Apparel U.S. Imports From Selected Trading Partners

Presented by

China Advanced Research Center

San Antonio, Texas, USA

Investment & Trade Opportunities

for Chinese Enterprises under

NAFTA

What is NAFTA?

Preparietary Information Omega International Group, Inc. 3

NAFTA:

“North America Free Trade Agreement”

A trade agreement between the US, Canada and Mexico

Designed to reduce restrictions on trade and investment between the US, Canada and Mexico

Built on the Canada US Trade Agreement signed in 1989

Took effect on January 1, 1994

Scope of NAFTA:

All of North America

400 million population

US $8 trillion in goods and services

NAFTA Impact:


NAFTA: 1994 – 1996: The First two years

A trade increase of $127 billion between the U.S., Canada and Mexico -- a 43 percent gain

U.S. exports to Mexico hit a record $57 billion -- an increase of 37 percent

In the fourth quarter of 1996 alone, the Department of Commerce reports U.S. exports to Mexico increased at an annual rate of $64 billion.

U.S. market share in Mexico increased from 69 percent to 76 percent of total Mexican imports.


TRADE AMONG NAFTA COUNTRIESLonger term: 1985 – 2000(Millions of 1996 USD)

0

100

200

300

400

500

600

700

1985 2000

Total

US - Can

US - Mx

Mx - Can

Global View:


Tri-lateral Collaboration for 21st Century

Global economics is the wave of the 21st Century.

With its entry to WTO, China is ready for global expansion.

Three driving forces: Culture, Management and Technology

should be closely examined for this global collaboration.

Tri-lateral Collaboration among China / US / Mexico business

can generate significant impact in Pan Pacific trade

practices.

Chinese investments in the US can provide direct access to

the North American investment and consumer markets via

NAFTA

Global Trends:


SHARE OF WORLD INCOME

1980 2000

U.S. 21% 22%

P. R. CHINA 4% 12%

MEXICO 2% 2%

Source: IMFSource: IMF


Redistribution of Income brings Opportunity

China’s share of World Income is increasing dramatically

Cash available = Opportunity for Global Investments

US share of World Income has slowed down

Welcomes Global Investments and Trade for growth

Mexico’s share of World Income remains flat

Needs Trade and Investments for growth


MEXICO: SHARE OF GDP(Share of Mexico’s Total)

Population 1993 2002

Northern States 17% 21% 24%

Southern States 11% 5% 5%

On a per-capita basis, the North On a per-capita basis, the North contributescontributes threethree timestimes as as

much to Mexico’s GDP;much to Mexico’s GDP;

Regional GDP is Regional GDP is growinggrowing more than more than twicetwice asas fastfast in the North. in the North.

Source: INEGI; CONAPOSource: INEGI; CONAPO


Cross Boarder Trends

Opportunities in

NAFTA:


Investment Opportunities/Benefits:

Direct Facilities ownership in US Foreign Trade Zone

Business alliances with US owned companies for import/export under NAFTA

Business partnerships with US owned companies for import/export under NAFTA

Light Manufacturing in US Foreign Trade Zone for import/export under NAFTA

Product distribution from US Foreign Trade Zone under NAFTA

Direct access to the Maquiladora Program

Local and federal tax advantages

Access to technology and markets

Joint development of products and services

Import/Export tax advantages

Import/Export tariff advantages

Teaming with Mexican cross boarder manufacturing

Opportunities Benefits

NAFTA Connection:

Why Texas?

NAFTA Center,Business Environment


TEXAS- NAFTA Center

By 2002, largest exporter among U.S. states

Its exports to Mexico and Canada doubled from 1993 to

2003, from $20 to $43 bn.

Channeled 46% of all U.S. exports to Mexico (2000)


TEXAS- Business Environment: Highly ranked among all US states

Texas’ largest export market is NAFTA

Second in US for new job growth

Sixth in the US “e-Government” index score

Competitive

Tax

Structure

CompetitiveLaborForce

InnovativeBusiness

Environment

ActiveForeign TradeZone

NAFTA Connection:

San Antonio is Unique

Location, Infrastructure


San Antonio - Location: Gateway to Mexico’s fastest growing regions


San Antonio -Infrastructure: In place and ready to serve growing markets

Highway and Rail Air Travel

China vs Mexico in trading with US


Table 1U.S. imports from leading suppliers, 2000-2005

Supplier

2000

2001

2002

2003

2004

2005

Change 2000/05

Share in 2005

Billion U.S. dollars Percent

EU 15 218 219 224 242 270 297 36 18

Canada 229 217 211 224 256 288 26 17

China 100 102 125 152 196 243 143 15

Mexico 135 131 134 137 155 169 25 10

Japan 146 126 121 118 130 138 -5 8

All other 377 338 340 377 453 527 40 32

Total 1,205 1,133 1,155 1,250 1,460 1,662 38 100

Source: Compiled by the U.S. International Trade Commission from official statistics of the U.S. Department of Commerce.


