The Textile Industry Looks Forward To The Dawn

At present, the textile industry is in the most difficult period of internal and external troubles. Some people are optimistic that it is the darkness before the dawn. How many enterprises have fallen silently in the darkness, and how many surviving enterprises hope for early dawn in the middle of the darkness.

Since August 1, the export tax rebate rate of some textiles and clothing has increased from 11% to 13%. This good news undoubtedly makes some textile enterprises see the dawn.

Since last year, the textile industry has been plagued by many adverse factors in succession - the appreciation of the RMB, the reduction of export tax rebates, the rise in the price of raw materials, the implementation of the new labor contract law, environmental restrictions, the US subprime mortgage crisis reducing the demand in the international market, etc.

These adverse factors cause the textile industry to face a serious survival crisis. According to the recently released statistical data, the accumulated loss of the textile industry from January to May 2008 reached 9.958 billion yuan, a substantial increase of 2.972 billion yuan over the same period last year, with a year-on-year growth of 42.54%. The growth rate of loss in the first two months of this year was 37.20%, and the growth rate of loss from January to November last year was only 14.34%. It shows that under the influence of drastic changes in the internal and external environment, the overall profit decline of the textile industry is indeed accelerating.

In addition, according to the investigation of the Textile Chamber of Commerce, many enterprises in the passive adjustment have suffered a great impact due to the external environmental pressure. Especially in some small and medium-sized enterprises, the phenomenon of production reduction, layoffs and work stoppages has occurred repeatedly.

Although many textile enterprises prefer to regard the current predicament as "darkness before dawn". In their view, the impact of the current round of the US subprime mortgage crisis should gradually dissipate within a year or two. At that time, the Sino US textile agreement has also expired, and China's textile and clothing exports will certainly see light again. However, we should also clearly realize that the darkness ahead is long and needs to be "shouldered". Only those enterprises that can "persist" to the end can see the dawn. In this process, quite a number of small and medium-sized enterprises will fade out of the competition stage forever.

The increase of the textile export tax rebate rate is obviously a timely help from the government when SMEs are facing unprecedented difficulties. It may give some enterprises hope for survival.

For export-oriented enterprises, the export tax rebate rate is adjusted back by one percentage point, which is equivalent to adding 1% of the total export volume of enterprises directly to the profits of enterprises. Not only that, it can also effectively reduce the competitive pressure on the domestic market caused by the "export to domestic sales".

However, it is worrisome that China's textile and clothing lack of brands and low added value, leading to the lack of independent pricing power for exports. If the export tax rebate rate is increased, foreign buyers will take the opportunity to lower prices, which may eventually lead to the profit gained by enterprises from the increase of export tax rebate being embezzled by foreign buyers. Therefore, technological innovation and industrial upgrading are the final way out for the textile and clothing industry if we want to truly get through the darkness and welcome the future of the textile industry.

As Gao Hucheng, Vice Minister of the Ministry of Commerce, said in an interview with media reporters not long ago, the stability policy has become the consensus of relevant departments, but enterprises must also take the situation into consideration and speed up adjustment.

At present, what textile enterprises need to do is still to sharpen themselves in anticipation, improve their independent innovation ability, and usher in the dawn as soon as possible.