Contents 1. Global Textile Industry

2. Taiwan Textile Industry 3. A Strategy for Product Differentiation 4. Ways to Enter Free Trade Markets 5. Relations between Taiwan and the U.S.A.

2

1. Global Textile Industry (1) Trade in Textile & Clothing of the world, 1995-2011 450 400

(Billion USD)

350 300

Textile In 2011 the world trade amount recorded of US$17.2 trillion, with US$706 billion in textile and clothing industries, with a growth rate of 17%, which reveal the importance of the two industries. The global textile trade amounted to US$294 billion and US$412 billion for apparel trade.

250

Clothing

412

362

352

345 316

311 276

294 258

200

182 158

186

186

199

195

233

203

238 219

164

195

203

251

250 211

173

150 152

151

158

151

148

155

147

154

100 50

 During the past ten years, the average growth rate of world Trade in Textile & Clothing accounted for 9.0% and 10.3%.

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source：WTO，2012.10

3

1. Global Textile Industry (2) Top 15 Largest Textile Exporters, 2011 100

94.4

In 2011 the global trade of textile industry amounted to US$294 billion, with a growth rate of 17.1%. Taiwan was the 7th biggest country with export amount of US$11.0 billion.

90 80 (Billion USD)

70 60 50 40 30

23.7

20

15.0

13.8

12.4

11.3

11.0

10.8

4.8

4.1

3.8

2.1

2.0

Thailand

Viet Nam

Mexico

Malaysia

8.0 Japan

Pakistan

Turkey

Source：WTO，2012.10

Taiwan

HK

Korea-South

USA

India

Extra-EU27

China

0

9.1

Indonesia

10

4

1. Global Textile Industry (3) Top 15 Largest Textile Importers, 2011 35

By aggregating the importing value of textile of China and Hong Kong, China is the 2nd biggest textile importing country. Taiwan was the 29th biggest textile importing country with importing amount of US$1.4 billion.

31.2

30 25.4

(Billion USD)

25 18.9

20 15

11.0 9.2

10

8.7

7.6 5.9

5.7

5.7

5.6

5

4.5

4.3

3.8

3.4 1.4

0 Taiwan29

India

Russian

Brazil

Canada

Bangladesh

Indonesia

Korea-South

Mexico

Turkey

VietNam

Japan

HK

China

USA

Extra-EU27

Source：WTO，2012.10

5

1. Global Textile Industry (4) Top 15 Largest Clothing Exporters, 2011 160

153.8

In 2011 the global trade of clothing industry amounted to US$412 billion, with a growth rate of 17.0%. China remained the biggest apparel exporting country with export amount of US$153.8 billion, accounting for over one third of the global apparel trade.

140

(Billion USD)

120 100 80 60 40

28.0

24.5

20

19.9

14.4

13.9

13.2

5.2

4.6

4.6

4.6

4.5

4.2

4.1

1.0

USA

Mexico

Malaysia

Thailand

Pakistan

SriLanka

Cambodia

Taiwan30

8.0

0 Indonesia

VietNam

Turkey

India

Bangladesh

HK

Extra-EU27

China

Source：WTO，2012.10

6

1. Global Textile Industry (5) Top 15 Largest Clothing Importers, 2011 120

The E.U., U.S. and Japan were the three major leading apparel importing countries with aggregated import amount of US$222.4 billion, accounting for 54% of global apparel market. Taiwan imported apparel worth of US$1.5 billion and is the 20th leading apparel importing country.