Table 2U.S. producers’ shipments of manufactured goods, total U.S. imports from China, 2000-2005

Category

2000

2001

2002

2003

2004

2005

Change 2000/05(percent)

U.S. producers’ shipments of manufactured goods (billion U.S. dollars)

4,20

9

3,970

3,89

2

3,99

9

4,37

4

4,681

11

Total imports from China (billions dollars) 100 102 125 152 196 243 143

Ratio of total U.S. imports from China to U.S. producers shipments of manufactured goods (percent)

2.4

2.6

3.2

3.8

4.5

5.2

n.a.



Category Value Category Value

Percent PercentCrude petroleum

22,4 13.2 Computers and parts

40.3 16.6

Motor vehicle parts

21 12.4 Textiles and apparel

26.9 11.1

Motor vehicles 18.5 10.9 Toys, dolls, games, and sporting goods

17.2 7.1

Televisions & video monitors

10 5.9 Telephone equipment

14.4 5.9

Agricultural products

9.3 5.5 Consumer electronics

13.6 5.6

Textiles and apparel

8.3 4.9 Footwear 12.6 5.2

Computers and parts

7.2 4.2 Chemicals and related products

12.2 5

Telephone equipment

5.6 3.3 Furniture 11.7 4.8

Chemicals and related products

5.4 3.2 Household appliances

5.7 2.4

Electrical circuit

4.3 2.6 Televisions & video monitors

5.1 2.1

Medical goods 3 1.8 Luggage and handbags

4.6 1.9

Measuring, testing, and controlling instruments

2.9 1.7 Lamps & lighting fittings

3.8 1.6

Household appliances

2.7 1.6 Base metal products

3.7 1.5

Electrical motors

2.3 1.3 Motor vehicle parts

3.2 1.3

Consumer electronics

2.2 1.3 Air-conditioning equipment

2.4 1

Air-conditioning equipment

2.2 1.3 Electrical circuit apparatus

2.2 0.9

All other 41.9 24.8 All other 63 26Total 169.2 100 Total 242.6 100

Mexico ChinaShare of

total (per-cent)

Share of total (per-

cent)

Billion dollars Billion dollars


Table Apparel: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05

Share of total in 2005


China 8.5 8.9 9.6 11.4 13.6 20.0 135 26

Mexico 8.7 8.1 7.7 7.2 6.9 6.3 -28 8

Canada 1.9 1.8 1.8 1.7 1.7 1.5 -21 2

Japan 0.1 0.2 0.2 0.3 0.3 0.1 0 *

All other 45.1 45.0 44.6 47.7 49.9 48.7 8 64

Total 64.4 64.0 63.9 68.3 72.4 76.5 19 100

* Less than 0.5 percent.Source: Compiled by the U.S. International Trade Commission from official statistics of the U.S. Department of Commerce.


Table Computer hardware: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05



China 10.7 10.5 14.9 22.1 33.9 40.3 277 43

Mexico 9.0 10.4 8.9 7.6 7.8 7.2 -20 8

Japan 14.5 10.2 8.7 7.0 6.8 6.5 -55 7

Canada 3.7 2.8 1.7 1.5 1.7 1.8 -51 2

All other 52.4 40.6 41.5 38.6 39.1 38.2 -27 41

Total 90.4 74.5 75.8 76.9 89.3 94.0 4 100



Table Telephone equipment: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05



