Russia-Ukraine conflict set to press on China's textile and apparel exports

Russia-Ukraine conflict attacks much attention. As for its impacts on China's textile and apparel market industrial chain, in addition to the cost of feedstock, there is also the impact on export.

Russian textile and apparel market and China's textile and apparel exports 

Since the disintegration of the Soviet Union, the Russian textile and apparel industry declined sharply and improved only after the financial crisis broke out in Russia in 1998, but its level of development was still not high and can only reach a small part of the requirement of the domestic market. Russian textile industry accounts for nearly half of Russia's light industry, and together with sewing industry, leather and fur processing industry (including leather shoes) and wool joint processing industry constitute the three major sectors of Russian light industry.

Russia is not only an important export market for China's textiles and apparel, but also a significant region for China to implement export market diversification and "Go global" strategy. Textiles and apparel have always accounted for a large proportion of bilateral trade. In 2000-2020, China's textile and apparel exports to Russia increased from 1.11 billion USD to 7.65 billion USD in 2020, and over the past 20 years, the exports to Russia have increased nearly six times. China's textile and apparel trade with Russia is mainly export. The value in 2019, 2020 and 221 was 8.84, 7.65 and 7.26 billion USD respectively. 

In 2021, China's textiles and apparel exported to Russia accounted for 2.2% of China's total textile and apparel exports. In terms of the product structure of exports, we can find that China's exports to Russia were mainly apparel by comparing the data from 2017 to 2021. In 2021, China exports twice as much apparel to Russia as textiles. Russia played a particularly important role in China's apparel export market, basically in the top five of the export before 2019; although it has declined in the past two years, it was still in the top ten.

Ukrainian textile and apparel market and China's textile and apparel exports   

Textiles in the Ukrainian market mainly rely on imports, and the fabrics mainly come from China, Pakistan, South Korea, Turkey and Russia. The logistics mainly pass through the Suez Canal and arrive at the Black Sea port city of Odessa after passing through Turkey. In 2019, 2020 and 2021, China's textile and apparel exports to Ukraine were 680, 660 and 760 million USD respectively, accounting for about 35-40% of Ukraine's imports. China is Ukraine's largest source of textile and apparel imports. However, Ukraine accounts for a relatively low proportion of China's total textile and apparel exports, accounting for about 0.23% in 2021.

Ukraine's textile and apparel exports are relatively small, with an annual export value of about 400 million USD in recent years. Germany, Denmark and Italy are the main markets for Ukraine's textile and apparel exports. Ukraine has a number of traditional textile markets and is the fabric distribution center of Central and Eastern Europe. The Odessa market in Odessa is the largest and most concentrated fabric market. In the sales structure of large Ukrainian textile mills, 55%-70% of the products are sold in the domestic market and 30%-45% of the products are exported, which is mainly due to large and excellent cargo ports such as Odessa and Ilychovsk.

Impact on Ukrainian and Russian ports 

Since the conflict between Ukraine and Russia, the risk of navigation has been even greater due to the continued occurrence of security incidents such as the attack and seizure of ships. Maersk, Mediterranean Shipping, Dafei, Hebrot and other shipping companies have announced that they will not call at Ukrainian ports from Feb 24 and will stop accepting new bookings in and out of Ukraine until further notice.

Russia has suspended commercial shipping in the Sea of Azov, but Russian ports in the Black Sea remain open. Other shipping companies' services to Russia have also been partially affected. 

Press on China's textile and apparel exports 

In 2021, China's textile and apparel exports to Russia and Ukraine totaled 8.02 billion USD, accounting for 2.5% of the total. 

Before the conflict broke out, some downstream weavers in China have received suspension notices from Eastern European customers. It is predicted that the orders will not improve in short.