Multinational textile manufacturers transfer part of production from China to Malaysia.

According to the Malaysian Textile Manufacturers Association, there is a movement among some multinational textile manufacturers to transfer a part of their production from China to Malaysia to expand production in Malaysia in expectation of the conclusion of the U.S.-Malaysian FTA.

Textile exports from Malaysia in 2005 amounted to 103 ringgits ($2.93 billion) and those for the U.S. accounted for over 20% of the total. Currently, from 12% to 32% custom duties are charged for Malaysian textile products imported into the U.S., but it is expected that the future conclusion of the U.S.-Malaysian FTA will expand the export of textile products to the US market.

Textile exports from Malaysia in 2006 are expected to increase by 5-7% from the previous year, and even in 2005 when Chinese textile exports destined for the U.S. exploded because of removal of the WTO Agreement on Textiles and Clothing, Malaysia's textile exports increased by 6.2% from the previous year, showing strong growth. The association is expecting that textile exports in 2007 will increase by 5-7%.

European Commission presents its China report.

The European Commission announced its report about China on February 19. The report identifies major opportunities for EU companies in green goods and high-value products, but concludes that it is still restricted by nontariff barriers and poor protection of intellectual property rights. The summary of the report is as follows.

• China's middle class is expected to number 150 million by 2010. The Chinese market for high-value goods is estimated to be worth 1 trillion euros by 2010, which will be a big opportunity for EU companies.
• The services sector is the fastest growing segment of the Chinese economy and is expected to be worth 500 billion euros by 2010. This represents a new opportunity for EU companies in the e-marketplace, but this is an area where some of the most serious barriers to the Chinese market are found.
• China's domestic policy making is now strongly focused on the need for environmentally sustainable economic growth. China's need for green technologies and services is a huge opportunity for EU companies - a market estimated to be worth 98 billion euros by 2010.
• EU companies wanting to compete on price in the Chinese market will need to consider production in China. Successful EU companies are mostly already diversifying into China-based manufacturing.
• While China has made considerable progress in liberalizing its market after its accession to WTO, many of its WTO commitments remain unfulfilled. A representative of the machinery sector in the EU estimates that "intellectual property theft in China equates to a 20% loss of revenue for EU machinery producers." It has been said that various Chinese non-tariff barriers cost EU companies no less than 21.4 billion a year in lost business opportunities.

Lenzing Group expands production of carbon fibers.

The Lenzing Group will expand production of carbon fibers. Lenzing Plastics GmbH, one of the subsidiaries of the Group, and its German partner companies, SGL Carbon AG (Wiesbaden) and Kelheim Fibers GmbH (Kelheim), will establish a joint venture, European Precursor GmbH, which is to produce raw materials for carbon fibers at the Kelheim site. The venture is now awaiting the approval of the cartel offices of Germany.

It is reported that there is a large expectation that a carbon fiber manufacturer SGL Carbon whose expertise is in production, promotion and market analysis, and Kelheim Fibers which produces high-strength acrylic fiber specialties marketed under the brand names "Dolan" and "Dolanit" make a mutually ideal complement.

Another joint venture with the Lenzing Group for the production of carbon fibers, yet to be concluded, is being planned, and these increases in production of carbon fibers are intended to generate expansion and growth of its plastics business.

China Textiles Development Center establishes Fabrics China-National Industry Base on Textiles Research & Development in Shanghai.

The China Textiles Development Center has jointly established "Fabrics China-National Industry Base on Textiles Research & Development" in Shanghai with Donghua University, major domestic textile manufacturers and research institutions with the support of the China National Textile and Apparel Council. The purpose of this new establishment is to adapt industrial structure, enhance the level of the industry and intensify the development capacity of textile manufacturers which are issues that the Chinese textile industry would face, and to raise Chinese brand awareness.

Fabrics China-National Industry Base on Textiles Research & Development has been selected as "a national textile industry innovation new service platform" by the National Development and Reform Commission, which means it will be given support from the government.