China 2.9 3.2 4.7 5.9 9.6 14.4 397 29

Mexico 4.6 4.4 4.2 4.7 5.9 5.6 22 11

Canada 9.2 3.9 3.0 2.5 2.7 3.3 -64 7

Japan 3.9 2.5 1.8 1.5 1.6 1.9 -51 4

All other 11.5 13.2 14.3 16.4 19.5 24.0 109 49

Total 32.1 27.2 27.9 31.0 39.3 49.2 53 100



Table 7Household appliances: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Chang

e, 2000/0

5



China 2.4 2.8 3.4 4.1 4.9 5.7 138 39

Mexico 1.5 1.8 2.0 2.1 2.3 2.7 80 19

Canada 0.9 0.8 0.9 1.0 1.0 1.0 11 7

Japan 0.2 0.2 0.2 0.2 0.2 0.3 50 2

All other

2.7 2.6 3.1 4.0 4.1 4.8 78 33

Total 7.7 8.4 9.6 11.6 12.5 14.5 88 100



Table 8Consumer electronics (except televisions): U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change

, 2000/05



China 6.3 6.3 8.2 8.8 11.6 13.6 116 53

Japan 5.8 4.2 4.5 4.5 4.5 4.3 -26 17

Mexico 3.0 2.8 2.5 2.3 2.3 2.2 -27 8

Canada 0.1 0.1 0.1 0.1 0.1 0.2 100 1

All other 6.7 6.2 6.2 6.2 5.9 5.6 -16 22

Total 22.0 19.5 21.5 21.5 24.4 25.9 18 100



Table 9Furniture: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Chang

e, 2000/0

5

Share of

total in

2005 Billion U.S. dollars Percent

China 4.1 4.6 6.4 8.0 9.8 11.7 185 48

Canada

4.2 3.9 38 3.8 4.0 4.1 -2 17

Mexico 1.0 0.9 1.0 1.0 1.2 1.2 20 5

Japan 0.1 * * * 0.1 0.1 0 *

All other

5.8 5.4 5.8 6.1 6.7 7.2 24 30

Total 15.2 14.8 17.0 19.0 21.8 24.3 60 100

* Denotes less than $50 million or less than 0.5 percent.Source: Compiled by the U.S. International Trade Commission from official statistics of the U.S. Department of Commerce.


Table 10Motor vehicles: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05



Canada 45.7 41.2 41.6 41.0 46.7 48.5 6 33

Japan 34.5 33.0 35.2 33.1 33.2 35.9 4 25

Mexico 21.0 21.3 20.8 19.3 19.1 18.5 -12 13

China * * * * * 0 * *

All other 28.4 31,8 35.7 41.0 43.8 43.3 52 30

Total 129.6 127.3 133.3 134.4 142.8 146.2 13 100



Table 11Auto parts: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05



Mexico 14.6 14.0 16.0 17.3 19.4 21.0 44 27

Canada 14.5 12.9 14.2 15.5 16.9 18.1 25 24

Japan 11.9 11.1 12.5 13.3 15.0 16.1 35 21

China 0.8 0.9 1.3 1.7 2.4 3.2 300 4

All other 11.0 10.5 12.2 14.0 15.8 18.4 67 24

Total 52.8 49.4 56.2 61.8 69.5 76.8 45 100



Table 12Television receivers and video monitors: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change

, 2000/05



Mexico 4.9 5.1 5.2 5.5 7.7 10.0 104 44

China 0.2 0.3 0.8 1.5 2.4 5.1 2,250 22

Japan 0.7 1.3 1.7 2.2 3.0 2.6 271 11

Canada * * * * * * * *

All other 1.9 2.0 2.9 3.4 4.4 5.0 163 22

Total 7.7 8.6 10.6 12.7 17.5 22.7 195 100



Table 13Measuring, testing, and controlling instruments: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change

, 2000/05



Mexico 2.6 2.6 2.8 3.1 2.9 2.9 12 19

Japan 2.3 2.1 1.9 2.0 2.4 2.4 4 16

Canada 1.1 1.1 1.1 1.0 1.2 1.3 18 8

China 0.4 0.6 0.6 0.8 1.2 1.3 225 8

All other 5.4 5.5 5.1 5.6 6.7 7.5 39 49

Total 11.7 11.8 11.6 12.6 14.4 15.4 32 100



Table 14Electric motors, generators, and related equipment: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05



