"The bigger our capacity is, the sharper our competitive edge becomes," Zhang Baomin, Chairman of the Supervisory Board of Xinjiang Tianye Co. Ltd., told Beijing Review. The company is a Shanghai-listed arm of the parent group.
Zhang added that the company is taking advantage of falling commodity prices to secure resource supplies, and is also building its own logistics center to smooth the way for more westward exports.
A bumper harvest
Despite gale-force winds and unbearable summer heat, Xinjiang has turned a stretch of wild desert into a vital oasis with tufts of quality cotton and seedless grapes. The cotton industry, in particular, has picked up steam due to its weighty significance-it serves as the lifeline of numerous local farmers and provides more than 30 percent of the material that feeds the growing number of textile mills across the country.
The bumper cotton output has largely been attributed to good weather conditions and improved water-saving irrigation techniques to combat yearlong droughts. Meanwhile, farmers are also highly motivated to boost yield, as the government has been buying cotton in massive quantities to shore up prices since late last year. As part of its revitalization program for the textile industry, the Chinese Government has even declared its ambition to build a textile production base in the region. But the endeavor will obviously be a bumpy ride given the depth of local industrial woes amid the economic slowdown.
The freefall in demand has dragged down textile prices and left many manufacturers on the hook for losses, said Huang Chunyi, Vice General Manager of Xinjiang Tiansheng Industry Co., one of the largest textile producers in the region. It is engaged in processing cotton into yarn and clothing for a variety of garments.
To offset the deepening downturn, the company is betting on high-quality fibers sought for use in high-end fashion apparel. It has improved the cotton varieties it uses and introduced advanced equipment to churn out better quality and higher value-added products in terms of fiber length, strength and fineness. Moreover, it has opened five new branches in foreign countries including France and Brazil to target an increasingly fashion-conscious overseas market.
"What's most critical for us is ensuring quality amid fierce competition," said Huang. "Although overcapacity has been an acute concern in the sector, the top end of the market is still far from being saturated."
Huang said that future trends in the sector would be driven by the extent to which domestic manufacturers learn to upgrade and market their products. Businesses have to strengthen themselves so as to better prepare themselves for growth when the economic climate warms up, he added.
Quick Facts About Xinjiang (2008)
Population: 21.3 million
Area: 1.66 million square km
GDP: 420.341 billion yuan ($61.49 billion)
Investment in fixed assets: 231.4 billion yuan ($33.86 billion)
Retail sales of consumer goods: 102.57 billion yuan ($15 billion)
Output of crude oil: 27.15 million tons
Output of natural gas: 23.6 billion cubic meters
Output of cotton: 3.016 million tons
Per-capita disposable income of urban residents: 11,432 yuan ($1,673)
Per-capita net income of rural residents: 3,503 yuan ($513)
Urban registered unemployment rate: 3.7 percent
Source: Statistical Communiqué of the Xinjiang Uygur Autonomous Region on 2008 Regional Economic and Social Development
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