Miracle Textiles: High-tech fabrics could help the beleaguered textile industry compete with China
Financial Post Business, September 2007

When Canadian entrepreneur Pierre Bissonnette first set foot in a Chinese textile factory last April, he was stunned by what he saw. He had already witnessed the recent, devastating effects that cheap Chinese textile imports were having on Canadian manufacturers - including the 2004 shutdown of a worsted-wool manufacturer that he co-owned - but he still wasn't prepared for the massive scale of the factories he visited in Shanghai and Shandong.

"To be honest, it was a shock for me," says Bissonnette. "One plant I was in has 50,000 employees in just one location. The company has 160,000 employees in total. When you see China's [apparel] textile industry, you see that, unfortunately, there is no way we can compete against them."

However, Bissonnette, now the owner and president of St-André d'Argenteuil, Que.-based Cilia Solution, hadn't travelled to China to concede defeat. Instead, he was there to try his luck at selling to the Chinese. So far, his experiment was going well: He made a $7,000 sale to the No. 1 bed linen brand in the country, Ming Guang. But Bissonnette, who is no longer a manufacturer, wasn't selling pillows and sheets - instead, he was selling a new product called SilverClear, an antibacterial liquid that will be applied to Ming Guang's own line of linen. (Bissonnette is the exclusive reseller of SilverClear, which is produced in Saint-Hyacinthe, Que., by TransTex Technologies.) "The value of the initial sale wasn't huge, but Ming Guang is under the umbrella of a giant textile company called Shangtex," he says. "This group owns over 200 companies. You do business with one and hopefully get access to the others." He also is talking with a Chinese company that wants to apply SilverClear to hospital walls, and with the Chinese army, which wants to use it on military clothing.

Bissonnette is part of a group of Canadian entrepreneurs that have a bold new strategy to turn the tables of globalization: They want to save the struggling Canadian textile industry by selling Canadian-made products to the Chinese. These textile producers and related companies, operating out of a shared office in Shanghai called the Textile Canada Business Center, are armed with a secret weapon: Instead of peddling traditional apparel fabrics, they are betting that "technical textiles" - laboratory-developed fabrics designed for use in the medical, construction and sports industries - will be their ticket into the massive Chinese market. "We cannot compete in some areas," says Bissonnette, "but Canadian products for the niche market are competitive."

The idea is that while China is great at making cheap, simple products, Canadians can excel at selling branded, high-tech products for specialty markets. Among them: heat- and flame-resistant fabrics used to make clothing for firefighters; others used in road construction to stabilize layers of soil; and still more that are used to make sheets to protect crops from sun or hail. China is already one of the biggest markets for technical textiles in the world, with a value of around $30 billion, according to the Centre for Textile Technologies (the CTT Group), the Saint-Hyacinthe, Que.-based textile industry association that runs the Shanghai office. Asia is predicted to be the world's No. 1 market by 2010.

Right now, Bissonnette's SilverClear is being applied in China only to locally made textiles, but he believes that by forming partnerships with Canadian manufacturers, he will help homegrown producers gain an edge selling there and elsewhere. For example, he says SilverClear-treated fabrics were a key factor in helping Montreal-based pillow and mattress pad manufacturer AHF secure contracts with Wal-Mart and Canadian Tire. "I will always give priority to Canadian companies, because it's our survival," he says. "Everybody in textiles will tell you the same thing: They're trying to find a way to keep their company and keep their staff. They have to come up with something that will set them apart."

The Textile Canada Business Center is located in a mid-rise building in an industrial area of Shanghai. The office, which was established in December, receives $26,000 in funding from Industry Canada and $20,000 from Quebec's Ministry of Economic Development, Innovation and Export Trade. The balance of its $95,000 budget is covered by the CTT Group, and annual fees of up to $12,000 from companies using the office. The centre provides office space and a showroom for Canadian members. Two permanent staff act as translators, do market research and identify potential partners and clients. The staff even accompany hopeful exporters to meetings and coordinate payments and shipments.

The centre's director is David Cao, a Chinese-Canadian originally from Shanghai who has a background in chemistry and chemical fibres. He lived in Canada for several years, where he worked for the CTT Group. Cao acts as a guide to the textile industry in China, which with its heavy focus on mass production, is much like the North American industry was 50 years ago. He helps the exporters navigate the bewildering cultural protocols of doing business in China while encouraging them to take the leap into the unknown and start to export aggressively into the Asian market. "In Shanghai alone, there are 15 million people, which is 60% of the entire Canadian population," he says. "Canadians have the advantage of having very good technology, but in order to keep our jobs in Canada, we need to export more to Asia."

By now, the suffering of Canada's textile industry, based largely in Quebec, has been well documented. Canadian companies shipped $5.7 billion of textiles in 2006, down from a peak of $7.9 billion in 2002. The industry was hit hard by the 2003 elimination of quotas and tariffs on imports from developing countries, such as Bangladesh and Cambodia. But the biggest blow came on Jan. 1, 2005, when the World Trade Organization's system of quotas on textiles expired. Suddenly, clothing and textiles from India, Pakistan and, most frightening of all, China, flooded the market. The high Canadian dollar has also caused great pain.

Forward-thinking textile companies began to shift into high-tech products in the early 2000s, and after the lifting of quotas in 2005, the trend intensified. Today, more than half of the 428 textile manufacturers in Canada produce technical fabrics, and those companies are increasingly turning to foreign markets to sell their products. In 1989, only 10% of Canadian textile products were exported, but now, almost half are sent abroad.

The CTT Group first ventured to China in 2004 on an exploratory mission. When three Canadian firms made sales, CTT Group's president, Jacek Mlynarek, began to consider the idea of selling to China more seriously. The organization had been contemplating setting up an office in New York to focus on the American market, but it now felt that Shanghai was a bigger priority. "We decided to go with China first because of the urgency of globalization," Mlynarek says. If successful, the organization may open offices in other foreign markets, such as Brazil.

Early results out of the Textile Canada Business Center have been encouraging. JB Martin, a 52-employee company based in Saint-Jean-sur-Richelieu, Que., used it to sell fabrics for the interiors of yachts and powerboats, as well as textiles used to reinforce concrete building columns. "I think that within two years, 50% of our sales will be in China," says sales and marketing manager Normand Carpentier. Consoltex, Canada's biggest Canadian textile manufacturer, is also testing the Chinese market. It's not using the Textile Canada Business Center, however. Instead, it set up its own office in Shanghai and hired a local employee to sell its industrial, protective, medical and sports textiles there.

Canadian entrepreneurs are keenly aware that they face huge risks in China. They know that at some point, Chinese competitors are likely to enter the technical textile market. However, Bissonnette speaks for all when he says he hopes his early entry and the support of the CTT Group's office will keep him in the lead. "It helps a lot to have a local office and some people who speak the language," he says. "It's a different world out there, but working with local people is the best way to succeed."