Mexico 2.0 1.9 2.1 2.2 2.2 2.4 20 28

Japan 1.2 1.6 1.4 1.0 1.1 1.3 8 15

China 0.4 0.4 0.6 0.7 0.9 1.1 175 13

Canada 0.5 0.6 0.5 0.5 0.5 0.6 20 7

All other 2.4 3.1 2.6 2.4 2.3 3.1 29 36

Total 6.5 7.6 7.2 6.8 7.0 8.5 31 100



Table 15Medical goods: U.S. imports from selected trading partners, 2000-2005

Country

2000

2001

2002

2003

2004

2005

Change, 2000/05



Mexico 1.3 1.5 2.0 2.3 2.6 3.0 131 15

Japan 1.3 1.3 1.3 1.3 1.5 1.7 31 8

China 0.4 0.5 0.5 0.6 0.7 0.9 125 4

Canada 0.3 0.3 0.4 0.5 0.5 0.6 100 3

All other 5.9 7.3 9.0 11.4 13.7 14.3 142 69

Total 9.2 10.9 13.2 16.1 19.0 20.5 123 100



Table 16U.S. import categories for which China supplied over one half of total U.S. imports in 2005

Category

U.S. imports in 2005 China’s share of

total

Mexico’s share of total

China

Mexico

Total

Millions of U.S. dollars Percent

Dolls 963 0 1,038 93 0

Umbrellas 331 1 371 89 *

Toys 8,092 291 9,287 87 3

Luggage and handbags 4,573 55 6,151 74 1

Games 4,855 56 6,745 72 1

Footwear 12,654 247 17,834 71 1

Lamps & lighting fittings 3,784 957 5,831 65 16

Sporting goods 3,248 178 4,978 65 4

Bicycles 791 2 1,434 55 *

Brooms and brushes 656 150 1,236 53 12

Consumer electronics (except televisions)

13,634

2,184

25,866

53

8

Portable electric hand tools 1,219 713 2,424 50 29

Subtotal 54,800 4,834 83,195 66 6

All other 187,838 164,382 1,639,656 11 10

Total 242,638 169,216 1,722,851 14 10

* Denotes less than 0.5 percent.Source: Compiled by the U.S. International Trade Commission from official statistics of the U.S. Department of Commerce.


Products for which Mexico is an important supplier to the U.S. market, but China is not:

1. See tables 10, 11, 13, 14, and 15:

Motor vehicles Auto parts Measuring, testing, and controlling instruments Electric motors, generators, and related equipment Medical goods

2. For these categories, Mexico supplied 18 percent of U.S. imports in 2005 and China supplied 2 percent.

3. Mexico is most competitive relative to China in products with the following characteristics

a. High ratio of weight to value

(1) Motor vehicles

(2) Large screen televisions

(3) Major household appliances

b. Quality (rather than price) intensive

(1) Medical goods

(2) Process control instruments

c. Are inputs for industries that require just-in-time delivery, customized production, or require frequent design changes

(1) Auto parts

d. Protection in intellectual property is important


Products for which China supplied over one half of U.S. imports in 2005

1 Table 16 Toys, dolls, games, sporting goods, and bicycles

Leather goods, including footwear, luggage, & handbags

Lamps and lighting fittings

Umbrellas, brooms, & brushes

Consumer electronics & portable electric hand tools

2. For these categories, Mexico supplied 6 percent of U.S. imports in 2005 and China supplied 66 percent.

3. These products are:

(1) Labor intensive (many require sewing)

(2) Have long production runs

(3) Require few style changes


Products where competition between Mexico and China is most intense:

1. See tables 4-9, & 12

Computer hardware

Product life cycle: Mexico at the start up phase and end (customization)

China during mature phase with long production runs

Apparel China—light weight & labor intensive

Mexico—heavier items, quick turn around, less sewing

Telephone and telegraph equipment China—hand sets & cell phones

Mexico—switch gear & other equip. for phone companies

Consumer electronics (except televisions)—all China

Furniture China—wood household furniture (lathe work)

Mexico—furniture for the Southern California market

Household appliances China—counter top appliance

Mexico—major appliances (washers, dryers, refrigerators)

Televisions & computer monitors:

Mexico—larger screen televisions

China—computer monitors and smaller televisions

Motors and generators: Mexico leads China in all categories, especially medium/larger sizes

China—competitive only in the smaller-sized motors


Opportunities for cooperation between China and Mexico

A. Follow the Japanese and Korean models for investment in manufacturing facilities in Mexico to supply to U.S. market, using North America suppliers for materials and components, as well as suppliers in Asia

1. Household Appliance

2. Fabricated Metals

3. Auto Parts

B. Invest in textile knitting and weaving mills to supply fabrics for the North American production of apparel and textile goods rather than shipping final goods from China.

China Advanced

Research Center

Thank You