Shanghai Daily news

The abolition of a quota system on Chinese textiles and apparel on January 1 by the United States, the European Union and several other countries has boosted export deals for Jack Mao's company by 30 percent in the second quarter of this year from the same period in 2004.
But the veteran salesman and many others in the industry are worried the boom will be short-lived and that Western countries will reintroduce quotas or other hurdles in response to a massive surge in Chinese textile exports.
"Some major clients like The Gap and Liz Claiborne didn't place their orders for the second quarter on previously quota-controlled categories like sweaters," said Mao with Shanghai Sales Clothing (Wei Xin) Co Ltd, a Hong Kong firm with an office in Shanghai.
"They've shifted their manufacturing to Southeast Asia out of fear that safeguard measures like quotas could be reintroduced in the second half of the year due to the surge in exports," he said.
Recently, textile makers in the United States have been pressing Washington to impose restrictions on clothing imports from China. Just last week, EU Trade Commissioner Peter Mandelson suggested Europe might act to slow garment exports from China.
These foreign producers say an export tax China places on goods formerly controlled by the quotas isn't working. The tax ranges from 0.2 yuan (2.4 US cents) to 0.5 yuan per article of clothing, but industry insiders say the fee is less than exporters formerly paid to buy a quota, meaning their costs have actually fallen.
China sold US$989 million worth of apparel to the United States in January, a jump of 80.2 percent year-on-year, according to the China Chamber of Commerce for Import and Export of Textiles. Apparel products shipped to the country rose 43.4 percent to US$540 million in January.
"The floodgates opened and everyone's scrambling for the previously restricted market," said Hu Jun, a salesman with Shanghai Silk Group Co Ltd, a major textile and apparel exporter."
Hu says a large number of Chinese textile companies have jumped into the export business, causing a price war.
"Every player is involved in the price war, which has squeezed the higher profits created by the lifting of quotas," he said. "With so many domestic companies dealing with low-end cheap products, shrewd importers have become tougher about prices."
Exports of some categories of textiles and apparel to Europe so far this year have already equalled sales for all of last year, according to the Shanghai WTO Affairs Consultation Center.
Export prices of some sensitive categories to Europe dropped between 20 percent and 35 percent in February from the end of last year, the center said.