Textiles firms and CSR

China's textile and apparel industry leaders are calling for a greater investment in corporate social responsibility initiatives despite the continuing economic downturn.

The country's 10 top firms approved an initiative describing a greater focus on social and environmental programs despite plunging exports in the sector.

The industry leaders reached consensus at a recent conference in Beijing organized by the China National Textile and Apparel Council, or CNTAC.

Participating companies included Topnew Group, Hongdou Industry, Jodoll Group, Ruyi Group, Baoxiniao Group, Advancetex Fashion Garment, Huafu Co Ltd, Jingwei Textile Machinery, Haitian Material Technology and Tiansheng Holding Group.

CNTAC President Du Yuzhou said reports released by the companies at the meeting showed they are committed to social responsibility initiatives as a plus, rather than a drain, on company growth strategies.

Du said that the council's goal is to engage all stakeholders, not just a few larger members, in promoting the initiative.

China's export-led textile industry has been hit hard by the global financial crisis.

In the first five months of this year, China's textile exports plunged 11.12 percent year-on-year. Sales growth in the domestic market slowed, too.

From January to May, domestic sales volume grew by 5.37 percent year-on-year - 12.08 percent slower than the previous year's growth rate.

The general profitability of the industry is also declining.

In the first two months of 2009, profits declined by 11.01 percent year-on-year, and 12,644 large-scale firms - about a quarter of all large-scale textile and apparel enterprises - suffered losses.

Textile and apparel industry woes squeezed employment in this traditionally labor-intensive sector, too.

The number of workers in the apparel and textile industry fell by 198,000 in 2008 compared to a year earlier.

By the end of February, the number of workers had shrunk 225,000 since last November.

The 10 companies that recently met in Beijing so far have weathered the crisis, and none said they had plans to lay off workers.

Zhang Weimin, Party secretary of Topnew Group, a Beijing-based textile and garment producer, said his company had lowered the wages of some workers, but thus far had avoided layoffs.

Yang Xun, chairman of Advancetex, said his company had cut back work hours to avoid layoffs.

At Advancetex, working hours have been cut by 13 percent, but the average wages of workers has risen 19 percent. Plus, the total output of the factories has increased by 5 percent, Yang told China Business Weekly.

The measures taken by Advancetex will be expanded to other subsidiaries of Glorious Sun Enterprises Limited, its holding company, he added.

To answer continuing financial pressures, more firms are adding marketing responsibilities to their traditional role as manufacturers.

With that marketing focus comes more efforts to build their own brands, industry members said.

China's textile and apparel companies now have to accept greater international scrutiny demanded of exporting businesses and also abide by international corporate social responsibility (CSR) standards.

Sun Ruizhe, deputy president of CNTAC, said CNTAC was the first among major industry associations to release CSR reports.

CNTAC has released industry-wide CSR reports for the past three years, Sun said.

In 2008, CNTAC published the China Sustainability Report - Guidelines for Apparel and Textile Enterprises (CSR-GATEs), which was the first domestically developed index and standards system for corporate social responsibility.

The 10 large firms formulated their reports based on the criteria of the CSR-GATEs.

To meet international standards, their reports have been examined and approved by Bureau Veritas, an international certification agency based in Paris, as well as DNV, a Norwegian classification society, and CNTAC.

Environmental issues are a major concern, even in the economic downturn.

Du said the industry had cut per-unit energy and water consumption in the past year and would continue to carry out energy-saving, emission-cutting strategies.

The businesses also outlined their successes in eco-friendly, energy-saving work processes.

(China Daily 07/20/2009 page8)