Textile Industry Is Struggling To Survive. China Is Bidding Farewell To The World Factory.

According to a company survey compiled by the American Chamber of Commerce in Shanghai, the competitive advantage of mainland China is weakening, mainly due to rising costs.

At the 30th anniversary time node of China's reform and opening up, we have to face up to such a proposition: the so-called comparative advantage of labor force in the past is losing gradually.

At the crossroads of pformation, we must consider the question: where is China's new competitive advantage?

However, the 103rd Canton Fair, which has just been concluded, has been called the "decline" Canton Fair by the media.

Reported that this year's Canton Fair was the most serious setback of textile and clothing exhibition area.

Mark, a businessman from Chile in South America, imports large quantities of clothing, shoes and hats and other daily necessities to China every year. But now his purchase range is not limited to China, because things like Vietnam and Bangladesh seem to be cheaper.

China's clothing prices are as cheap as they used to be, almost impossible.

To some extent, this statement reflects the predicament China's textile industry is facing.

According to the latest statistics, in February, China's textile and clothing exports amounted to US $10 billion 288 million, a decrease of 11.07% over the same period last year.

From 1 to February, the total export volume of textiles and clothing reached a 8.19% growth rate, down 30.9% from the same period in 2007.

Since the reform and opening up, Shengze silk industry has introduced tens of thousands of advanced production equipment at home and abroad after several rounds of large-scale technological pformation.

The Chinese Eastern Silk Market in the town is one of the largest specialized markets for silk textiles in China, with a turnover of 14 billion 800 million yuan in 2002.

Shengze town has become the main production base, export base and product distributing center of silk textile industry in China.

The capacity of the town's indirect spinning enterprises has been reduced from 2 million tons to 200 thousand tons, with only 1/10 left.

Cost pressures are reflected in the fact that first, with the rise of international energy prices and high domestic inflation, the price of oil derivatives is soaring rapidly.

According to Zhang Yexing, the raw material MEG used by Sheng Hong Company was only 4000 yuan / ton in 2003 and 2004, while the current market price has reached 10000 yuan / ton.

In addition, with the tightening of bank credit since last year, the cash flow from banks to textile enterprises has been reduced, but a large number of loans have been used. This has also increased the financial cost of enterprises.

Some enterprises can only borrow short-term loans for loans because they can not borrow money from banks, and their financial expenses have increased by about 10%.

In addition, the new labor law, which began this year, has greatly increased the cost of labor in the textile industry.

The profit of textile industry is very thin, so the pressure caused by the rise in wages is particularly heavy.

According to the statistics of China Textile Industry Association, the average profit margin of China's textile industry is only 3.9%, and most of the enterprises in this industry have no profit margin of 1%.

Zhang Yexing said that after the introduction of the new labor law, the labor cost of enterprises increased by 10%-20%.

According to Zhang Yexing, because Sheng Hong's main business is direct spinning business, and its product has always maintained a leading edge in technology, it has been able to overcome its difficulties.

Facing the rise of cost pressure, Sheng Hong Company took an offensive in marketing, mainly attacking the domestic market, and taking a more proactive attitude in the latter stage of service.

In addition, in terms of cost reduction, the company is on the way to improve the added value of products. Its chemical fiber products are pformed to ultra-fine and ultra velvet, while the price of the products will follow the ordinary product price route.

In the field of microfiber, the company has set up a set of high-tech production equipment with the German Bama company, making the company the world's first in the field of microfiber.

Zhang Yexing believes that in the face of the cost pressure that comes next, textile enterprises can only go through the wind and rain to meet the rainbow only by taking the road of scale and differentiation.

CIC securities analysts pointed out that the average size of textile enterprises is small. Under the dual pressure of unfavorable export situation and domestic regulatory policies, small and medium-sized garment enterprises can be eliminated, and the situation of oversupply of medium and low grade clothing can be alleviated, and the upgrading of textile and garment industry will be promoted.

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