100.9

100

(Billion USD)

88.6

80

60

40

32.9 17.2

20

5.8

4.0

3.3

3.2

2.9

2.8

2.7

1.5

United-Arab

Norway

Saudi-Arabia

Mexico

Taiwan20

6.1

Turkey

6.1

China

7.6

Australia

9.5

0 Korea-South

Switzerland

Russian

Canada

HK

Japan

USA

Extra-EU27

Source：WTO，2012.10

7

1. Global Textile Industry (6) Total Output of Fiber (2006~2012) (million tons)

Year

Fiber

Chemical Fiber

Natural Fiber

Total

Sub-Total Synthetic Artificial

Cotton

Wool

Silk

2006

65.84

37.81

35.10

2.70

26.64

1.23

0.16

2007

68.73

41.31

38.24

3.07

26.03

1.22

0.17

2008

64.23

39.49

36.77

2.72

23.40

1.19

0.15

2009

64.65

41.51

38.55

2.96

21.90

1.10

0.14

2010

72.51

46.36

43.15

3.21

24.87

1.13

0.15

2011

78.16

49.62

45.97

3.65

27.28

1.10

0.15

2012

79.37

52.03

48.00

4.04

26.08

1.11

0.15

12'/11‘ growth rate

1.5%

4.9%

4.4%

10.6%

-4.4%

0.3%

0.0%

Proportion

100.0%

65.6%

60.5%

5.1%

32.9%

1.4%

0.2%

Source：Japan Chemical Fibers Association (JCFA)，2013.01

8

1. Global Textile Industry (7) The World's Major Chemical Fiber Production Region

(Year 2012、million tons、%)

Region Global China ASEAN India EU Taiwan USA South Korea Japan

Volume 12'/11' % Volume 12'/11' % Volume 12'/11' % Volume 12'/11' % Volume 12'/11' % Volume 12'/11' % Volume 12'/11' % Volume 12'/11' % Volume 12'/11' %

PF 26.81 6.2 20.76 8.5 1.35 1.8 1.40 0.6 0.34 -17.8 0.94 -9.5 0.57 11.7 0.79 3.3 0.17 -7.6

Synthetic Polyester Nylon PS Sub-total NF+NS 14.79 41.59 4.03 5.7 6.8 6.5 9.57 30.33 1.89 8.5 9.3 18.5 0.89 2.24 0.12 -6.8 4.7 6.5 0.89 2.29 0.10 3.9 2.7 9.2 0.54 0.88 0.35 1.2 -5.1 -11.5 0.56 1.50 0.34 0.7 -7.4 -0.2 0.64 1.21 0.56 10.1 9.7 -4.9 0.53 1.31 0.14 -1.1 2.3 0.0 0.15 0.32 0.10 -3.6 -5.4 3.1

Artificial Acrylic ANS 2.04 -0.6 0.70 0.7 0.13 4.2 0.08 -2.2 0.61 3.1 0.07 -26.9 0.00 0.0 0.05 2.0 0.14 -7.8

total

RF+RS

48.00 4.4 34.00 10.6 2.48 -1.1 2.47 2.0 1.90 -4.9 1.93 -5.9 1.91 4.9 1.52 1.4 0.69 -4.9

Source：Japan Chemical Fibers Association (JCFA)，2013.01

4.04 10.6 2.46 19.0 0.58 4.2 0.35 -6.0 0.45 2.9 0.10 18.8 0.03 -0.3 0.00 -3.7 0.06 -0.2

Chemical Global Fiber Share 52.03 4.9 36.46 11.1 3.06 -0.2 2.82 0.9 2.35 -3.5 2.03 -4.9 1.93 4.8 1.53 1.4 0.75 -4.5

100.0 70.1 5.9

5.4 4.5 3.9 3.7 2.9 1.4 9

2. Taiwan Textile Industry (1)Supply Chain of Taiwan Textile Industry Fiber Industry Spinning Industry Fabric Industry Textile Printing Industry Dyeing & Finishing

Made-up Textile Articles

Man-made Fiber(Polyester, Nylon, Rayon, Acrylic , and Texture-yarns) Natural Fiber(Cotton, Wool, Silk, linen) Cotton Yarn, Wool Yarn, Man-made Fiber Yarn , Blended Yarn, Texture Yarn Weaving Fabric, Knitting Fabric, Nonwoven Fabric, Special Fabric

