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Is China's Textile Industry Still a Labour-Intensive Industry?

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Is China's Textile Industry Still a Labour-Intensive Industry? Jianlei Zhang1,*, Lin He1,**, Is China’s Textile Industry Still Longdi Cheng2 a Labour-Intensive Industry? DOI: 10.5604/01.3001.0014.5038 1 Jiaxing University, Abstract College of Business, Is China’s textile industry (CTI) still a laboor-intensive one? To answer this question, this Faculty of Marketing, study measures the capital-labour intensity and technology intensity of CTI and its sub- 56 South Yuexiu Rd, 314001, Jiaxing, China, sectors during 2006-2018, then applies factor intensity classification and cluster analysis * e-mail: [email protected], to identify their industrial attributes. The results show that CTI and its sub-sectors are still ** e-mail: [email protected] the labour- and non-technology-intensive. All the indexes of capital-labour intensity and 2 Donghua University, technology intensity of CTI and its sub-sectors are below 100, lower than the average of College of Textile, industry sectors, indicating that they are not separate from the category of labour-intensive Faculty of Textile Industry Economics, industry and still heavily dependent on labour. And cluster analysis verifies the industrial 2999 North Renmin Rd, Shanghai, China, classification results. So CTI still needs to keep on increasing its capital intensity and tech- e-mail: [email protected] nology intensity to achieve the goal of industrial transformation and upgrading in the future. Key words: textile industry, labor-intensive industry, factor intensity classification, capital -labour intensity, technology intensity. Introduction some views that CTI [3] part of textile tion process, in which labor, capital and sub-sectors [2, 4] in some regions have technology account for the largest pro- All along the textile industry has been taken off the “hats” of “labor-intensive portion, respectively and show its com- regarded as a typical labour-intensive industry” and become technology-inten- parative advantage. Literature on indus- industry. As it absorbs a large amount of sive instead. trial classification by factor intensity is the labor force, the textile industry has little and scattered. The capital-labour also become a traditional pillar industry As discussed above, different views and ratio and technology ratio are commonly of China’s economy. Nowadays, the in- thoughts regarding CTI attributes have used to classify an industry [7-10], but no telligent manufacturing level of China’s been fostered and developed in academ- literature has been retrieved that studies textile industry (CTI for short, hereafter) ia. So what are the industrial attributes of the factor intensity of CTI. Referring to has been continuously improving with today’s CTI? Is it still a labour-intensive the index system and statistical method the introduction of new equipment, tech- industry? What level of factor intensity designed by Liu Renyi [7], this study nologies and materials. Its production has it reached? Faced with these ques- chooses two sets of indicators to measure mode is gradually changing from exten- tions, this paper firstly measures the fac- the factor intensity of CTI. sive production to intensive production, tor intensity of CTI and its sub-sectors from factor-driven production to efficien- during 2006-2018, then applies factor The first set of indicators includes the cy-driven production, which not only ef- intensity classification and cluster anal- capital-labor ratio, capital-output ratio fectively alleviates the operation pressure ysis to identify their industrial attributes and output-labor ratio, which are used brought about by the rising production in order to answer whether CTI is still to measure the capital-labor intensity of cost and environmental protection but a labor-intensive industry or not. Lastly, CTI and to determine whether the textile also promotes industrial transformation some policy suggestions are recommend- industry is a labor-intensive or capital-in- and upgrading. More importantly, it ex- ed for the transformation and upgrading tensive industry. The capital-labour ratio erts a subtle influence on people’s view of CTI. is the most widely used and most impor- on the attribute of CTI as a labor-inten- tant indicator. It refers to the ratio of fixed sive industry. capital to labour input in the production Methods & data sources process of an industry. The capital-out- For example, the number of workers used put ratio refers to the ratio of fixed capi- Factor intensity classification per 10,000 spindles in a cotton mill has tal used per output, and the output-labour decreased from about 300 in the 1990s The industrial classification schemes