German textile machinery manufacturers play a leading role in international business with an export averaging between 80%-90%. China, Taiwan, and Korea are the key export markets in Asia and show a reasonable growth potential.

In 2002, the output volume in German textile machinery industry was €3.848 billion; the export amount was €3.752 billion, accounting for 30% of the total in the world, which made German became the first textile machinery export country in the world. Asia is the largest export market for German textile machinery industry, and China is the largest export country market, the amount of which reached €738 million. China continues to be the largest export market for German textile machinery industry; therefore, the textile machinery companies in German pay more attention to China market. China has been the number one investment country for the German textile industry for past three years.

Germany is also largest European supplier of textile technology to the Vietnamese textile industry. Vietnam was a market with huge potential for the German textile machinery and accessories industry. German textile machinery suppliers and manufacturers were seeking to boost sales of their machinery and accessories to Vietnam. The overall value of suppliers in 2002 was 60% higher than that of all other European textile machinery manufacturers. However, it ranks fourth among textile machinery exporters to Vietnam, after the Republic of Korea, Taiwan and Japan.

The fast growth of Vietnam's textile industry, increasing demand for modern machines and technologies among local textile enterprises, and skilled workers were the major factors in their consideration of Vietnam as an important market.

The German manufacturers further improve their worldwide leading position by value added automation systems and continuously automated formulation data management. In August 2003, the German Textile and Fashion Association (Gesamtverband) signed a cooperation agreement with the China National Textile Industry Council (CNTIC) and the Chamber of Commerce for Import and Export of Textiles. Both countries want to develop closer cooperation on trade policies concerning the textile and fashion industries.

German textile companies will join forces to showcase their products as a group at the Cinte Techtextil trade fair, to be held in Shanghai from September 1 to 3, 2004. Cinte Techtextil China has grown in status and reputation as one of Asia's leading trade fair for technical textiles and non-woven material. The organizers say it has become an "effective marketing platform" for many European manufacturers. The German pavilion, consisting of technical textile and non-woven specialists, will feature the latest product advancements, and information on processing technology.

Textile and clothing industry
German textile and clothing industry is among the oldest and consists mainly of SMEs; the sector remains the second largest manufacturer of consumer articles in the country, after the food industry. Before the invention of the spinning machine and the mechanical loom, the production of textiles and clothing was a labour-intensive process. Weaving and spinning mills were among the first economic activities to use industrial processing technologies to meet the demands of the growing population. During the 1980s, over-capacities were reduced by employment cuts. Before that time, the transformation to capital intensive production was largely achieved in almost all product groups.

With the stagnation of large-scale demand for domestic textiles and clothes in the 1970s and 1980s, problems arose. Exports could not be increased further as a result of the high costs. Demand remains for selected and specialized product groups. While textile producers are influenced by the performance of their industrial customers and fluctuations in resource demand, the clothing industry is highly dependent on final demand.

Global competition was one of the biggest threats. Textiles and clothing were the first industries to internationalize production. Due to the decisive import growth, many German producers were forced out of the markets. Today, both industries have declined in importance in terms of

the number of employees and firms. As a result, almost all German producers have established branch plants in Eastern Europe or in emerging markets like Asia and invest little at home. Nevertheless, German firms try to stick to their home location as long as possible because the label 'Made in Germany' provides a

competitive advantage for it is thought to represent quality. High domestic production costs also instigated successful survival strategies, such as the production of highly specialized and design-intensive rather than mass products. Also, firms diversified by producing several product groups and using flexible technologies.

High specialization, flexible adaptation to the markets, product innovations and the use of automation were strategies that enabled this industry to survive. Outputs have decreased dramatically since 1990. Despite closures of many textile firms, Germany is still an important location of the textile industry.

At present production and processing of resources is often carried out by suppliers from Asia or Eastern Europe and by branch plants in such countries. This is much cheaper than producing in Germany. Many firms acquire ready-made garments or materials and finish them in Germany. High-value production, technology-intensive refining processes, design and the automated production of specialized textiles are still carried out in Germany to some extent. Firms that still produce standardized products with low value-added will have difficulties adjusting to market changes and maintaining competitiveness.

