“The Belt and Road” Initiative has received extensive attention and caused intensive resonance in the worldwide scope. However, in “The Belt and Road” Initiative, Central and Eastern Europe has an important status.
In September, China Textile Go Global Union and CCPIT TEX organized China textile and garment entrepreneur representatives to go into Hungary and Romania to investigate the textile and garment industries as well as the investment environments of the two countries.
The manufacturing and logistics center of Europe - Hungary
A few days ago, the delegation of China National Textile and Apparel Council visited and discussed with Dr. Livia Kokas Palicska - the president of AHLI and vice president of TMTE. Kokas expressed warm welcome to the delegation. In the discussion period, Kokas introduced the histories and recent developments of the textile and garment industry of Hungary. He still mentioned that the present Europe is also quite approved with the quality of the textile and garment in China. Moreover, he shared the dynamic conditions of the textile industries in other European countries.
Hungary is seated in the center of Europe. It is bordered with seven countries. It covers a national territorial area of 9,300 km2 and has a population of 9,856,000. It has superior geographical location, outstanding regional strength, improved fundamental facilities and high labor cost effectiveness. All these factors decide its status as the manufacturing base and logistics distribution center in Europe. It is an important pivot for Chinese enterprises to lever the European market and a bridge to connect the eastern and western markets. In The Belt and Road Forum for International Cooperation in May this year, Hungary established the overall strategic partner relationship with China.
Hungary has possessed rather complete and high level of textile industrial system in the socialism period. However, as the Fall of Communism in the 80s of the last century, its textile industry decreased rapidly and the traditional market is lost. A majority of the state enterprises went into liquidation and were replaced by numerous middle and small-sized enterprises. At present, Hungary has about 1,340 national registered textile companies. There are only 7 large-scale enterprises with over 250 people. Among the 2,093 garment companies, there are only 12 large-scale enterprises with over 250 people. In 2016, the total out-put value of the textile industry was Euro 360 million, in which the export occupied Euro 285 million. The total out-put value of the garment industry was Euro 320 million, in which the export occupied Euro 202 million.
Afterwards, the secretary general of China Textile Go Global Union and vice president of CCPIT TEX - Lin Yunfeng stated the development state, confronted challenge, pressure and development opportunity of the Chinese textile and garment industry to president KOKAS. Mr. Lin also invited president KOKAS sincerely to lead Hungary textile and garment enterprises to visit the exhibition to communicate in the joint exhibition period in the joint exhibition period in the March of the next year. He also expressed that he would like to introduce the best textile and garment education organizations in China to president KOKAS, so as to promote the development of the related industries of the two countries from the aspect of talent cultivation.
As the logistics center in Europe, Hungary has the first national overseas economy and trade zone of China in European countries. CEO of CECZ - Wu Jiang introduced the construction and operation conditions of CECZ. The logistics park is the commercial and logistical service-oriented comprehensive park deployed by China’s Ministry of Commerce in united according to the development model of “one district and several parks”. Its planned total investment is Euro 265 million and it has an opening area of 12,660,000 m2. Its logistics can reach the districts with the most intensive population(almost 240 million) and highest purchasing power in Europe.
The Xiang-Europe and Central Europe expresses launched in May, 27th, 2017 with one shuttle every week (Changsha-budapest express) opened up the new way from China to European Union. They have become the new portal of China commodities to enter into European Union. In addition, they converged with COSCO Piraeus rail express in budapest. The land and sea Silk Road has formed the enclosed loop. Hungary is not only the logistics center of the European trade. It can also be said as the spring board for domestic enterprises to enter into the eastern and western markets.
The delegation learned from the investigation that the textile industry in Hungary has week basis. Most of the yarns, fabrics and accessories are imported from foreign countries. As to the textile upstream enterprises in China, it is also a good cooperation opportunity. Hungary has outstanding regional strength. It covers the European market with the population of 500 million and has become the logistics center of Europe. Hungary has stable political situation, high mutual trust and it is friendly to China. It is the first European country to step into “The Belt and Road”. Its compiled “eastward openness” economic and diplomatic strategy has put forward a series of preferential policies for the foreign investors. Overseas enterprises can utilize CECZ, Xiang-Europe express railway and rail express to open the Central and Eastern Europe, so as to explore the Western European market gradually.
