MISSING PIECES Shaoxing & Surat – Textile capitals of China & India
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Lessons to learn
haoxing is a prefecture-level city in the northeastern Zhejiang province and is home to five million Chinese. Located on the south bank of the Qiantang River estuary, it borders Ningbo to the East, Taizhou to the Southeast, Jinhua to the Southwest, and Hangzhou to the West. The name comes from the Shaoxing reign of Emperor Gaozong of Song, and is a poetic term meaning “continuing prosperity�. Shaoxing has long been a center of Chinese cultural activity, producing such luminary figures as Wang Xizhi, Zhou Enlai, Lu Xun, and CaiYuanpei. It is widely known throughout China for polyester textiles, Shaoxing wine, Meigancai, and tofu. Its local variety of Chinese opera, Shaoxing opera, sung in the local dialect,has huge popularity, coming only next to Peking opera. In the year 2010, Shaoxing celebrated the 2500-year anniversary of the founding of the city. Economically, the city is driven by the manufacturing of textiles, electronics, and energy efficient lighting. Zhejiang has the fifth highest per capita GDP in the nation, with the city itself being ranked32nd nationally in terms of GDP per capita. Surat, previously known as Suryapur, is a city in the Indian state of Gujarat. It is also the administrative capital of the Surat district. The city is situated on the left bank of the Tapti River (Tapi).Surat is Gujarat’s second largest city, and India’s eighth most populated city with a population of 4.5 million. The city registered an annualized GDP growth rate of 11.5 per cent over the fiscal years between 2001 and 2010.
A moat divides the older parts of the city, with its narrow streets and handsome houses, fromthe newer suburbs. The city is largely recognized for its textile and diamond businesses. It is also known as the textile capital/Manchester/ textile city of India.Surat is known for producing world-class synthetic textiles. Surat produces r 40 per cent of the nation’s total man-made fabric production, r 28 per cent of the nation’s total man-made fibre production r 18 per cent of the nation’s total man-made fibre export and r 12 per cent of the nation’s total fabric production. Surat city is one of the fastest growing cities in the world. It is interesting to look at the SWOT of Surat textile cluster: STRENGTHS 1. Abundant raw material 2. ow cost skilled labor 3. Presence across the value chain 4. Growing domestic market 5. Strong backward integration 6. Recent government efforts to promote the industry through a textile policy. 7. Truly vertically integrated from raw material to ÀQLVKHG SURGXFWV 6WHDGLO\ GLYHUVLÀHG LWV UDZ PDWHULDO EDVH WR LQFOXGH PDQ PDGH ÀEUHV VXFK DV 3RO\HVWHU YLVFRVH DFU\OLF SRO\SURS\OHQH HWF DV ZHOO DV RWKHU QDWXUDO ÀEUHV 9. Flexible in terms of production quantity and lead time. WEAKNESS 1. Fragmented industry 2. Lower productivity and cost competitiveness 3. Tech obsolescence. 4. Caters mainly to the low & middle end class. 5. Low level of training. 6. The export-import policy of India changes too IUHTXHQWO\ GXH WR ZKLFK LW EHFRPHV YHU\ GLIÀFXOW IRU importers to import goods.
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7. Delay in delivering the goods at the right time. 8. Lack of economies of scale and advance processing capabilities. OPPORTUNITIES 1. Huge demand for value added goods all over India & in all major countries. 2. Relocation from high cost economies. 3. Large and relatively untapped domestic market in villages 4. Large Indian Expatriate community resulting in a large demand for Indiangarments. 5. Bilateral Agreements on Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes on income and capital have further opened the Opportunity for higher export for the garment sector. 6. Extensive commercial interactions have greatly helped in laying the foundation for competitive environment. THREATS 1. Competitive imports from China /DERU VKRUWDJH DV PRVW ODERU FRPHV IURP RXWVLGH SDUWLFXODUO\ IURP VWDWHV OLNH 83 %LKDU HWF 3. Cost competitiveness may be lost in the next few years.