The total area of this base is 320 thousand square meters, and comprises four sections: textile enterprises area, fashion design area, public service area and experimental base. It is composed of an integrated combination of many functions like research and development, design, experiments, information exchange, commodity inspection, distribution and personnel training.

In this base, participating companies, industrial chain manufacturers from upstream to downstream engaged in fibrous raw material, yarn, woven fabric, dyeing, finishing and sub materials, are aiming to collectively conduct trading, accept orders, develop new products and enhance brands through their close cooperation in areas like application development for new products, technology development and consultant services. It is also expected to generate positive economic effects through prompt merchandising of research and development achievements. The base is expected to take advantage of superiorities in Shanghai in terms of human resources, technology, markets and the field of intelligence.

Currently many textile related companies are paying attention to this base, and already ten companies, Zhejiang Huafu Group Co., Ltd., Zhejiang Longsheng Group Co., Ltd., Haitian Textile Co., Ltd., Dymatic Chemicals, Inc., Yebao Group, Gaiqi (China) Weaving, Dyeing and Garment Co., Ltd., Zhejiang Rainbow Village Printing & Dyeing Co.,Ltd.,

Fengda Textile Co., Ltd., Deyi Fashion Cloths Co., Ltd. and Quanzhou Karrack Sports Goods Co., Ltd. have announced their entry.

Kelheim Fibers of Germany actively breaks into Chinese market.

Kelheim Fibers, rayon and acryl staple fiber manufacturer, and its subsidiary Dolan opened a Shanghai office (in charge of China, Hong Kong and Taiwan) last September. Kelheim Fibers said that domestic manufacturers in China could not yet meet the current market needs for special fibers, and it focused on the development of textile and non-wovens during China's 11th five-year-plan, which would be a major opportunity for the company to break into the Chinese market actively.

Chroma Chemical Industrial of Taiwan produces direct dye in Jiangsu, China.

According to Huazhong News, Taiwanese dye manufacturer, Chroma Chemical Industrial Corp. will establish a production plant for direct dyes at Suqian in Jiangsu. It will begin construction in the very near future, aiming to start operation during 2007. It is expecting 200 million yuan per year in sales after full-fledged operations have started.

Since its establishment in 1991, Chroma Chemical Industrial Corp. has been producing a total of 10,000 tons of direct dye and acid dye per year and exporting 70% of its products to Europe, Japan and Southeast Asia.

USTR aims negotiated settlement for China's counterfeit issue for present.

The United States Trade Representative (USTR) revealed that for the present, a negotiated settlement will be the solution for the issue of China's counterfeit of US products upon mutual acceptance. However, if there are no tangible effects produced by China during a specific period of time, it would file a further complaint on China with WTO.

According to USTR, almost 80% of pirated and counterfeit products seized at U.S. borders originated in China, and the amount of damage to US companies reached $1 billion.

The U.S. trade deficit with China reached a record-high $232.0 billion in 2006. There has been a conspicuous firm attitude towards China in the U.S. Congress where protectionist Democrats dominate, and in January 2007, the U.S. filed a compliant with WTO against China over export subsidies.

Wal-Mart expands its presence in China.

Wal-Mart Stores, the largest retailer in the U.S., acquired a 35% stake in Taiwanese retailer Trust-Mart. Trust-Mart, operating hypermarkets, has 101 retail outlets in 34 cities in China. Wal-Mart already operates 71 stores including huge shopping malls in China, and this acquisition of stock of Trust-Mart doubles the number of its China bases which outnumbers Carrefour. According to some reports, Wal-Mart is eyeing the possibility of purchasing the parent company of Trust-Mart, Bonteous Company. In this case, it is believed total investment will come to $1 billion.

The total amount of sales of Wal-Mart outside the U.S. in 2006 was $77.1 billion. The company is accelerating its international expansion with a view to further growth promotion. The company places much value on the potential of India and Russia besides China, and a report announced that it has entered into talks with Karusel, a Russian hypermarket, for acquisition of its shares.