Yuan revaluation 'no quick fix' for SA textile & clothing trade
29 Jul '05
2 min read
The recent revaluation of Chinese currency Renminbi or Yuan will hardly bear any or nill effect on the problems faced by South African textile and clothing industry is facing, industry insiders say.
Only silver lining he offered was that it may help.
Textiles and clothings coming from China will not make imports cheaper due to several other factors.
Trade Union Federation, the Congress of South African Trade Unions, in support of its campaign to compel retailers to source more goods locally, has said SA's clothing, textiles and footwear industries have lost more than 40,000 jobs since 2003.
Johan Baard, Vice Chairman, Cape Clothing Association opined that revaluation was not a 'silver bullet' that would solve all the problems plaguing the South African Textile and Clothing industry.
According to Brian Brink, Executive Director of Textile Federation said that undervalued yuan a major part of the problems faced by the local textiles industry is facing.
Chinese industry was advantaged due to its lower input cost, depressed yuan and adjustment of its currency would affect its exports competitiveness, from clothing to toys and suitcases.
However, Brink added that China had a long way to go before it offers level playing fields to other countries.
Another fact he doubted was whether lower price benefits would be passed on to the consumers by the retailers.
He contended that this never happened citing comparision between price points of garments in the past 18 months, stating that they did not go down, but the financial results suggested top-listed retailers posted lower results.
Retailers were any way gaining whether inflation or deflation existed, said a source.
It was viewed that the higher inflationary environment enables easier management of retailers' businesses, till they can increase selling prices at a faster rate than rise in input costs.
Past two years performance under low inflation, or even deflation grew as increased volumes of sales offsetted the lower price margins, he said.
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