Printing, Dyeing, Finishing (Impregnated, Coated, Covered, Lamination ) Industry Textiles Oekotech, Buildtech, Indutech, Medtech, Protech, Geotech, Mobiltech, Sporttech Household Textile Bedspreads, Furniture Covering(Table Linen, Couch Cover Fabric), Interior Blinds( Curtain, Tapestries), Towel

Clothing Textile

Apparel •Garment (Knitting Garment, Weaving Garment, Sweater) Industry

•Accessories (Hosiery, Headgear, Ties , Scarves and the like) Source：Taiwan Textile Federation

Taiwan Textile Industry Association • Man-Made Fiber

Up stream

• • • • •

Mid stream

• • • • •

Down stream

• • • • • • • • •

Spinners’ Wool Textile Weaving Silk & Filament Weaving Printing Dyeing & Finishing for Filament Printing Dyeing & Finishing for Staple Towel Carpet & Blanket Nonwoven Fabric Knitting Garment Sweater TEPZ Garment Hosiery Glove Headgear Bags Fishing Gear Medical & Biotech

10

2. Taiwan Textile Industry (2) Fiber Usage in Taiwan Textile Industry (1,000 tons)

Natural Fiber Year

Cotton Volume

Chemical Fiber

Wool , Silk…

Use %

Volume

Total

Use %

Volume

Use %

2006

297

16.4

18

1

1,497

82.6

1,812

2007

261

14.1

17

1

1,569

84.9

1,847

2008

220

14.4

13

0.8

1,297

84.8

1,530

2009

212

14.8

10

0.7

1,212

84.5

1,434

2010

238

14.1

11

0.6

1,446

85.3

1,695

2011

205

13.1

14

0.9

1,348

86.0

1,567

Proportion

14%

86%

100%

Source：Taiwan Man Made Fiber Industries Association 2012.05。 11

2. Taiwan Textile Industry (3) Taiwan textile industry's production value, manufacturers number and the employees Textile industry's production value, manufacturer number and the employees all reveal a decline phenomenon in the past 12 years. 1. The production value of textile in Taiwan was NT$460 billion in 2012, down 13% from NT$528.9 billion in 2001. 2. The manufacturers in 2012 were 4,375 units, down 21% from 5,507units in 2001. 3. There was a decline in employment from the number of 212,597 in 2001 to 147,121 in 2012, down 31%. 4. Considering from the average productivity by each employee, the average production value was grown from NT$2.49 million in 2001 to NT$3.13 million in 2012, with a growth rate of 26%. Taiwan's textile industry upgrading gradually from laborintensive to technology-intensive and transformed into capital-intensive.

2001

2006

2012(f)

2001

Production value (NT$ billion )

2006

2012(f)

2001

Manufacturers (units)

2006

2012(f)

employment

Textile

461.8

458.8

436.5

4,030

3,519

3,125

158,267

123,953

115,396

Clothing

67.1

40.9

23.5

1,477

1,203

1,169

54,330

36,249

31,725

Total

528.9

499.7

460.0

5,507

4,722

4,375

212,597

160,202

147,121

Sources: Directorate General of Budget, Accounting and Statistics, Executive Yuan (employees)、 Dept. of Statistics, MOEA (production value) (for year 2012, 1US$=29.614NT$)

12

2. Taiwan Textile Industry (4) Textile Export Proportion & Major Markets on 1-12, 2012 Product

Volume(1,000 tons) 2011

2012

Value(million US$)

±%

2011

2012

±%

Share %

1.Fiber

569.6

603.1

5.9

1,329.6

1,186.1 -10.8

10.0

2.Yarn

751.0

722.4

-3.8

2,532.6

2,236.8 -11.7

18.9

3.Fabric

989.1

947.9

-4.2

7,638.3

7,239.9

-5.2

61.3

36.9

34.1

-7.6

784.0

750.3

-4.3

6.3

110.6

103.0

-6.9

431.4

406.6

-5.8

3.4

2,457.2

2,410.5

4.Apparel 5.Miscel Total

Region

-1.9 12,715.9 11,819.7

Volume(1,000 tons)

