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the British proportion of the imports, as is shown by the figures given in the Wool Textile Industry Section of this Report. The most striking feature is the complete reversal of the relative posi- tions of Great Britain and Japan in the importation into China of cotton goods which are the most important articles in the list.
COTTON.
114. When the statistics for the British trade with China are surveyed as a whole, the most striking point about them is the fall of over £5 million in exports of British cotton goods between 1913 and 1929. If, in 1929, Great Britain had exported to China no greater volume of cotton goods than she exported in 1913, her total exports to China would not have shown any de- cline in actual volume. In 1913 Great Britain exported to China (including Hongkong) cotton yarns and manufactures to the value of £12,095,394, whereas her exports to the same destinations in 1929 amounted to only £6,975,653, a decrease of £5,119,741, re- presenting a decline of 42 per cent. in value. The decline in quantities is even greater. The 1929 quantity was 64 per cent. lower than the average annual quantity exported to China in 1909- 1913, and 70 per cent. lower than the quantity exported in the year 1913.
We regret to record that, bad though the 1929 figures were, the figures for 1930 are far worse. The actual yardage of British piece goods exported to that market in 1930 was 64 million linear yards, or less than one-ninth of the average annual yardage exported from Great Britain to the same market in 1909- 1913. Coincident with the great loss which has been sustained by Lancashire in exports to China of recent years, Japan has made a remarkable advance, her exports of cotton piece goods to China (including Hongkong) having risen from £3 million in 1913 to no less than £18 million in 1929, or a figure larger by £12 million than the exports in that year of cotton piece goods from Great Britain to the same markets. In the period 1910-1913 Great Britain supplied no less than 60 per cent. of China's imports of cotton piece goods, but in 1929 only 22 per cent. Instead of Great Britain, Japan now dominates the China market in piece goods, securing no less than 70 per cent. of China's total import require- ments, compared with 15 per cent. pre-war. The principal reason for this change is the lower cost of Japanese production.
115. Methods of distribution of Japanese piece goods in China do not differ materially from those of British piece goods. The Japanese may effect distribution at a slightly lower cost and be rather more intimate with the Chinese dealers than our merchants are, but any gain by them on this account is due to lower cost of operation and not to a difference in methods.
From what we have seen of the capacity of both Japan and China to produce cotton piece goods suitable in quality and price
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for the China market, we must conclude that without radical alteration in Lancashire of costs, prices, and probably methods, a large part of our trade in the export of cotton piece goods to China will be lost.
For a detailed study of the position as regards the sale of British cotton goods in China, we refer to the separate report of the Cotton Mission which accompanied us to the Far East. Our conclusions are stated in Chapter XI of this Report.
CHEMICALS.
116. A bright feature of British trade to China is the great increase which we have secured under this heading. According to the British trade returns, exports of chemicals to China, including Hongkong, in 1913 were valued at £213,516, and by 1929 had risen to £1,591,068. In the pre-war trade returns, exports to China of dyes were not separately distinguished, but in 1929 they were recorded as amounting to £323,673. Chemicals and dyes together, therefore, form a very substantial trade for Great Britain with China and constitute more than one-tenth of our total export trade in goods wholly or mainly manufactured to that market. This most satisfactory result for British trade in a highly competitive market is due to a sound system of distribution as well as to the excellence of the products and their competitive prices. We regret that we cannot regard pharmaceutical chemicals and medicines as enjoying a similar success, for out of a total import trade into China in 1929 of £1 million, Great Britain secured the low share of 13 per cent. only.
117. The chief supplier of medicinal preparations to China is Japan, with 40 per cent. of the total imports. The United States secures about 25 per cent. and Germany about 20 per cent. and we are informed that the reason for the British failure is the refusal of British manufacturers to recognise that China presents a large market with very individual requirements or to consider China as other than a possible dumping ground for surplus production. There is the further disability of high price, from which British products suffer when in competition with those of Germany, Japan or the United States. These countries appear to supply medicines of a quality quite suitable to the market, and they pack and label their preparations in such a way as to make a special appeal to the Chinese. The distribution adopted by American and Continental manufacturers for medicinal goods is also much better than our own. Our competitiors have either their own branches in China or employ their own representatives working through established distributors in the drug trade. Many British medicines, however, are distributed in China through general merchant houses not specialising in these articles.
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