Taiwan's cotton yarn export to Mainland China faces challenges

Taiwan's cotton yarn exporters are facing a significant hurdle due to a recent policy change by Mainland China. The new policy suspends tariff reductions on specific goods from Taiwan, including cotton yarn categories that make up over 90 per cent of Taiwan's cotton yarn exports to China.

This change threatens the competitiveness of Taiwanese yarn, which previously enjoyed advantages in price and delivery time due to tariff reductions and geographical proximity. With the tariff advantage gone, Taiwanese yarn will face steeper competition from Vietnam, Malaysia, and Indonesia, who benefit from zero tariffs on cotton yarn.

Taiwanese open-end yarn mills that rely on China market (60-70 per cent of exports), could see their profits dip due to increased custom clearance costs. This might lead them to explore alternative markets in Southeast Asia and potentially increase production of blended yarns.

However, establishing a foothold in these new markets will be challenging. Vietnam already dominates the blended yarn market in China, making it difficult for Taiwan to compete effectively.

The overall impact of this policy change on Taiwan's cotton yarn industry remains to be seen. Taiwanese manufacturers will need to adapt and explore new strategies to survive in this competitive landscape.