2012

2012

2,457.2

2,410.5

China-HK

726.7

679.9

-6.5

4,265.8

3,706.4 -13.1

31.4

Asean10

710.7

718.3

1.1

3,783.1

3,653.9

-3.4

30.9

NAFTA

165.9

176.0

6.1

1,197.2

1,188.2

-0.8

10.1

EU27

185.8

172.6

-7.1

663.1

573.1 -13.6

4.9

-1.9 12,715.9 11,819.7

±%

Share %

2011

Global

2011

Apparel 6.3% 0.8 Fabric 61.3% 7.2

Miscel 3.4% 0.4 Yarn 18.9% 2.2

Fiber 10.0% 1.2

-7.1 100.0

Value(million US$)

±%

Chart (billion US$、%)

-7.1 100.0

Source：Taiwan Customs Service 2013.02

EU27 4.9% 0.6

NAFTA 10.1% 1.2

Others 22.8% 2.7

ChinaHK 31.4% 3.7 Asean 30.9% 3.7

13

3. A Strategy for Product Differentiation

(1) Germany、Italy and France textile industries are the learning model for Taiwan textile industry The current GDP per capita of Taiwan equals to that of Italy, Germany and France in 2000. The growth path of the three countries in the past 10 years (i.e. year 2000 to 2010) is a learning model for Taiwan textile industry. In the meantime, concentration on branding is one of the ways to develop textile industry chain. Starting from 2000, the apparel industries of Italy, Germany and France were reversed to growing. Their success attributes to design and brand. By seizing the middle and high end market with value-added products, the exports of apparel overpass textile starting from 2003 in France, and 2007 in Germany, and the export difference between apparel and textile was widen year by year. Meanwhile, the textile industry in Italy, Germany and France developed steadily starting from 2000. The major reason was their R&D, innovation and quality surpass those of other countries. The exports of apparel grew in big scale also promoted the growth of textile industry.

100 million US$

300 250 200

French-Apparel French-Textile

Germany-Apparel Germany-Textile

Italy-Apparel Italy-Textile

The export of apparel overpasses textile from 2007 in Germany Italy (19293)

150

Italy (34058 ) Germany (40273)

Germany (23168)

100 50

France (22577)

0

France (40704)

The export of apparel overpasses textile from 2003 in France

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source：WTO，2012

14

3. A Strategy for Product Differentiation (2) The Focus and Trends of Taiwan Textile Industry Comfort, Safety and Health

Functions The new textiles merging Eco-textile Eco-Textile Fashion Functions Fashion • • • •

Stylish Popular Culture Life-style

• • • •

low pollution low energy consumption Recyclable decomposable 15

3. A Strategy for Product Differentiation (2) The Focus and Trends of Taiwan Textile Industry FIFA 2010 at South Africa

16

3. A Strategy for Product Differentiation (3) The Main Elements of Functional Textiles Draping Gorgeous Luster Colorful

LOOK

Antistatic Water Repellent Stain Release Antifungal Far Infrared PERFORMANCE Flame-Resistant

TOUCH

Tender Soft Cool & Warm

Lighting Drying Breathing

COMFORT

Resilience

17

A Certification System to Promote Taiwan Functional Textiles

TAIWAN FUNCTIONAL TEXTILS

Taiwan Textile Research Institute

Standard & Testing Methodology Sub-committee

A Joint Committee

Testing Labs Alliance Sub-committee

Taiwan Textile Federation

Certificate Mark Promotion Sub-committee

18

A Certification System to Promote Taiwan Functional Textiles

As a certification/verification system, “Taiwan Functional Textiles” has been jointly developed by Taiwan Textile Federation and Taiwan Textile Research Institute, and registered as a certificate mark in Taiwan, China, Japan, the US and EU since 2001. There are 18 standards have been developed and introduced to the industry so far.

19

A Certification System to Promote Taiwan Functional Textiles

20

A Certification System to Promote Taiwan Functional Textiles

21

A Certification System to Promote Taiwan Functional Textiles

22

4, A Certification System to Promote Taiwan Functional Textiles Good for the qualityspecified products on a continuous production line.