Tailoring workshop in Europe - Romania
In Romania, CNTAC delegation had a deep understanding to this important Eastern European Country along “The Belt and Road”. The textile and garment industry is the traditional pillar industry in Romania. It takes an important status in its national economy and foreign trade. Romania is also an important market for Chinese textile and clothing to be exported and a distributing center of the Eastern European area. At present, it has about 6,096 textile and garment enterprises throughout the country, with an employed population of 190,381. In both enterprise quantity and employed population, the percentages of the textile category are less than 20%. Romania has a rather good garment processing foundation and advanced technical level. 85% of the enterprises produce clothes in the format of accepting customers’ materials for processing. 91% of the products are exported to EU. Its main product is the straitjacket and women’s jacket (smock).
The president of FEPAIUS - Mr. Mihai Pasculescu and vice president Mrs. Elena Stoica had discussion with the delegation of CNTAC. As a big garment processing country in the East Europe, Romania has the characteristics of fast sample making, high product standard, small order quantity and quick delivery time and so on. Meanwhile, it also has some disadvantages, for example, its major format is accepting the customers’ materials for processing, so that its design capability is limited and the technical workers are deficient and so on.
Because Romania has weak textile industry, it has to import yarns and accessories from abroad. If the processing transition ratio in Romania reaches over 51%, it can be regarded to be manufactured by Romania itself. Product entering into EU market and the countries with free trade agreement with EU enjoy taxation and quota free. Therefore, the Chinese textile upstream enterprises and garment enterprises in Romania have great cooperation opportunities.
Mr. Mihai Pasculescu also mentioned that he expected Chinese enterprises to establish fabric processing plants in the free trade ports of Romania, so as to enjoy the positive political support of the Romania government. In addition, the northern Romania has wet land, which is extremely suitable to plant flax and cannabis sativa. The Chinese enterprises are welcome to plant and explore the production line of bast fibre plants.
The secretary general of China Textile Go Global Union and vice chairman of CCPIT TEX - Lin Yunfeng expressed that the textile industries of China and Romania have a certain complementarity and wide cooperation prospect. He further pointed out two detailed cooperative suggestion: the first is the trade cooperation, suggesting to pay close attention to Texworld exhibition and Intertextile Shanghai; the second is the investment promotion, suggesting to provide the detailed conditions and policies of establishing plants in the free trade port. It utilizes the website and WeChat Official Account and other platforms of China Textile Go Global Union to propagandize, so as to attract the interested enterprises to concentrate. In addition, China has already very matured experience to the China-hemp planting and product development, so it can provide cooperative opportunities.
Afterwards, the delegation visited a French knitting enterprise situated in Bucharest, which was established in 1998. Its main products include the pullover, skirt, pants and uniform of the French soldiers. Although the enterprise has only over 30 employees, the products are of very high quality. All of its products are exported to the European countries, especially the markets in France and Germany. In visiting the tailoring workshop, when it is informed that the yarns are coming from Italy, the entrepreneurs keep on praising. Such a small enterprise would use the yarns from Italy. The sensitive entrepreneurs of the delegation smell the business opportunity.
With the support and arrangement of the Chinese commercial office residing in Romania, Counsellor Guan Gang was present and he visited Romania Investment Bureau with the delegation. The director-general of Romania Business Environment, Trade and Entrepreneurship Foreign Investment Bureau - Sorin Vasilescu introduced the investment advantages of Romania: it is situated in the Eastern Europe. It has a population of 20 million. It is the second biggest market in the central Europe, radiating to the consumption market of 500 million population in EU. In 2015, its GDP growth rate was 5.7%, which was ranked front in EU. The fixed enterprise tax rate was 16%; the reinvestment profit tax was 0%, which was extremely low in EU countries. In 2016, its added-value tax was 20%, the dividend tax was 5%. In 2018, it will be reduced into 19% and 0%. Its natural resource is quite rich. It has fertile land, including the petroleum, natural gas, coal, gold and so on. In addition, its labor cost is quite competitive. Its industrial base installation has good development. It possesses Constantsa port-the biggest and deepest port of the Black sea, thus enjoying convenient waterway transport.
As to the cooperation, the garment processing industry in Romania is quite powerful. In addition, China has the complete industrial chain. It has the outstanding spinning, weaving and other bases and technologies of the textile industry. The two countries have supplementary advantages, so as to possess great cooperation space.
Through this visit, Romania Textile and Garment Industrial Association has decided to organize its membership enterprises to visit the exhibition in Shanghai in the spring joint exhibition period in March of the following year. It is also intended to hold the Romania investment illustration meeting in this period.