Clothing firms on rack as Chinese quotas filled
Date: 12-07-2005
Source: Irish Independent
The apparel industry faces turmoil as orders placed in China can't now be imported because limits agreed by Brussels have already been exceeded in just two months. IRISH fashion and clothing businesses face "major disruption" in the coming months due to severe restrictions on imports of Chinese textiles to the EU. The Irish Clothing and Textile Alliances (ICTA), part of IBEC, has warned that several Irish companies face major difficulties after placing orders with Chinese companies earlier in the year. When existing textile quotas were lifted at the start of 2005, the volume of Chinese textile imports into Europe rose dramatically. Many Irish companies went to China, sourced suppliers and committed to orders. New European Union quotas to limit the explosive growth of Chinese clothing imports have already been exceeded, just weeks after they were agreed with Beijing, leaving some retailers worried about shipments they have already paid for but not received as the busy autumn-winter season gets under way. In Germany, the threat has already led to a warning from Economy Minister Wolfgang Clement that the limits on soaring imports of textiles and clothing from China could seriously harm German companies. "The restrictions on imports of textiles and clothing products from China, effective from July 12, 2005, threaten to cause major damage to manufacturing and trade in Germany," Clement said in a letter sent to European Union Trade Commissioner Peter Mandelson. The type of products which Irish companies source in China are not mass-market products which it has been claimed have flooded Europe, but mid to high-end products carrying larger price tags. However, the new agreement limiting imports has actually caused shipments to surge. Quotas in the nine textile areas have been put in place and quotas for two categories - trousers and pullovers - have already been filled. Three other categories are close to hitting their ceilings for the year. Contracts for sweaters alone had amounted to nearly ?100m by early June. EU member states agreed earlier this month to raise the ceiling for sweaters to unblock goods already bought by retailers, despite concern in countries like France and Italy which have big textile industries of their own. But the rise is still insufficient to clear the full backlog of contracts. Several ICTA members have been impacted, according to spokesperson Michael Hannon. Difficulties include orders which have already been paid for but which may face challenges in being imported. Industry sources say that products which may see shortages include school uniforms. Another problem is that fashion products have a shelf life, and therefore products cannot be stored. "We're left with an environment which is not predictable or stable," said Mr Hannon. Clement's letter, which was also sent to EU Commission vice-president Guenter Verheugen, said the only workable solution was to allow companies to honour all old contracts even if they breached the new quotas. One Irish fashion company, Libra Design, which has been working with Chinese companies for 15 years, says it may face problems in fulfilling orders which it has recently filed from hundreds of customers. The company sources fine beaded products and silks from China, and supplies companies in Ireland, Britain, Europe and Russia. Brian Beggan, co-managing director of Libra, said that he has just finished taking orders for the spring/summer season 2006, which he needs to get by the end of 2005. However, he is now unsure how he will get 200,000 to 300,000 garments delivered to Ireland, 50pc of which are destined for outside of the EU. He said that the EU has "now suddenly closed the door after the horse has bolted". "The consumer is now being hung out to dry because some European bureaucratic decision has been made by people who don't understand the basic industry," said Mr Beggan. He said that Ireland has become a re-exporting base for the clothing industry. He said that his company was a small player in Europe but that several Irish companies were facing problems
Trade Credit Brokers
Registered in the Republic of Ireland No.199439
Office: 36 Fitzwilliam Street Upper, Dublin 2, Ireland
Tel: +353 1 678 9930 | Fax: +353 1 678 9941
Email: mail@tcbrokers.com
A member of IFG Group Plc
Trade Credit Brokers Limited is Authorised and Regulated by the Financial Regulator