A Research On Zhejiang’s Textile And Garment Industrv Upgrading In The Perspective Of OFDI

Zhejiang’s textile and garment industry had a fast growth during35years with Reform and Opening, which plays a decisive role in Zhejiang province’s industrial production and export trade. Zhejiang’s textile and garment industrial forms the advantage due to the development and investment, but now faces the many problems, such as, the low value added, the weak ability of creation, the dependence of OEM. After2008financial crisis, under the background of low demand from overseas, the cost fluctuation of raw material, the RMB appreciation and the rise of labor cost, being locked at the producing position of global value chain, Zhejiang’s textile and garment industry is suffering a plight, the profit is decreasing, and many enterprises go bankrupt.So Zhejiang’s textile and garment needs transformation and upgrading. With a full use of inner resource, Zhejiang’s textile and garment should use the method of OFDI, reforms the comparative advantages and reshapes the system of GVC.Under the theory system of foreign direct investment, this paper analyses the impact of OFDI to textile and garment transformation and upgrading theoretically. From the microcosmic level, OFDI can improve the production efficiency and technology, controls the supply of raw materials and market of products, also OFDI helps the enterprise overcome the trade barrier; From the intra-industry level, OFDI uses the intra-industry connective effect and competitive effect to realize the upgrading; From the inter-industry level, OFDI re-collocates the factors in the whole economy system, and upgrades the textile and garment industry.Using the PVAR model, selecting the panel data from eastern coastal provinces, we find that: at this time, OFDI works for production upgrading and product upgrading. Due to the low level of OFDI, OFDI has little impact on function upgrading.In order to have a good use of OFDI" s impact on textile and garment upgrading, government should make stable encourage policies, such as financial, information consulting,tax and human resource policies; enterprises should have a good understanding of the host country, including government, economy, culture and relative industry development before investment.