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English>>China Business

Textile margins wear thin

By Zhang Xiaomin  (China Daily)

13:34, September 19, 2012

A textile worker at a mill in Nanyang, Henan province. China's textile industry is suffering losses because of decreasing overseas demand and rising costs. [Photo/Xinhua]

Domestic textile and garment manufacturers are facing tough times due to declining overseas demand, sharpening domestic competition and rising labor costs.

Li Daoyou, a manager at Dongtai Henghua Weaving Co Ltd in Jiangsu province, said there had been a big fall in overseas demand since the second half of last year.

Sales at his factory, which produces high quality fabrics, decreased about 30 percent year-on-year in 2011.

Statistics from the General Administration of Customs showed the country exported garment and textile products worth $24.6 billion in August, down 3.35 percent from the previous year.

In the first eight months of 2012, China exported garments worth $99.48 billion and textile products worth $62.51 billion, both down 0.7 percent from a year earlier.

"Orders from the European Union are dropping and competition with domestic factories is intensifying," Li said.

"Overseas buyers always demand lower prices. But it is better to do it at a lower price than have nothing to do," he said.

Many smaller textile factories have been forced to close because of a lack of orders and higher labor costs, said Li.

According to the Ministry of Industry and Information Technology, the country's textile industry suffered decreasing exports and profits this year.

In the first five months, the profits of textile enterprises with annual revenue of above 20 million yuan declined by 2.4 percent year-on-year to 91.7 billion yuan. About 18.6 percent of those enterprises made losses, up 5.4 percent year-on-year.

"Wages kept rising in the past few years. For example, in our factory, the workers now earn twice what they earned five years ago," Li said.

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