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After the boycott of Chinese manufacturing, Indian orders are returning to China...

November 10, 2020

"There is no holiday on November. In addition to overtime pay, employees will receive an additional subsidy of 200 yuan per person." "In the past, we had a three-day holiday on National Day. This year, we only have two days to catch up with the construction period." This year's National Day holiday, China’s Many textile printing and dyeing factories that supply foreign trade have experienced this situation because of the increase in overseas orders.


According to media reports, the person in charge of the production side of a foreign trade home textile processing factory in Jiangsu said: This year, the factory worked overtime during the eleventh period and basically never took a break.


Because Thanksgiving and Christmas are approaching, this time of year should have been the peak season for foreign trade textile orders; this year, due to the impact of the epidemic in Europe and America, the number of orders would have dropped.


An important reason for the "upward against the market" is that many Chinese manufacturers have received "urgent orders" and "flying orders" from India.


Indian orders "return" to China


Since September this year, many large export-oriented textile companies in India have been unable to guarantee normal delivery due to the impact of the new crown epidemic. European and American retailers have chosen to transfer many orders originally produced in India to China in order to ensure supply during the peak sales season of the "two festivals". In some companies that have received such orders, orders for production have been scheduled until May next year.

Public information shows that India is the world's largest cotton producer, the world's largest jute producer, and the world's second largest silk producer. The yarn production capacity accounts for 22% of the world's total; the textile industry accounts for about 15% of India's total export revenue.


Textile is a labor-intensive industry, but India's labor force is being hit hard by the new crown epidemic. According to the latest data released by the Ministry of Health of India, as of 8:00 on October 15 local time, the cumulative number of confirmed cases of new coronary pneumonia in India rose to more than 7.307 million, and the cumulative number of deaths was more than 111,000. In the past 24 hours, 67708 new cases were confirmed. Among the administrative regions of India, there are currently more than 100,000 confirmed cases in 18 states or regions.

Local media have predicted that the total number of confirmed cases of the new crown epidemic in India may soon surpass that of the United States, becoming the country with the largest number of confirmed cases in the world.


In fact, both China and India are big countries in the textile industry, and competition for textile orders has a long history. Before the outbreak of the new crown epidemic, many orders received by Indian companies flowed out of China.

Feng Shui turns around. At present, China's remarkable results in epidemic prevention have enabled many domestic textile factories to basically resume normal operations since June, and these orders that ran away have returned to China.


India wants to "untie" the Chinese economy


This situation may be unexpected by Indian Prime Minister Modi. Under his leadership, India is promoting the "de-sinicization" of the economy and competing for industrial transfer from China.


At the 3rd Annual Leaders Summit of the United States-India Strategic Partnership Forum (USISPF) held on September 3, Modi said: "Whether it is the United States, Europe or Australia, countries all over the world trust us. India has attracted more than 20 billion this year. Foreign investment in US dollars. Companies such as Google and Amazon have announced long-term plans for India." He said: Under the epidemic crisis, many companies have sought reliable and policy-stable investment destinations, and "India is where these characteristics are. ".



Regardless of the domestic turbulent new crown epidemic, Modi's description is consistent with the facts. The hard fact is: Since this year, India has successively introduced incentives to attract companies to move to India. Since India announced the "Production Linkage Incentive Program (PLI)" in April 2020, a total of about 22 companies including Samsung Electronics and Apple’s assembly partners have pledged to invest 110 billion rupees (about 1.5 billion US dollars) in the next five years ) To expand investment in India.

In addition to PLI, India also announced the "Electronic Components and Semiconductor Manufacturing Promotion Plan" (SPECS) and the "Electronic Manufacturing Cluster Plan" (EMC 2.0). These three plans can basically be summarized as follows: Use US$6 billion as an incentive, allocate hundreds of thousands of hectares of cheap land, and invite global giants to come to India to set up factories.


Some analysts believe that under the implementation of these plans, 10% of global smart phone production capacity may be transferred to India in the next five years, and most of the production capacity will be moved out of China.

Indian officials do not shy away from publicly claiming competition with China. In addition to banning Chinese apps and other activities, on September 1, India, Japan, and Australia agreed to launch an initiative to establish a flexible supply chain in the Indo-Pacific region, which called for reducing dependence on Chinese trade.


In addition, India has also formed a "four-party security dialogue" structure with the United States, Japan, and Australia. The four countries plan to deepen trade relations, and Japan is considering transferring some manufacturing departments to India.

Japan announced the expansion of a subsidy program on September 3, which listed India, Bangladesh and other places as target countries to undertake the transfer of Chinese industries. The Japanese government will allocate 23.5 billion yen in the fiscal 2020 supplementary budget to promote the diversification of production bases from China to Southeast Asia.

China is not afraid of "digging the wall"


Can the Indian idea succeed? Let alone compete with China, let’s see if it has a clear advantage over Southeast Asian countries? According to a recent survey by Standard Chartered Bank, Vietnam is still the most popular investment destination, followed by Cambodia, Myanmar, Bangladesh and Thailand. India is not among the main countries or regions where production capacity is dispersed.


Similarly, the proportion of Japanese companies' re-export trade sales in India in 2019 accounted for only 17.8% of exports, far lower than 24% in Myanmar and 53% in Bangladesh. This data comes from the Japan External Trade Organization (JETRO).

Poor infrastructure, congested ports, and unsatisfactory regulatory environment... These are India's shortcomings in the eyes of international companies. After all, the market still speaks for interests. Who can provide lower costs and higher returns can attract the favor of enterprises.


On October 14, Li Xingqian, Director of the Department of Foreign Trade of the Ministry of Commerce of China, commented on the phenomenon of Indian textile orders "returning" to China when answering questions from reporters. He said that we sincerely hope that India can contain the epidemic as soon as possible and resume normal production and life. China's textile industry chain has also withstood the same test brought by the epidemic.


Li Xingqian, Director of the Department of Foreign Trade of the Ministry of Commerce of China, said: "Each of us is a consumer. In the face of diversified market supply, we will shop around when we purchase, and choose high-quality, inexpensive and reliable merchants and products, as does international trade Multinational companies adjust order production on a global scale, and international buyers select suppliers based on production capacity. These are all normal market behaviors. There are also some industries and local orders in China that are transferred to other countries and markets for production."


Let's take a look at India's economic situation. At present, many international economic experts have further lowered India's GDP forecast for the 2020-2021 fiscal year.


SBI chief economic adviser Soumya Kanti Ghosh predicted on September 1 that India's annual GDP will shrink by nearly 11%, which is higher than its May forecast of 6.8%. Standard Chartered Bank believes that with the new crown infection level still high, the recovery cycle of the Indian economy will be longer than originally expected, and they will lower their forecast for India's annual GDP from the previous -4% to -8%.


In contrast, the "World Economic Outlook Report" released by the International Monetary Fund on October 13 predicts that China's economy will grow by 1.9% in 2020, making it the only major economy in the world to achieve positive growth. We do our own things well, so we don't have to worry about "digging the wall."


(This article is reproduced on the Internet, the purpose is to spread the knowledge of the apparel industry, it does not represent the company's point of view. If copyright issues are involved, please contact us within 30 days, we will delete the article as soon as possible.)


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