CO129-531-10 Hong Kong University- encouragement of Chinese students to counteract American influence 30-5-1931 - 1-9-1931 — Page 228

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cessions is not only gaining a strong position of its own but is also buying the goodwill of old established British houses.

284. In small plant and materials for small buyers, price is, of course, more important, and a real effort to supply the needs of such buyers is necessary, This can only be done by mass production after close study of the requirements of the market.

285. Competition in China is undoubtedly keen, but in machinery and constructional work the market is by no means a bottom price one; inadequate specifications and lazy or inexpert selling make it so.

But the Chinese will frequently pay for a good article if they are convinced of its superiority.

286. The standards and methods of different nations differ greatly; if we are to fight a winning battle for China trade we must educate China to our methods and our products:—

(a) By educating young Chinese in Great Britain to use and appreciate our products;

(b) By supporting universities in China with plant and literature;

(c) By circulating British periodicals and catalogues of good quality to Chinese schools and to the offices of machinery-using industry;

(d) By sending out more real experts not only to support our agents but also to instruct the Chinese in the use of our machinery. A general agent without an expert is usually a mere order taker and not an order getter.

287. China will probably develop an iron and steel industry of her own, but it will not suffice for her industrial future. She will make for herself much of the hardware and small machinery suited for the small user of cheap products. She will also be able to co-operate in assembly and part manufacture of our products. By such co-operation saving in freight and quicker delivery should be possible.

288. Organisations of British machinery exporters into groups to prevent wasteful inter-British competition and strengthen British representation must be given close consideration.

THE WOOL TEXTILE INDUSTRY,

289. There are domestic spinning and knitting industries in China producing goods which do not compete with imports of foreign cloth. Of recent years there has been a rapid growth of the knitting industries on a factory scale. These industries are likely to expand still more and would appear to afford a promising field for British knitting machinery and yarn.

290. The Chinese have begun to appreciate the value of wool clothing and despite a probably temporary set-back caused by the new tariff and the low price of silver there should continue to be an increasing demand for wool textiles. China cannot hope to supply

this demand herself, and it is essential that British spinners and manufacturers should be ready to meet it when it comes. China is, however, in wool textiles, essentially a price market, and only those nations which can produce at competitive prices can hope to secure the trade.

291. Exports of woollen and worsted yarns from Great Britain to China rose from just over 2 million lb. in 1924 to 5.7 million lb. in 1929, but there has been a decline in the percentage share secured by Great Britain in the total import trade into China. Germany is Great Britain's chief competitor in this trade, and has regained her pre-war position.

292. The methods of distribution of British and Continental yarns are the same. The immediate outlook is obscure owing to the fall in the value of silver, the general political uncertainty, and the dis- turbed condition of the interior, but taking the long view it seems reasonably certain that the Chinese market for woollen and worsted yarns will steadily expand.

293. There are only a few mills in China manufacturing woollen cloth, and their output is insignificant. As regards imports through Hongkong, it is noticeable that in the last 8 years imports from France, Germany and Italy have all increased substantially. The imports of woollen and worsted cloth into China have, of recent years, averaged in value over £4 million as compared with an average pre-war value of £1 million, but imports from Great Britain are being largely displaced by imports from Continental Extensive enquiries which have been made show defi- nitely that the cause of this decline in British trade is due to the high price of British cloth. Great Britain does not offer enough of those types of goods which are within the buying power of the Chinese, and the Chinese market is now entirely a price market. The demand for cheaper classes of cloths offered by our competitors is increasing.

sources.

294. The remedy for this state of affairs must be found almost entirely in Great Britain. Importing houses in China are handling Continental goods as well as British, and so far as the woollen and worsted cloth trade is concerned, we are satisfied that (except for certain advantages in freight rates from Continental ports), British goods are on equal terms with those of our Continental competitors as regards distribution in China.

In our view, the remedies for the decline of the trade in British woollen and worsted cloth are to be found in a drastic reduction of production costs of all kinds in Great Britain.

295. We wish to draw attention to the fact that Continental shippers have certain advantages in freight rates over British ex- porters, and we recommend that the authorities at home should take up the matter with British Shipping Companies with a view to placing British exporters on a parity with Continental exporters.

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