Rising Prices Of Raw Materials Foshan Textile Industry Faces Major Reshuffle

Foshan is one of the 12 largest textile export bases in China.

Rising prices of raw materials and continued weakness in European and American markets

In the near future, the RMB exchange rate against the US dollar "broke 7" will not further push Foshan textile enterprises suffering from "cold winter" to the brink of crisis.

According to Foshan Textile Industry Association relevant personage discloses, at present part of Foshan textile enterprises have appeared cost profit upside down, this year Foshan textile industry is expected to "big shuffle", then a large number of textile enterprises will face bankruptcy.

Dilemma: half of orders are reduced to half profits.

The owner of a textile enterprise in Foshan saw a lot of bitter water when he saw reporters. "This year, textile enterprises are more sad than ever. Not to mention making money is difficult even to maintain their survival. Recently, many models sent to the United States have gone nowhere. Our us orders in the first quarter have dropped by half, and there are few large ones. The export list of US $10 million has been made annually, and half of this year is estimated to be impossible."

Order is the lifeline of the enterprise, and the lack of orders is one of the most important problems faced by many textile enterprises in Foshan.

According to Wu Haoliang, vice president of Foshan Textile Industry Association, the export market of Foshan textile and clothing is mainly in Hongkong and Europe and America. Since last year, the impact of subprime mortgage crisis has become more and more obvious. The decline in consumption power of the United States has led to a decline in orders in the US. Especially in this year, orders for many enterprises have dropped by 50%.

Heavy losses: RMB's "breaking 7" exacerbated the loss of profits

At the same time, the continued appreciation of the renminbi has further reduced the profit margins of export textiles.

According to the statistics of Foshan Textile Industry Association, the total export volume of textiles in Foshan in January this year was about 360 million US dollars, and at least 50 million yuan was lost due to the appreciation of RMB.

"The export of RMB will lose 0.5 percentage points per litre of 1 points. Last year, the total volume of textile exports in Foshan was $2 billion 300 million, and the loss of direct profit was more than 500 million yuan due to the appreciation of the renminbi."

According to Wu Haoliang, vice president of Foshan Textile Industry Association, Foshan is one of the 12 largest textile export bases in China, and exports account for half of the total textile production in Foshan.

According to the introduction, Foshan textile industry's largest export area is Hongkong, which accounts for about three to 40% of the total textile exports in Foshan, followed by about 30% of Europe and the United States, and 30% of its exports to Korea, Japan, Africa, Southeast Asia and other places. Among them, the export to Hongkong area can only be settled in Hong Kong dollars with the US dollar, not to mention the export to the United States.

Forecast:

Small and medium enterprises will be eliminated

Oil and raw materials prices continue to rise, labor costs rise, the European and American markets continue to be weak and increasingly stringent environmental protection requirements, making Foshan's textile industry is in the "internal and external troubles" dilemma, many small and medium-sized textile enterprises have been facing the edge of life and death.

According to Liang boss of Guangfeng dyeing and Weaving Co., Ltd., since the export tax rebate of textile industry in 2005 has been adjusted from 1.7% to 1.1%, Foshan textile enterprises in recent years are faced with the problem of rising cost of raw materials, increasing the threshold of environmental protection, increasing the cost of crude oil and increasing freight charges. "Now the cost of sewage alone has increased 1 times. The original sewage treatment fee is 1.8 yuan / ton, and now it is 3 yuan / ton; and the reduction of export tax rebates and RMB appreciation will at least reduce the profits by 15%." the pressure of "internal worries" can not be enough for many enterprises, plus the reduction of orders, and so on. A large number of textile enterprises will go bankrupt this year.

Liang boss road.

"There are more than 6000 textile enterprises in Foshan, of which small and medium-sized enterprises account for the majority. Taking Shunde Junan as an example, although it has won the reputation of" Cowboy City ", even the cowboy enterprises are mostly small family workshops. If SMEs fail to find new breakouts, they can only be eliminated.

Wu Haoliang said.

Countermeasures:

Energy saving, consumption reduction and cost reduction

Although encountered difficulties, but Foshan textile enterprises are also seeking a variety of ways to "break through".

It is understood that the current main breakout way is to shorten the quoted time and quote the exchange rate fluctuations; two, improve product quality, expand the share of self run and upgrade the industrial structure; three, strengthen the internal management and implement energy saving and consumption reduction; four, export to domestic market and compete for the mainland market.

However, in combination with exchange rate fluctuations, quotations are obviously not feasible. "Who dares to raise prices now?

When you raise the price, foreigners turn around and go away. If you don't do it, there are still lots of places to do. Now a lot of orders are being pferred to India and other places. As long as there is a little profit, enterprises can not afford to hold on to it.

A textile firm owner, who did not want to be named, said.

To enhance product quality and expand self export, enterprises need strong technical support and brand influence. "Many enterprises are also working hard in this regard, but this is not an overnight move. Some large enterprises consider industrial pfer, but going out is really not easy. Production and processing involve a lot of links. It is a complete industrial chain, not to say that turning will be able to turn. The only thing that can be done now is to start with strengthening internal management and implementing energy saving and consumption reduction, and then strive for more market.

The textile enterprise boss said.