Latest News:  
Beijing   Thundershower/Overcast    28 / 22 ℃  City Forecast

Home>>China Business

Textile profits shrinking

By Chen Yang (Global Times)

08:16, July 09, 2012

China's textile industry, which contributes significantly to the country's exports, experienced a slowdown in the first five months of 2012, mainly due to weakening global demand and decreasing competitiveness compared to other Southeast Asian countries, industry experts said Sunday.

Domestic textile companies with annual revenue of at least 20 million yuan ($3.14 million) saw total gross profit of 91.7 billion yuan from January to May, down 2.4 percent year-on-year, the Ministry of Industry and Information Technology (MIIT) said in a statement on its website Friday.

Among them, 18.6 percent of companies reported losses during the period, up 5.4 percentage points from a year earlier, it said.

The decline in industrial profit was mainly due to sluggish domestic and overseas orders, a widening price gap between domestic and international cotton prices, increasing competition from Southeast Asian countries, and high financing costs for domestic textile companies, the ministry said.

"Cotton prices usually account for 40 to 60 percent of textile companies' total costs. A price gap below 1,500 yuan per ton is sustainable for domestic textile companies, but currently a ton of international cotton is 4,500 yuan cheaper than the domestic product," Sun Liwu, an industry analyst at Sublime China Information, told the Global Times Sunday.

The widening price gap was partly due to State procurements of cotton between September 2011 and March 2012, which prevented domestic cotton prices from slumping amid the global downturn, Sun noted.

Sun said the cotton price gap has weakened Chinese manufacturers' competitiveness in the global market. Meanwhile, labor costs in the country's textile industry are also rising fast, and are now five to 10 times those in certain other Southeast Asian countries, spurring some foreign clothes brands to move some of their operations from China to lower-cost countries.

"When I went to foreign clothing stores such as Zara and H&M this weekend, I noticed many garments were made in Vietnam and Bangladesh instead in China," Wang Rui, a 29-year-old woman who works in a State-owned company in Beijing, said Sunday.

From January to April of 2012, textile products imported from China accounted for 36.1 percent of all textile imports in the US, down 4.04 percentage points from a year earlier, while imports from India, Vietnam and Bangladesh increased, according to US customs data.

The MIIT estimated that the situation in the textile industry is not likely to improve in the second half of 2012, given the pessimistic outlook for the global economy, and warned that more small and medium-sized textile companies may close.

Wang Qianjin, chief editor at textile sector information provider webtex.cn, expects that the government might help Chinese textile companies by increasing import quotas.

"Besides policy stimulus, domestic textile companies need to develop some key technologies and homegrown brands that are recognized worldwide," Sun noted.

Email|Print|Comments(Editor:厉振羽、张洪宇)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. Japanese celebrate "Tanabata" festival

  2. Mud Soccer Cup in Beijing

  3. Police pledge to fight child trafficking

  4. Master of pasted-paper sculpture

Most Popular

Opinions

  1. US-Pakistan relations still tense after apology
  2. Preserve Arctic for sake of shared global future
  3. Owning a car a fading dream in China?
  4. Do not foment youngsters to protest
  5. All classes easy prey for marketing scammers
  6. Property controls good for economy
  7. Transition comes before democracy in Myanmar
  8. Vatican’s religious assertions tangled with politics
  9. Steady economy recovery key to int'l co-op
  10. China steps up moves in South China Sea

What's happening in China

Teenager hailed as a hero for saving girl

  1. Wenzhou bans extravagant govt banquets
  2. Mining to become key to Tibet's economy
  3. Audi to recall Q5 models
  4. Underperforming firms face delisting
  5. Beijing Nanyuan Airport opens new terminal

China Features

  1. Why is TCM worth of commendation?
  2. Arabians pay heavy price for Arab Spring
  3. Master of pasted-paper sculpture
  4. China, US hold mixed attitudes toward each other
  5. China does not lack capital: CSRC Chair

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai