Economic Integration

Seven official sectors related to the cotton market, including the influential National Development and Reform Commission (NDRC) and the Ministry of Agriculture (MOA), have jointly published a notice this week requesting their regional branches to take measures to stabilize the cotton market, Liverpool-based Cotlook Ltd. reports in its November 5 issue of Cotton Outlook (subscription required). 

Cotlook says the notice identifies areas of concern, including a perceived relaxation of quality management and the influence of speculative activities on prices. 

The recommended measures include the following: strengthened market supervision (cracking down on illegal purchasing without license, for instance), increased quality controls, quicker railway deliveries of Xinjiang cotton, increased financial credit management and strengthened information services and market guidance. 

Although the notice does not provide new, specific steps, it underlines the depth of concern in official circles. What detailed measures the government will take in the coming weeks remains a matter of conjecture, Cotlook said.

Questions:  Do the recommended measures provide a reasonable opportunity to stabilize cotton prices?  Why or why not?

What other steps could be taken to accomplish the goal?

Is there a threat to the broader economic stability of the country over the longer term if an attempt is not made at market stabilization?

A detailed report from Mr. Paul Cochrane at just-style.com (subscription required), suggests an impressive recovery for Turkey’s clothing and textile industries this year.

The following is an excerpt from Mr. Cochrane’s report:

Turkey's clothing and textile sector has rebounded this year on the back of strong sales to Europe and emerging markets, with clothing exports up 11% to US$9.5bn as of August 2010, and textile exports reaching US$4.1bn, up 23% on 2009.

"Last year was a disastrous year, with clothing exports down 23%. This year we're recovering, exports are up, but 17% below 2008 and 10% below 2007," said Mehmet Kumbaraci, director general of the Turkish Clothing Manufacturers Association (TGSD).

Current export figures suggest the TGSD's forecasts for 2010 were relatively solid, with ready-to-wear exports projected at around US$14bn and textile exports at US$6bn. Their predictions, however, had looked rather rose-tinted in the spring.

"We were rather pessimistic at the beginning of the year, but textile exports in August were US$480m, up 10% on the previous month, and US$1.1bn in clothing exports, up 6% on July. I expect for the end of the year exports will be more than US$14bn for clothing, and about US$6bn for textiles.

"All plants are fully occupied, including high quality orders from suppliers in Pakistan, Bangladesh and China," said Kumbaraci. Demand ranges across the industry for all types of garments, he added, with no notably higher demand for any specific items.

Turkey was the only 'top 20' exporter to the European Union (EU) to record gains in the first five months of 2010, up 18.5% in Euro earnings between January and May. The other 19 main exporting countries - including China and India - have seen exports fall, stressed Zafer Çaglayan, Turkey's state minister for foreign commerce, at the launch of Istanbul Fashion Week 2010 in late August. 

The TGSD's long-term goal is for Turkey to account for 5% of global clothing exports - as in 2005 - at some US$22.5bn to US$25.3bn by 2014, and US$60bn by 2023.

Questions:  Should Turkey be considered on the path of long-term recovery in its clothing and textile sectors?

What are some positive factors that will help ensure steady improvement?

Are there any foreseeable impediments to recovery?