Chinese textile sector looks to extend reach

The lobby of the Hodo clothing factory is airy and spacious, with a lone receptionist looking slightly lost in front of a vast backdrop in the company's trademark colour, red.

Climb the wide stairs into the factory itself and the quiet of the reception is forgotten. The shop floor has hundreds upon hundreds of workers furiously stitching, ironing and cutting.It is in factories such as this one, in a city dubbed "mini Shanghai" due to its explosive growth, that many of China's 20 million textile and garment workers, most of them women, are employed.

Hodo's parent company, the industrial conglomerate Hongdou, employs 20,000 people in sectors ranging from property to pharmaceuticals, but textiles made up more than half of the group's revenue of 20.7 billion yuan (Dh11.12bn) last year. The company makes 160 million garments each year, ranking it second in the sector in China, and Zhou Haijiang, its chief executive, last year placed 188th in Forbes.com??s list of the 400 richest Chinese, with his and his family's net worth estimated at US$295 million (Dh1.08bn).

Conditions on the factory floor, though frenetic, are far from the Chinese sweatshop cliche, perhaps explaining why this site is chosen for official tours by overseas visitors. The equipment is Japanese, noise levels are modest and the workers, most of them in red T-shirts, are spaced well apart.

Hongdou workers earn about 2,000 yuan a month, compared with perhaps 1,700 yuan for the average textile employee. In keeping with the Chinese government??s 2006 five-year economic plan that emphasised speeding up the development of high-tech industries, textiles makers have also been trying to add value beyond simple production.

Notable successes have been achieved in developing new kinds of materials, such as low-static clothing, says Jianmao Wang, a professor of economics at the China Europe Business School in Shanghai.

"That's one example and there are many others," Prof Jianmao says. "You could even consider the suits for astronauts." While he believes there are so many companies in the field that some will continue to specialise in high-volume, low-value manufacturing, not everyone agrees.

According to Dr Jagjit Singh Srai, the head of the University of Cambridge's Centre for International Manufacturing, "the days of mass contract manufacturing with no value added are probably numbered".

"The margins are staggeringly low just for production and it's about improving margins, it's about bargaining power," Dr Srai says. Suppliers with design capability, for example, were much harder for customers to discard, he says.

Hongdou has put a lot of work into establishing itself as a top-end manufacturer. It has commissioned French designers, set up a training centre with the French fashion school Esmod and developed more expensive brands such as Hetinne, which makes shirts that retail for about $20 in the company's dedicated stores, significantly more than most Chinese-made shirts. Hetinne goods, which also include ladies' clothing and handbags, are sold in separate stores from those of Hodo.

It is a far cry from 30 years ago when China, still recovering from Mao Zedong's cultural revolution, barely had any such thing as fashion. The drab Maoist jacket was practically required wearing.

Pierre Cardin, the French designer, was the first western manufacturer to see the country's potential as a market and a manufacturing centre, and held his first fashion show in Beijing in 1979. Countless others have since outsourced production to China, driving manufacturers in developed and developing countries out of business. China is now the world??s largest maker and exporter of clothing and textile materials, last year selling $185.1bn worth of goods overseas, an increase of 8.2 per cent compared with 2007.

"If you look at so many brands today, whether western or Asian, almost everything we're wearing is made in China," says Denis Ravizza, who regularly visited makers in China as an art director for the clothing and cosmetics maker Esprit. "Many, many famous brands are made there." China has long since established a reputation for being able to produce quality textiles at a fraction of the cost European or North American suppliers would charge.

"There is serious and intensive quality control that has to be made, but Chinese manufacturers are totally capable of making high-standard garments,"says Mr Ravizza, who now works as the art director and associate dean at the Dubai branch of Esmod. While China has had extraordinary success as a textile exporter, it has a modest profile internationally when it comes to its own premium clothing brands.

Just 10 per cent of Hongdou's clothing production goes overseas, according to Wang Zhuqian, the company spokeswoman. Though Hongdou, which traces its history back to 1957, has registered its name as a trademark in dozens of countries, its popularity remains concentrated in its vast home market.

Other Chinese companies have made significant headway in developing brand recognition internationally, among them Shanghai Tang, based in Hong Kong.

"The design is very interesting. It's a mix between western and Chinese," said Mr Ravizza when describing the company's style."They use silk and velvet with a touch of the whimsical." But given the size of the textile industry in the country, some still believe the number of globally recognised Chinese clothing brands to have extended their reach beyond the region will remain modest.

"A number of Chinese designers did shows in Europe a while back and they weren't very successful," says Ben Simpendorfer, the chief China economist at Royal Bank of Scotland.

"The European designers are more sophisticated. If they are selling to the Chinese market they will be more successful."