Friday, July 30, 2010

Kalero (flash-back: Chinese company to increase domestic cotton production, consumption

A chinese company, Integrated Cotton and Textile Manufacturers, has already started ground work aimed at improving proceeds farmers earn on cotton products in Balaka, a development that will help increase domestic consumption of Malawian products.
Industry and Trade Minister, Henry Mussa, said in an interview the company was one of the many that recently visited the country to explore investment opportunities, in line with government's goal to improve the number of industries.
Mussa said the coming in of foreign direct investors spelled the beginning of good prospects for Malawi, as most people would now get employed, apart from increasing the number of textile and garment products manufactured in the country.
"Right now, officials from the Chinese textile and garments company are on the ground in Balaka district, and it is hoped that by the end of this year they will have brought all the equipment necessary to scale up their activities and bring tremendous improvements as far as the cotton industry is concerned,"said Mussa.
The minister lamented current trends, where the country exports raw products- a development that translates into low returns for the local grower while those who add value on the products elsewhere reap more profits.
"That is why we need more industries like this, inorder to transform the economy and bring about change. The good thing is that we have held a lot of fora on the issue of investment with foreign investors from Chana (Mainland), Britain, and even those from Asia. The idea is to transform this country by scaling up industrialisation," he said.
While the coming in of Chinese companies may be good for Malawi, other countries have complained about the influx of Chinese products as
Garment companies working in China are, for instance, making their own thread now, which they are exporting, thus increasing global competition.

Even the regional giant, South Africa, has not been spared, as the country's employment opportunities in the textile industry dropped from 70, 000 in 2003 to about 50, 000 in 2007. This came against increased cheap imports from Asia.
Yarn imports rose from 77, 000 in 2001 to over 100, 000 tonnes last year, though the truly alarming increase that fretted South African textile makers was the 600 per cent rise in imported textiles- up from about 5000 tonnes in 2001, to about 30, 000 tonnes in 2007.
This comes at a time when China's impact on the region's inputs is being felt, though local manufacturers like Mapeto DWSM offer outlets for locally produced materials.
Regional textile trade is facilitated by the Southern African Development community (SADC) Free Trade Agreement, whose goal is to create a unified 'borderless' trading bloc for member states.
Malawi's neighbour, Mozambique, with its reviving economy at the north-eastern part of Maputo Corridor, has been putting in place initiatives aimed at garnering a share of the region's textile business. One big encumbrance, though, is that cotton production last year yielded only a forth of raw materials required by the country's ginning mills, a development that saw cotton being sourced from South Africa and Malawi, among others.
Cotton yields were 90, 000 tonnes in 2007, down from a record 122, 000 tonnes in 2006. Bad weather- droughty conditions in some growing areas but too much rainfall in other places- was blamed for the drop. Mozambican ginning mills require 400, 000 tonnes of cotton for their operations, a trend that necessitates measures to address the influx of cheap products from Asia if the region is to make any in roads into the textile market.
This has prompted South Africa to start addressing the influx of Chinese textiles through the introduction of a quota system. A China Restraint Agreement was introduced by government in January last year. It also covers such areas as firefighter gear and specialised sporting gear.
However, while conditions get tougher opportunities exist for fabrics for industrial applications globally, a market that has a growth rate of approximately 3 to 4 per cent per annum- which is far above the 1.5 per cent annual growth for conventional fabrics.

Malawi, however, is in dire need of industries, following the closing shop of most industrial players over the past ten years, a development trade experts blame on unfavourable policies and privatisation during the previous administration. However, David Whitehead and Sons Malawi Limited, a textile and garments manufacturer, has proved these assertions wrong as it continues to do better on the market, years after being privatised.

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