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Grasp the opportunity of RCEP, China’s textile and garment industry value chain to enhance again

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The implementation of RCEP will have a positive and far-reaching impact on the pattern of textile and apparel trade and industry chain between China and Asian countries. Cao Achang, president of China Chamber of Commerce for Import and Export of Textiles, believes that the entry into force of the RCEP agreement will provide a huge boost to China’s textile and apparel industry in the new period to form a new development pattern with a large domestic cycle as the mainstay and a dual domestic and international cycle to promote each other.

In recent years, with the deepening of production capacity cooperation between China and neighboring countries, especially ASEAN countries in the field of textiles and garments, a regional industrial cooperation model with obvious advantages have been formed among RCEP members.

“On the one hand, China, with its strong comprehensive competitive strength and stable and complete industrial chain advantages, maintains a direct export of textiles and garments on a scale of nearly $280 billion; on the other hand, Chinese enterprises take advantage of low-cost and labor resources in ASEAN countries to ‘overflow’ some of their original and new production capacity ‘ to these countries, making an important contribution to the promotion of textile and garment exports, employment and economic growth in ASEAN countries, while also driving the growth of Chinese yarn, fabric, and other intermediate products exports to ASEAN, and significantly increasing the mobility, activity, and interdependence of intra-regional textile and garment trade, thus driving the rise of the China-centered Asian supply chain. ” Cao Achang said.

1. Expansion of intra-regional trade

RCEP integrates and expands the “10+1” FTAs between ASEAN and China, Japan, South Korea, and other member countries, and makes high-level open commitments through rules of origin, tariff reductions, positive negative lists, and other measures, providing an excellent opportunity for Chinese textile and garment enterprises to expand intra-regional trade, optimize resource allocation, integrate and strengthen supply chains, and enhance value chains for transformation and upgrading.

The implementation of RCEP will expand the scope of tariff concessions of the original FTA, and some textile and garment products, including some garments and bed fabrics exported to Indonesia, some chemical fibers and fabrics, garments and textiles exported to the Philippines, and some cotton yarn, fabrics and chemical fiber products exported to Malaysia, will be able to enjoy tariff concessions beyond the original FTA. After the implementation of RCEP, the most direct and significant impact will be on China’s textile and apparel exports to Japan. “After RCEP comes into effect, Japan will eventually achieve zero tariffs on most Chinese textile and apparel products within 15 years, which builds a positive and predictable policy environment for the long-term development of China-Japan textile and apparel trade, which will stabilize the long-term commitment of Chinese and Japanese enterprises to mutual cooperation and solidify China’s market share in Japan, and is extremely important for the long-term development of bilateral textile and apparel trade cooperation between China and Japan and stability has extremely important positive significance.” Cao Achang said.

The textile and apparel industry has a long industrial chain, from fiber cultivation or manufacturing – spinning – weaving – printing, dyeing, and finishing – garment manufacturing, with a large number of links involved in between. For a long time, influenced by labor costs and supply, trade preferential arrangements, cotton quotas, procurement strategies, and other factors, China and ASEAN countries have formed both competitive and cooperative supply chain layouts and trade and investment patterns. the RCEP unified, simple, and clear rules of origin will have a very significant guiding role for Chinese textile and garment enterprises in ASEAN trade, investment, and supply chain layout.

“RCEP rules of origin on textile and garment products are relatively lenient, and after the implementation of RCEP, enterprises importing fabrics from China, processing them into garments in ASEAN, and then exporting them to Japan, can enjoy duty-free treatment. The original subject to the ASEAN-Japan, ASEAN-Vietnam FTA rules of origin, had to carry out local production, or because ASEAN can not be produced and do not enjoy the tariff-free treatment of products, will be able to enjoy a tariff-free treatment in Japan, which will help ASEAN countries to take full advantage of the production of Chinese yarn, fabric and other intermediate products to expand exports to Japan, thus also benefitting Chinese intermediate products to ASEAN countries exports.” Cao Jiachang said.

2. Deepen industry chain integration and layout

The implementation of RCEP will help slow down the outward shift of the whole Chinese textile and garment industry chain and build a China-centered Asian textile and garment supply chain and a unified large market. the unified and transparent investment environment created by RCEP will also be conducive to enhancing trade and investment and industrial synergy between the Chinese textile and garment industry and RECP countries. RCEP reduces trade and investment barriers and creates a unified large market, which is conducive to Chinese textile and garment enterprises to make optimal allocation of resources in the region and realize international layout. By strengthening the industrial division of labor and cooperation among member partners, it promotes the formation of a more reasonable and beneficial regional industrial chain, supply chain, and value chain closed loop for all parties in the region and overall enhances the position of East Asia in the global textile and apparel industry competition.

The implementation of RCEP will also play a positive role in Chinese textile and garment enterprises taking advantage of the low cost of ASEAN countries to achieve complementary advantages and build a stable industrial chain and efficient supply chain. In terms of product design and development, international marketing network construction, branding to the sea, and the development of cross-border e-commerce, RCEP also provides opportunities for Chinese textile and garment enterprises to play to their strengths, explore the potential of regional markets and continuously improve their value chains.

Chinese textile and garment exporters should seize the major development opportunities provided by RCEP and continuously deepen the integration and layout of China’s textile and garment industry chain. In this regard, Cao Achang believes that Chinese textile and garment exporters should carefully study, read and apply the tariff reduction table. Combined with the RCEP tariff concession arrangements, on the one hand, reference to the progress of concessions to orderly expand the import and export trade of relevant products, on the other hand, according to the characteristics of the RCEP member countries apply different tariff concessions, to establish a fine and perfect division of labor system in the region, in order to make full use of the RCEP regional rules of origin to obtain the maximum tariff preferences. At the same time, enterprises should pay attention to the analysis and research of RCEP agreement rules to optimize the regional industrial chain and supply chain arrangements. In the international capacity cooperation and investment layout, we should fully evaluate the rules of origin, investment, and other related rules of RCEP and other two FTAs in the region, select the best and appropriate use, and make a more perfect industrial chain and value chain adjustment and layout in terms of production costs, raw materials, upstream and downstream industries and markets. In addition, enterprises need to pay attention to and study the rules of customs procedures, inspection and quarantine, and technical standards of each RCEP member country to land, evaluate the existing import and export links and logistics arrangements, optimize the declaration mode, shorten the trade time, simplify the trade process, and fully reduce trade costs.

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