than 50 percent of the companies have private investments today. The foreign investment trend started in the ‘90s through technology transfer. I think we will see more direct investments in the future.
March/April 2005