Abstract

Taiwan occupies a strategic position in the global textile production chain; it has evolved from a mass producer to a world-leading textile innovator with a wide variety of functional and eco-friendly textiles, many manufactured from manmade fibres. Today, approximately 70% of outdoor sportswear products sold around the world are manufactured using functional fabrics made in Taiwan1.
But this dominance is by no means assured. Emerging markets with competing comparative advantages are striving to increase the contribution of the textile/garment sector to their respective economies. The sector itself is constantly changing and evolving; new players emerge, investment climates are reconfigured, and industry leaders are forced to adapt.
Taiwan’s textile industry today finds itself at a “stitch in time”. A confluence of global trends are forcing a mature industry to think hard about its future: China’s rapid ascent up the skills ladder; the opportunities and threats arising from a fluid, evolving global trade regime; the rise of high-tech man-made clothing; and the advent of fast fashion and its attendant pressures for vertically-integrated processes. These are only some of the key developments shaping the pace and the breadth of change.
Shifting environments naturally bring up a series of questions: Where is the most costefficient production location? Is industry consolidation and/or integration necessary for firms to survive? Are further R&D investments essential for Taiwan to stay ahead of the competition? Can strategic trade alliances be woven with competing Southeast Asian markets and economies? For Taiwan’s textile stakeholders, decisions made today on these and other questions will have long-term implications.
Some key trends that are set to challenge Taiwan’s place in the global textile industry include:
1. China moving up the value-chain threatens Taiwan. China’s transition from low-cost to more capital-intensive activities is nudging leading downstream garment companies to lower-wage destinations such as Bangladesh and Vietnam. In their place, China’s nascent upstream textile producers, innovating in areas such as synthetic fibres, will grow to challenge Taiwanese incumbents.
2. The evolving global trading regime presents opportunities and threats. The evolution of the trade environment affects the way brands and companies reach Taiwan. Trade agreements and duty-free/quota-free trade access, for instance, can significantly impact costs, production processes, and potential revenues. To qualify for such advantageous access, yarn forward rules and other Rules of Origins (RoO) will either maintain this division between the capital- and labour-intensive member economies or accelerate the transition from downstream to higher up the chain.
However, due to geopolitical issues, Taiwan may very well be left out of this process.
3. Harnessing the advent of fast fashion may be very beneficial to expanding Taiwanese textile players. The logic of moving downstream production to more cost-competitive countries is complemented by purchasers’ need to respond quickly to market demands and fashion trends. The rise of fast fashion is prompting a shift toward more integrated production chains. This “Local to Local” purchasing trend favours bigger fabric suppliers able to invest overseas and integrate supply chains. SMEs typically have financial constraints that prevent them from doing so. It is crucial for them to get financial support in order to increase their capacity in overseas production bases and meet the global procurement strategies set by major international brands.
4. Taiwanese textile manufacturers are ideally positioned to benefit from the man-made fibres boom. The convergence of athletic clothing and casual wear has resulted in a phenomenon that apparel professionals call “athleisure”, which is fashionable clothing designed to be worn both for exercising and casual social occasions. More broadly, the rising popularity of man-made fibres can be traced to their practical advantages over cotton. The two main trends in fibres are “functional” fabrics and “eco” fabrics. Functional fabrics focus on ergonomics, safety, and fashion
while eco-fibres are focused on low-pollution and recyclability. Taiwan’s long-standing experience in developing high-tech products from high-value materials can be a priceless advantage over competing markets.​