ratio is the labour productivity, where to less than 100 now. Several mills have commonly used include two major cat- larger indicators mean higher CTI capi- even reached the minimum of 17 [1]. egories of classification, three industry tal intensity, while lower indicators mean The spinning workshop and printing & classifications, factor intensity classi- higher labour intensity. dyeing workshop of Lutai Textile, one fication, Standard Industry Classifica- of the listed CTI companies, has dra- tions (SIC), the North America Indus- The second set of indicators includes the matically reduced workers and greatly trial Classification System (NAICS), the R&D expenditure-sale ratio, R&D per- improved production efficiency through Global Industry Classification Standard sonnel-employee ratio and R&D expend- importing the most advanced production (GICS), Hoffman classification, Chen- iture-R&D personnel ratio, which are equipment [2]. With the upgrading of ery-Taylor classification and so on [5-6]. used to measure the technology intensi- equipment and the improvement of pro- Factor intensity classification divides ty of CTI from the perspective of R&D duction efficiency in the textile industry, industry sectors into labor-intensive in- expenditure input, R&D personnel input now most indicators point to CTI shifting dustry, capital-intensive industry and and input intensity, respectively, and then from a labor-intensive industry to a tech- technology-intensive industry based on judging whether it belongs to the tech- nology-intensive industry. There are also the input factor intensity in the produc- nology-intensive industries or not. Larg- Zhang J, He L, Cheng L. Is China’s Textile Industry Still a Labour-Intensive Industry? 13 FIBRES & TEXTILES in Eastern Europe 2021; 29, 1(145): 13-16. DOI: 10.5604/01.3001.0014.5038 Table 1. Capital-labour intensity of China's textile industry (2006-2018). and all data are obtained from the China Statistical Yearbook and China Industry Capital-labour ratio Capital-output ratio Output-labor ratio Statistical Yearbook. Fixed capital is rep- (thousand CNY per (thousand CNY per (thousand CNY per Mean Year person) thousand CNY) person) Index resented by the total fixed assets of CTI, Amount Index Amount Index Amount Index and labour is the number of employees, 2006 93.53 43 0.38 76 243.17 57 59 represented by the total workers in CTI. 2007 112.65 45 0.39 78 290.05 57 60 Since the China Statistical Yearbook no 2008 127.10 46 0.40 81 317.86 56 61 longer counts the gross industrial output 2009 140.41 45 0.39 75 364.17 59 60 value after 2012 and the revenue of the 2010 153.95 44 0.35 74 434.25 59 59 principal business is close to the gross in- 2011 186.03 44 0.34 74 548.35 60 59 dustrial output value, the output and sales 2013 192.09 44 0.27 64 700.84 69 59 are represented by the revenue of princi- 2014 234.77 46 0.30 65 781.20 70 60 pal business of CTI. R&D expenditure 2015 256.42 45 0.30 60 860.95 76 60 and R&D personnel are represented by 2016 279.19 45 0.30 59 936.32 77 60 the R&D expenditure and R&D person- 2017 284.53 43 0.31 59 923.26 73 59 nel of CTI, respectively. 2018 301.60 41 0.36 65 839.76 64 57 Table 2. Technology intensity of China's textile industry (2006-2018). Results of factor intensity classification R&D expenditure-sale R&D personnel- R&D expenditure-R&D ratio -employee ratio personnel ratio Factor intensity of China’s textile Mean Year (thousand CNY per (persons per thousand (thousand CNY per billion CNY) persons) person) Index industry Amount Index Amount Index Amount Index This study calculates the values and in- 2006 2291.01 44 3.20 34 173.83 74 51 dexes of capital-labour intensity indica- 2007 2386.59 45 3.26 30 212.42 86 54 tors (Table 1) and technology intensity 2008 2573.48 48 4.12 36 198.64 75 53 indicators (Table 2) of CTI during 2006- 2009 3078.66 52 5.48 37 204.50 83 57 2018. Since the China Statistical Year- 2010 3011.02 52 5.15 36 253.66 87 58 book does not count the number of CTI 2011 4212.74 59 8.64 41 267.43 87 62 employees in 2012, Table 1 and 2 do not 2013 4281.14 54 10.33 42 297.41 89 62 include the results for 2012. 2014 4640.27 56 11.60 44 312.53 89 63 2015 5193.32 58 13.30 49 336.26 89 65 2016 5384.75 57 14.59 51 345.62 85 65 According to the calculation results of 2017 6456.68 61 16.61 54 358.99 82 66 the capital-labour intensity indicator, 2018 9167.61 74 22.41 60 343.58 79 71 CTI is still a labor-intensive industry. From 2006 to 2018, the capital-labour ratio index, capital-output ratio index er indicators mean that CTI’s technology Cluster analysis and output-labor ratio index of CTI are intensity is higher and its dependence on In order to check the result reliability all less than 100, and the mean index technology input is also greater.
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