The textile and clothing industry in Taiwan is mature, modern and well developed. It carries out a full range of activities, ranging from the manufacture of yarn and fabrics to the production of clothing and accessories. Its main weakness is that there is no production of cotton or wool in Taiwan and therefore most of the industry's natural fibre requirements have to be imported. However, this weakness has been turned into a strength as it has spurred the development of a world class synthetic fibre industry. The textile and clothing industry is an important contributor to Taiwan's manufacturing sector. It provides significant employment opportunities, it is highly export oriented and it runs a huge balance of trade surplus. However, textile and clothing exports play a smaller role in international trade in Taiwan than in many other Asian countries. In fact, the Taiwanese economy is dominated by the electronics industry rather than textiles and clothing. Moreover, the textile and clothing industry has been declining over the past ten years-at least in terms of employment and output. As such, it has been following a pattern observed in Western developed countries where local manufacturers have been unable to compete with lower cost Asian producers. In response, Taiwanese companies have continued to move offshore by investing in production facilities in China, Vietnam and various other low cost countries. In addition, they have focused on developing products of higher added value, and placing a heavy emphasis on product innovation and automation in manufacturing. The big unknown is the influence of China, which continues to claim sovereignty over Taiwan. However, relations between the two have started to improve recently. China represents the largest export market for Taiwan's textile and clothing industry, and sales to the mainland should improve as tariffs are progressively reduced from January 2011 under the Economic Cooperation Framework Agreement (ECFA).
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