COTTON INCORPORATED
by J. BERRYE WORSHAM, III, CEO/President

The importance of China and its influence on the world cotton pipeline is far-reaching and undeniable. China continues to be, by far, the world's largest importer of raw cotton fiber. By the end of the 2005 marketing year, China is expected to have imported more then 14 million bales to meet its yarn and manufacturing needs.

The U.S. supplied nearly 40% of the world's total raw cotton exports in 2004. With a much reduced U.S. domestic mill consumption level the last few years, raw cotton exports must increase to maintain a healthy level of U.S. offtake. To expand world demand for your cotton, Cotton Incorporated continues to implement plans within its different divisions that consider those factors. The influence of China is an obvious consideration on most, if not all, of those plans. One of the most important tools Cotton Incorporated uses to expand demand for U.S. cotton is a suite of computer software programs that helps manage High Volume Instrument (HVI) data—The Engineered Fiber Selection (EFS) System. Our Fiber Management Research team works tirelessly to provide technical assistance to all EFS licensed mills—working with their technical staffs to help improve their end products. Since the shift in world textile operations which started over five years ago, the Fiber Managements Research staff has worked to expand their grating of international EFS licensees in many countries. Obtaining a licence in China has been a challenge. That is why I take great pleasure in announcing the signing of Central Textiles (Hong Kong) Ltd. as Cotton Incorporated's first EFS-licensed mill in China.

The significance of this license cannot be overstated. It allows the U.S. cotton industry to strengthen its marketing position by giving us a 'first mover advantage' for future plans-leading to future achievements.

Central Textiles is a 52-year-old privately held mill in the Guangdong province. It employs about1,500 workers and encompasses 57,000 square meters of space. This family owned mill buys 250,000 bales of U.S. cotton each year.

It is important to remember that to acquire a license, a user must commit to increase its purchases of U.S. cotton above what it normally buys. A quote from the Leo Yung, the General Manager of Central Textiles, speaks volumes about his opinion of the EFS System: "The major purpose in our licensing the EFS System was to bring the consistency of yarn qualities to new levels, have better management of our cotton mix and achieve higher machine efficiency in our mill."

Acquiring our first EFS license in China was possible because of our staff's effort to relate the intrinsic value of how EFS can improve their end products. I look forward to future columns to update you on how Cotton Incorporated continues working to increase demand for U.S. cotton from this very important customer.