In 2002, 1,125 companies were actively participating in textile production and 615 businesses in garment production. These businesses are mostly small and too sub-divided to be competitive on the world market. About 42% of these businesses are of a 20-49 employees with sale volume of EUR 1,500 million.

German textile and clothing exporters are cautiously optimistic as a result of 60% export quota increase in 1999, which lifted Germany to the world's 6th largest textile exporter after China, Hong Kong, South Korea, Italy and Taiwan. Export of textile and clothing from Germany decreased from US$ 21,915 million in 1990 to US$ 17,220 million in 2002.

Major export markets are Europe and, to a lesser degree, the U.S., Hong Kong, Taiwan and Japan. Although the textile and clothing industries are not among the German core industries they are one of the world's major in- and exporters. Some of the former producers, though, remained as small trading companies.

Germany's textile trade deficit remains huge due to growing imports from Eastern Europe and Asia. Only the US imports more clothes than Germany. However, import of textiles and clothing into Germany decreased from US $ 37,029 million in 1995 to US $ 31,250 million in 2002. Export and import of textiles and clothing into Germany is given in Table-1.

German textile and clothing industry should benefit from the potential opening up of vast markets in developing countries where economic and social development will also fuel consumer demand for textile products and clothing.

Despite persistence of structural rigidities in the labour market and extensive government regulation, the economy remains strong and internationally competitive. Although production costs are very high, Germany is still an export powerhouse. Germany competes successfully in highly engineered, quality products backed by excellent service. German firms are also successful in textile machinery and high-tech electronic goods.

Trade with Pakistan Germany is third biggest industrial country of the world and occupies an important place in global trade and finance. The development pace of the country can be gauged from the fact the per capita income has doubled in the 31 years, thereby creating demands for goods which the developing countries can export and earn precious foreign exchange. Germany is among 11 countries of the fifteen EU members, which joined the Euro Zone on Ist January

1999. Being the largest in size in Europe after Russia, the country is well poised to attract countries like Pakistan who are deficient in forex reserves and want to build economy on strong footing.
At present Germany is one of the most important trading partners of Pakistan. Despite some fluctuations, bilateral foreign trade has developed well. It is the 4th largest importer of Pakistani products and the 7th largest supplier of goods to Pakistan. Trade between Pakistan and Germany is conducted in freely convertible currency in terms of the Trade Agreement signed in 1957. The total trade volume was over US$ 1,142 million between the two countries during the year 2002-2003.

Germany is a good market for Pakistani textile products specially readymade garments, bed wear and knitwear. The main items of exports included cotton fabrics, towels, synthetic textiles, cotton yarn, carpets, bed wear, cotton bags and other made-ups textiles. Besides textile and clothing articles Germany also imports a variety of other products from Pakistan, like sports goods, leather, surgical instruments and footwear.

Export of textile and other items from Pakistan to Germany increased from US $495 million in 2000-2001 to US $580 million in 2002-2003. Export of textile and other items from Pakistan to Germany is given in Table-2.

The government continues to improve and rationalise its import policy with a view to allowing liberal imports of industrial raw materials, capital goods and essential consumer goods. These included machinery, chemicals and other raw materials. Imports from Germany increased from US$ 383 million in 2000-2001 to US$ 562 million in 2002-2003. In terms of rupee import of textile machinery from Germany to Pakistan during the year 2002-2003 is given in Table-3. Pakistan is a "priority partner" of the German development cooperation. Development cooperation is a main focus of the bilateral relations between Germany and Pakistan. Every year, the governments of Pakistan and Germany consult and negotiate bilaterally in order to identify concrete programmes and projects in three main areas of sectoral intervention. Currently, German activities are being concentrated in Northern Punjab, NWFP and the Northern Areas. Germany's assistance has tremendously helped Pakistan to steadily increase its exports to Europe in the past several years and to capture a share of German market for many of its products. The prospects of expansion in trade overall economic relationship between Pakistan and Germany are pretty bright. Pakistani exporters have the scope to explore the potential for the export of textile products, carpets and rugs,