THE FLANARANT: Textile investments keep China's cutting edge

China accounts for between 65% and 80% of the world's spinning and weaving capacity - and its textile technology investment in 2010 was higher than at any time in the past decade. So while buyers can shift garment production to cheaper locations, the reality is that they'll still be sourcing their fabric and yarn from Chinese factories, as Mike Flanagan explains.

If there's one thing the world's garment and textile industry agrees on, it's that China's getting increasingly uncompetitive.

This isn't just the view of the industry outside China; hardly a day passes without another Hong Kong businessman predicting the imminent collapse of China's entire garment or textile business.

But if China is such a rotten place in which to do business, why were more than three-quarters of the world's textile investments there during 2010?

The numbers are extraordinary, and vary a bit between categories of investment. But last year the country accounted for 72% of the world's orders for modern spinning equipment, 84% of the world's orders for the most modern weaving looms, and three-quarters of the world's orders for efficient new knitting machines.

In fact, Chinese companies spent more on new textile equipment in 2010 than in any other year on record - which is hardly evidence that the country's textile makers are about to up sticks for the middle of Africa.

Furthermore, this is nothing new: between 65% and 75% of all new purchases of spinning and weaving equipment since the year 2000 have been delivered to mainland China.

All of which means that China's spinners and weavers have an extraordinarily competitive edge that seems to have been completely forgotten in the current hysteria about declining Chinese competitiveness.

In high-volume spinning and weaving, the cost of labour is relatively insignificant. Instead, businesses first of all get their competitive edge by having modern, efficient equipment - which can slash the cost of manufacture, especially if most competitors are still using kit from the 1980s (or sometimes even from the 1880s).

Spinning and weaving mills based in China have had something close to a monopoly for the past decade in acquiring such equipment. China's near-dominance in owning up-to-date spinning, weaving and knitting technology will give its mills an advantage for years to come - and there's no sign of mills in other countries coming anywhere close in upgrading themselves.