The outlook for the local textile industry is still bleak this year as consumer confidence remains low, with market sentiment unlikely to improve until the European debt crisis poses less of a threat to the global economy, textile makers say.
The industry was severely hit by the global financial crisis in 2008 and has yet to fully recover, they say.
“People have to feel wealthier for them to be willing to buy one more piece of clothing,” Tah Tong Textile Co Ltd (大東紡織) chairman Steven Chen (陳修忠) said on Thursday on the sidelines of Taipei Innovative Textile Application Show at the Taipei World Trade Center Nangang Exhibition Hall.
“The textile industry is heavily affected by end demand,” he said.
Chen said the industry showed signs of improvement in 2010, when the US started its quantitative easing policy, boosting consumer confidence, but that the positive impact gradually lost steam in the following years, he said.
On one hand, the local textile industry is facing competition from cheaper products made in China and Southeast Asia. On the other, internationally, there is no guarantee of profitability resulting from entry into the global supply chain of major brands amid pricing competition among suppliers.
“The era of local textile companies competing by offering clients cheap products is long gone,” Chen said.
Some companies, including Libolon Enterprise Co (力寶龍), therefore chose to establish their own brands, although a move like this may take several years to bear fruit.
“To run a brand, we have to forecast sales of our clothes for the upcoming season and prepare the necessary amount starting a quarter ago, so we are not likely to sell out of every piece of apparel we make,” said Jonathan Lin (林文仲), chairman of Libolon Enterprise, which produces three brands — FN ICE, Go Hiking and Verno.
If companies decide to set up retail outlets, they need to choose locations wisely, and rents will become a major source of expense, Lin said last week.
Alternatively, Taiwanese textile firms can take advantage of the technology they amassed during the past 40 years, which allows them to develop high quality functional yarns, fabrics and cloths.
Moreover, Taiwanese manufacturers can acquire more bargaining power to negotiate with global brand companies if they can develop unique products, Chen said.
Yet local companies have to understand what end products, such as specialist garments or backpacks, that customers want and to design garments, fabrics and even yarns accordingly, he said.
In the first seven months of the year, total output of the local textile industry was NT$261.96 billion (US$8.92 billion), down 1.8 percent from NT$266.68 billion a year ago, according to the Taiwan Textile Research Institute (紡織產業綜合研究所).
The declining output was because production of polyester and caprolactam, which is used to make nylon, rose in China, exerting pressure on local fiber makers, deputy director of the institute’s department of industrial service and information Cheng Kai-fang (鄭凱方) said.
During the first seven months of the year, fiber makers’ output declined by between 7 percent and 8 percent from a year ago, the institute said.
Output of companies making fibers accounted for around 32 percent of the total output during the January-to-July period this year, while companies making yarns and fabrics produced 63 percent of the output, with garment makers contributing the remaining 5 percent, according to the institute’s data.