Fallout as China sews up textile market

The South African textile industry says cheap imports from China are threatening to wipe out the local industry, where 75,000 jobs have been lost since 2002.

"We're a very distressed industry at the moment. We're actually on our knees ... we've been devastated," the managing director of Gregory Knitting Mills, Selwyn Gershman, told IRIN.

His Johannesburg-based factory has recently stopped exporting because its products cannot compete with those of China: some machines stand idle, employees have been laid off, and output has fallen.

Gershman accuses the government of not doing enough to prevent the influx of grossly undervalued Chinese textiles.

The Congress of South African Trade Unions (COSATU) has acknowledged that the increase in Chinese textile imports has seriously affected South Africa's balance of trade, as well as costing the country thousands of jobs.

According to COSATU's trade and industry policy coordinator, Tanya van Meelis, job losses in local textile manufacturing have led to deindustrialisation in places like Dimbaza, a town in the Eastern Cape province, which lost about 6,000 jobs in 2002.

Brian Brink, the executive director of the Textile Federation, has urged the South African authorities to use the World Trade Organisation (WTO) to safeguard the local industry.

However China's economic and commercial counsellor to South Africa, Ling Guiru, said any move by the South African government to restrict textile imports from China would violate the WTO free trade agreement.

He added that even if Chinese imports were blocked, other countries like India and Pakistan would continue to sell cheap textiles in South Africa.

"The success of the Chinese textile and clothing industry can be attributed to its positive response and timely readjustment in the face of difficulties, instead of flinching and resorting to self-protection," Guiru told IRIN.

Brink argued that SA should follow China's example by providing subsidies, export rebates and low utility tariffs to textile manufacturers.

Meanwhile, COSATU has turned up the pressure on major clothing retailers to sign an agreement committing them to buy at least 75 percent of their stock from local manufacturers.

In April the 'Save Jobs' campaign, led by COSATU, the South African Council of Churches and various NGOs, handed a memorandum to Truworths and Woolworths - two of the country's leading fashion retailers - stating that clothing imports had seriously undercut local manufacturers, resulting in hundreds of job losses.

China's emergence as major source of cheap textiles has been particularly devastating for small developing countries with less diversified economies, especially in Africa. The least-developed countries - as defined by the US in the African Growth and Opportunity Act (AGOA) - could source inputs from anywhere to manufacture garments for duty-free export to the US, but this special concession expired at the end of 2004.

A report released earlier this year by the US International Trade Commission identified Lesotho, Kenya and Mauritius as being particularly vulnerable after expiry of the concessions that had allowed large low-cost producers to set up companies in AGOA countries for competing in the key US and European markets.

After the AGOA loophole closed in January 2005, six textile factories in Lesotho shut down, leaving 6,650 people jobless.

In Malawi, 2,511 jobs were cut in the textile sector between January and March, and 30,000 jobs are at stake in Swaziland's textile industry.