4, Quality Guarantee Guarantee Certification Certification Mode Mode

Good for the mills who can declare the yielded products be the same quality as its R&D samples.

1, Patter 1, Pattern Patter Certification Certification Mode Mode

Certification Modes 3, Consistent 3, Consistent with with Prototype Prototype Mode Mode

Good for newly developed samples.

2, Batch2, BatchExamination Examination Certification Certification Mode Mode

Good for single batches of quality-specified products.

23

A Certification System to Promote Taiwan Functional Textiles By Nov. 30, 2012, there have 674 functional textiles, submitted by 232 textile mills and apparel makers, approved by the certification system.

http://ttf.ttfapproved.org.tw 24

3. A Strategy for Product Differentiation (4) Three Levels of Eco-textile Corporate Social Responsibility Earth Guardians / Everyone Can Do

CSR

Technology

Energy saving Environmental protection Decomposable

Raw Material Green / Comfortable / Natural

25

3. A Strategy for Product Differentiation (5)To complement the shortage of design and marketing with fast design and sampling center Industry Clusters should be integrated

Market Oriented Fashion Brand Assist industry establishing fast innovation and design capability and enhance competitiveness with fast design and sampling center.

Innovation should be complemented with culture factor Expert in R&D Inadequacy in fashion design Marketing brand shortage

Design-marketing value chain analysis Product Application Product fashion trend planning raw material Design

Pattern Product/Brand/Image Sample Design manufacture

Complement on design and development shortage

Brand promotion

Marketing Access

Complement on marketing shortage 26

4. Ways to Enter Free Trade Markets (1) The Content of the Cross-Strait Cooperation

Closer Cooperation Innovation R&D Design

Accelerate Trade-in-Goods agreement

Normalization and Liberalization in Textile Trade

27

Integrate Certification Systems

Cooperation in Manufacture Supply Chain and Market Access

27

4. Ways to Enter Free Trade Markets (2) the Cross-Strait Cooperation in Certification System -Agreement on Standard, Measurement, Testing and Certificationwas signed in the 4th Jiang-Chen Meeting Promotion of functional textile certification system between the cross-strait

Standard of the cross-strait Regional Standard

Taiwan Textile Federation • Start from 2000 • 18 Certification Standards

Global Standard

China National Textile and Apparel Council (CNTAC) • -Fabrics China- start from 2000 • Include 9 Categories of Functional Testing 28

5. Relations between Taiwan and the U.S.A. (1) Trade of Textile & Apparel between Taiwan & USA There is no progress of liberalization of trade between both sides. Taiwan exports to the U.S. were declining in 2001-2012, while during the same period the U.S. exports to Taiwan remained stagnant. (Million US$) 3,500

400

USA export to Taiwan

3,000 2,500

350

2,161.7

271.4

250.6

1,500

237.5

228.4

2,000

257.0

250

1,883.0

228.0

200

157.1

1,541.7 1,294.9

1,000

300

U.S. exports

Taiwan exports

Taiwan export to USA

150

970.8 942.5

846.7

500 0

100 50

2001

2002

2003

2004

2005

2006

2007

Source：Taiwan Customs Service 2013.02

2008

2009

2010

2011

2012

29

5. Relations between Taiwan and the U.S.A. (2) TIFA (Trade and Investment Framework Agreement) Effective date：September, 1994 Function： The official platform to promote trade, investment and business cooperation for both sides. It’s also the consultative channel to resolve the economic and trade issues. Since 2008, however, TIFA meetings have been suspended due to U.S. beef issues. Ed Royce, Chairman of the Foreign Relations Committee of the U.S. House of Representatives, Interviewed by the media in Taiwan on Jan. 27 2013 suggested that Taiwan-US should restart TIFA, to solve the problem through negotiations; "The first step is TIFA, then a free trade agreement (FTA), the ultimate is to allow Taiwan to join the Trans-Pacific Partnership Agreement (TPP).”

30