Australia seeks safe haven because of its cotton found in South East Asia as tariff battle with China escalate

The relationship between China and Australia continues to deteriorate, after a year-much time escalation of veiled accusations, reducing mutual trust and strangled trade agreements. Now, the Australian natural cotton industry faces the potential loss of its 611 million Australian us dollars cotton trade to China.

Australia’s cotton industry is definitely fully reliant about exports and China is one of the country’s major markets. In fact, the cotton industry is among Australia’s most significant contributors to the agricultural sector, with exports worth around 2 billion dollars each year. Australia is probably the world’s top four cotton exporters, competing in a seriously subsidised international market.

In a recent view piece for ‘Queensland Country Your life’, Michael ORielley, Chairman, Australian Cotton Shippers Association, argues that the industry must move on, which “means reinvigorating founded markets and growing market segments where consumption of Australian cotton is smaller.”

ORielley highlights the prospects that markets such as South Korea, Japan, Indonesia and Thailand yield, recalling that “Australian natural cotton has been sold into most Asian and sub-continent market segments for a long time and it is these traditional Asian market segments where Australian natural cotton earned its reputation as a reliable supplier of top quality fibre - and it’s a status that still holds organization today.”

Unlike China, India or Pakistan, those traditional markets for Australian cotton don't have their own source of way to obtain local production, why is them totally reliant on imported cotton. Japan and South Korea, for instance, continue to be influential purchasers of Australian natural cotton, according to ORielley, regardless if they have observed their respective spinning corporations relocated to other even more competitive markets incorporating Indonesia, China and Vietnam.

While the number of spinning companies in Indonesia and Thailand demanding Australian cotton has declined since the late 1990s, these market segments even now recognise Australian cotton’s quality. Indeed, Indonesia was Australia’s major market before it had been overtaken by China. As a net natural cotton importer, the Indonesian market is still primarily a yarn producer and exporter instead of a completely integrated garment producer. “Indonesia as a potential growth industry will certainly get on our radar for even more bales to movement into,” advanced the chairman of the Australian Cotton Shippers Association.

Noteworthy, Australian cotton must contend with Brazil and US cotton not only in Indonesia, but also on Vietnam, another potential expansion marketplace. The U.S. continues to be the dominant cotton supplier to Vietnam, with more than a 48 percent show of Vietnam’s total natural cotton imports. Brazil, India and Australia, in that order make up another 40 percent of the cotton imports.