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COTTON (JAPAN AND CHINA).
304. The decline of British exports of cotton goods to the Far East since 1913 has been due mainly to:--
(a) Japan's remarkable success in rapidly increasing her production;
(b) Conversion costs which in Lancashire substantially ex- ceed those in Japan;
(e) Production in China.
305. Japan has utilised her industrious and low paid labour in combination with modern mechanical equipment to produce qualities of cloth readily acceptable and suitable to some of the largest of the world's markets. Under these conditions, Lancashire well equipped mechanically but with many old estab- lished methods and with higher paid labour has inevitably failed to compete with Japan. The Cotton Mission, in their exhaustive Report, have indicated the steps which in general must be taken to rehabilitate Lancashire. These recommendations we confirm and support, and we desire to express the further opinion that no industry which is so dependent on exports as the British cotton industry can continue to exist unless it is fully competitive with other countries. A continuance of the existing differences in pro- duction costs as between Japan and Lancashire, together with the growth of production in China, can only mean the further decline of the British cotton industry. This would be so great a calamity for Great Britain that whatever steps are necessary to prevent it must be taken without delay.
PROMOTION OF BRITISH EXPORT TRADE. 306. Our first recommendation is that a British service of specialists or experts should be established in those countries which are undeveloped or in which British trade shows the greatest decline. This service should have complete freedom of action in its own sphere and should report direct to the Department of Overseas Trade. Its personnel should be recruited from first- class men.
307. Secondly, we recommend that firms which are members of British industries producing for export should carefully consider, without delay, whether the method of grouping for export purposes can be applied with profit to themselves. The importance and value of investigation of a market when followed by combined action for export have strongly impressed themselves on us throughout our enquiries.
Firms which individually cannot afford the expense involved will, by adopting this method, be able to benefit by a large scale organisation for investigation, intelligence and increased sales.
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CONCLUDING OBSERVATIONS.
308. What are the reasons for the decline of British trade to China and Japan, and how can that decline be arrested and our trade increased? The task before the Mission was to answer these questions after examination and investigation in the markets themselves. In the course of our work we have interviewed many hundreds of distributors, agents, local producers, bankers and others. We have examined the volume and trend of trade in recent years, visited scores of factories and workshops and investi- gated the channels of distribution, methods of local production and the needs of the consumer.
309. From all that we have heard and seen during our enquiries, two conclusions of outstanding importance emerge. First, British trade to the Far East has declined of recent years to an alarming extent, and, secondly, this decline is due primarily to the high price of British goods in comparison with the goods of our prin- We cipal competitors-Germany, Japan, and the United States. do not wish to minimise the importance of other reasons for the decline in British exports to China and Japan. They have been discussed in detail in our Report. In the unanimous opinion, however, of the many hundreds of witnesses whom we have inter- viewed, and with whom we have corresponded in the Far East, price is by far the heaviest handicap from which British goods, generally speaking, suffer in that market. Efficient distribution, effective advertisement, careful packing, credit, study of market requirements, and adequate representation, are all aids to sale, but are only truly effective when the goods are competitive in price. In the markets of China and Japan a low price is, generally speaking, an overwhelming advantage which British goods do not possess.
310. Our recommendations in regard to British industries ex- porting to China and Japan, and in regard to certain facts which affect our commercial position as a whole in the Far East, are set out in our Report and briefly summarised above. This work has been done under the instructions contained in our terms of refer- ence, which are to enquire into the present condition of British trade in China and Japan, and to report what action should be taken to develop and increase that trade. We cannot, however, having seen what we have seen in China and Japan, feel that we shall have implemented in their true spirit our terms of refer- ence if we close without asking our friends, our fellow-countrymen, and ourselves, one question. Can our country, which advanced to its great position in the world principally because of the world's desire for its industrial products, hope to continue its advance or even hold what it now has, if these products are no longer able to secure adequate markets? There is, in our opinion, only one answer. Should the decline in the export trade of Great
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