Textile industry in China

The textile industry in China is the largest in the world in both overall production and exports.China exported $274 billion in textiles in 2013, a volume that was nearly seven times that of India, the second largest exporter with $40 billion in exports. This accounted for 43.1% of global clothing exports.

The industry began to grow at the turn of the 20th century, until the production of cotton yarn made up about 20% of China's total modern industrial output in that century. Stimulated by WWI, the industry expanded rapidly until the depression in the thirties. The industry continued to grow though more slowly until Second Sino-Japanese War, when the war destroyed many mills and their supply chains. They did not fully recover until the 1950s, at which point many of the major tycoons had moved their empires to Hong Kong to avoid persecution, while the rest of the industry was monopolized by the government. After Deng Xiaoping ascended to power, he identified these Hong Kong companies as models of technologically advanced capitalist companies and they were able to reconnect with those that had stayed in mainland China.

In the early stages of the Chinese economy following economic reforms begun in 1978–79, the low cost of labor was an important component of advantage in gaining export market share over other exporting countries.

Wages for blue collar workers have risen rapidly since that period, leading to predictions that textile products from China would no longer be competitive due to loss of low wage advantage. However, other advantages held by China over developing countries including "more efficient supply chain management, more modern infrastructure, and workers’ higher productivity", have allowed Chinese textile producers to keep costs low relative to other producers. American trade statistics show from 2006 to 2014, the average unit price of imports from China slightly increased 0.7% from $1.45/square-meter-equivalent (SME) to $1.46/SME compared to imports from other countries, which increased by 7.9% from $1.97/SME to $2.13/SME.

The industry is undergoing a process of ongoing consolidation in the industry with a future outlook of a handful of manufacturing behemoths. Industry data from the first half of 2013 showed that production from manufacturers with revenue of at least approximately 10 million RMB grew by 13.3%. However, according to an article in Forbes in 2013, the industry is still highly fragmented with approximately 10,000 yarn and fabric makers.

Factories are also moving from rich coastal provinces to the poorer interior in search of lower wage labor. The Esquel Group, the largest cotton shirt maker in the world, had plans in 2015 for a 2 billion yuan ($325 million) factory in Guilin, Guangxi.

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