There are interesting similarities between the Shaoxing&Surat textile clusters. Both have adopted the route of marketing infrastructure i.e. the soft intervention for sustaining competition. While Shaoxing has been successful in building clusters like China Light & Textile industries city, Surat has built severaltextile markets with almost 60,000 companies operating out of these textile markets, serving not only the entire country but also the international markets. The China Light & Textile industries Citymarketplace is a three-star model business marketplace in the province. The textile city abounds in famous brands of products from both home and abroad. The business revenue amounted to 24 billion yuan in 2010 and this record markedit as the second largest marketplace amongChina’s top 100 professional marketplaces that year. It is now the largest distribution center of textile products in China and Asia, boasting of the largest-scale facilities and the most complete range of products. In order to enhance the marketplace’s grade, the county government put forward an overall plan for the second all-out development of the China Light & Textile Industries City. The administration concentrated on the cultural buildup of the marketplace and carried out a “Year of Management� project to facilitate the overall new endeavors. Firstly, it started a fame program to establish and maintain the marketplace’s name by applying to the state administration of industry and commerce for 90 trademarks. Secondly, the administration made efforts to accelerate the normal work of the center and make the center play a bigger role. The administration also September 2013 ƒ India-China Chronicle |63|
started a program to study ways to protect fabric designs. As a result of the research, China Light & Textile Industries City Office for Registration and Protection of Fabric Design was established and 140 designs applied for copyright protection in 2010. The branch administration of industry and commerce at the City is responsible for keeping business order at the marketplace. The administration has an office on the spot to arbitrate and solve business disputes. The marketplace is equipped with fire engines. Security checks and inspections are carried out regularly in key areas. Cameras monitor the market 24/7. Smoking is banned in the market. The marketplace also checks to see if there are hidden troubles likepotential fire disasters and fire control drills are often carried out. These measures have effectively protected the marketplace from fires disasters. In 2010, 165 new companies registered respectively with the West, East, Central and North trading zones of the City. 1450 disputes concerning quantity shortages, sham goods, and contracts were heard and solved. These efforts kept the market in good order. The textile industry in Surat is mainly engaged in the activities of yarn production, weaving, processing as well as embroidery. Nearly 30 million metres of raw fabric and 25 million metres of processed fabric are produced in Surat daily. The city has several textile markets that exist since times immemorial. Zampa Bazaar, Bombay Market, JJ Textile Market and Jash Market are among them. Katar Gam, Magdalla and Udhana are the areas of Surat where manufacturing is mainly concentrated. In the course of time, people from various other places like Rajasthan and Kolkata have settled in Surat in order to carry out their textile business. The famous brands of Garden and Vimal textiles evolved from Surat. A few other brands like Parag and Prafful from Surat did become famous for a short time, but failed to create a lasting impression in the market. One of the main reasons behind the growth of textile industry in Surat is the peoples’ ability to adapt to changes |64| India-China Chronicle September 2013
and the latest trends. The city is quick to respond to any changes in the preferences of people. The industrialists here have strong entrepreneurial skills. In Surat Textile Market,Federation Of Surat Textile Traders Association (FOSTTA) is an association of Textile Processing units of Surat Textile Market. There are around 60,000 unitsand 160 markets associated with FOSTTA. FOSTTA addresses common concerns of these units and takes care of presentations and representations to several Ministries, Government Departments, Semi Government Institutions and Private Companieson their behalf. FOSTTA is thus a common platform for all the processing units of thearea for constructive interaction and mutually beneficial policy making. During a recent visit to both Shaoxing & Surat, the author was able to see the similarities & differences of the cities starkly. While international buyers throng the markets in Shaoxing, Surat sees very few international buyers. One reason for this is the infrastructure. While the infrastructure of Surat has improved over time Shaoxing’s infrastructure in terms of roads, electricity, traffic management, water management, exhibition centre, airport, railways, schools, universities, medical facilities, cleanliness, quality of life etc. is much higher than Surat due to the fact that a part of Shaoxing city was planned over a long period of time to be the textile capital of China whereas Surat grew without a plan & on its own, based on the model of the entrepreneur being the centre of Indian economy rather than the government as in the case of China.
JAGAT SHAH The writer is Chairman, India China Economic & Cultural Council (ICEC), Gujarat
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