Difficulties Faced By Denim Enterprises And Countermeasures

Since the beginning of this year, the denim industry is facing enormous difficulties and challenges due to various factors such as the US subprime crisis, RMB appreciation, export tax rebate reduction, tight monetary policy, adjustment of processing trade policy, and rising labor costs.

Under such circumstances, many denim manufacturers fall into the predicament of production and management difficulties, struggling on the edge of losses, and some of them are even on the verge of bankruptcy.

Our Lanyan group has been engaged in professional production of denim since the early 80s of last century. Over the past 20 years, the development of enterprises has witnessed the rapid development and progress of denim industry in China.

In the 1-5 months of this year, the major economic and technological indicators such as sales revenue, profits tax and export earnings were increased compared with the same period last year.

But in fact, in terms of our denim enterprises, over the past 10 years, I feel that this year is the most difficult year in the course of business development.

Since the second half of last year, the macroeconomic constraints have been strengthened, the sales of the denim market have been sluggish, the cost of enterprise products has increased sharply, and the ability to compete in the international market has declined. Among these problems, the removal of the equipment, products, sales, management and innovation of the cowboy production enterprises is not allowed to be ignored by the macroeconomic policy, which is manifested in the following five aspects:

1, a sharp appreciation of the renminbi and a reduction in the export tax rebate rate.

Every change in the exchange rate will affect the whole industry and the whole market.

In the 1-5 month of July 2005, the yuan appreciated by 4.89% against the US dollar. Compared with the exchange rate in July 2005, the total appreciation has reached 18%. Now it has entered the "6" era.

In addition, the export tax rebate rate has been reduced from 13% to 11%, which has become an important factor of reducing profits for denim enterprises, and has also led to a sharp decline in export profits of enterprises.

The appreciation of the renminbi and the reduction of the export tax rebate rate have eaten up the meager profits of the denim producers, and the enterprises have to raise their export prices. However, the price increase is at the expense of many customers turning to other countries.

Without raising prices, it is impossible to survive and raise prices may lose the market. Enterprises are facing a dilemma.

Take Lanyan group as an example, in the 1-5 month of this year, the total amount of foreign exchange earnings earned by enterprises was US $36 million 562 thousand and 800, and the loss reduction brought by RMB appreciation and export tax rebate rate reached 1163 yuan.

2, the loan interest rate rises, the enterprise loan is difficult.

Since March 18th last year, the interest rate of bank loans has been raised six times. It has been pferred from 6.39% to 7.47%, an increase of 1.08 percentage points and an increase of 16.9%. Only this year, the company will increase its financial cost by about 20 million yuan per year, and the deposit for bank acceptance will also rise from 10% to 30%-50%.

Among them, due to the implementation of the national processing trade ledger margin.

The system has entered the "real pformation", and the processing and processing trade will increase liquidity and have a great impact on production and operation.

In 1-5, our company only paid more than 2700 yuan for the account guarantee, which brought heavy burden to the enterprise.

In addition, enterprises can only open letters of credit within 90 days after opening the issuing bank. It is difficult to issue a 180 day usance letter of credit, and all kinds of bank fees and business fees have also increased significantly.

Tight monetary policy has made loans and financing more difficult than ever.

The textile industry is one of the industries that restrict the development of the state. Therefore, banks are the first to consider when compressing loans. It is impossible for enterprises to apply for increments in this year's credit granting.

The loan within the scope of credit is also required to be examined and approved by the provincial Bank alone. It is difficult to approve a single application when the provincial bank fails to complete the loan compression target, especially in the quarter, half year and year.

At present, provincial line control loan compression index is about 10%-30%.

The foreign exchange loan business, except for the provincial strategic cooperative enterprises, will be recovered at the same time. The strategic cooperative enterprises must also withdraw the 10%-30%, and the loan must be paid on the same day, and the loan can not be repaid on the same day.

The safety of the capital chain is the first important thing for enterprises to survive. Once Laiwu has a good performance in the industry, the bankruptcy and bankruptcy of the prince and other enterprises further confirm that the denim enterprises have been faced with the test of survival and bankruptcy under the constraint of the "capital chain".

3, the prices of raw materials and energy are soaring, and the pportation costs of products are soaring.

In China, CPI has been rising steadily since last year, but the price of denim is not strong enough.

According to the statistics issued by the National Bureau of statistics, in May this year, China's consumer price level rose by 7.7% over the same period last year, but clothing prices dropped by 1.5% over the same period last year.

However, in the first half of this year, the prices of various raw materials in the denim industry have been soaring, due to the rise of international crude oil prices. The low grade cotton suitable for denim has always been mainly imported.

Over the past two years, the number of low grade cotton in the international market has been reduced, and the price gap between medium and high grade cotton has gradually decreased.

The average price of domestic cotton is 1500 yuan / ton higher than that of the international market, and the price of low grade cotton is 4000 yuan / ton higher than that of India and Pakistan.

Especially for medium and low grade cotton, the corresponding tariff is as high as 15-20%, and the price under sliding quasi tax is only slightly lower than that of domestic grade cotton. This makes the denim enterprises using a lot of low grade cotton suffer a great impact.

In May 28th, the state announced a tariff adjustment on some products, which would impose a temporary sliding tax policy on cotton. Even so, the price of imported cotton is still higher than the domestic cotton price of 600 yuan / ton.

The temporary slip tax policy is just a drop in the bucket for many denim enterprises, which has also resulted in a large number of orders being pferred to India, Pakistan, Turkey, Vietnam and other countries.

In addition to the high fluctuation of cotton prices, the prices of various dyes and accessories, such as Indigo powder and insurance powder, rose sharply compared with last year.

The price of insurance powder last year was 4900 yuan per ton. In June this year, it had reached 11000 yuan per ton and Indigo powder price doubled to the end of last year, reaching 61 thousand yuan per ton.

Meanwhile, energy prices such as water, electricity and steam are also rising. As well as fuel prices skyrocketing, pportation costs of enterprises have increased by 26% over the same period last year.

The cost of fast rising has almost squeezed the profits of enterprises, so enterprises may lose money when they pick up the bill. This is even worse for denim manufacturers.

4, labor and environmental costs are surging.

The implementation of the new labor contract law has greatly increased the labor costs of textile enterprises.

According to statistics, the average wage of the textile industry is 70% of the average wage of the national manufacturing industry. In recent years, the shortage of labor in textile enterprises has been widespread in various regions, recruiting difficulties, poor labor stability and rising labor costs.

Compared with the same period last year, the per capita wages of our company increased by 15.9% on average, and the cost of labor insurance only increased by more than 23 yuan per month compared with the same period last year.

In addition, according to the national policy of energy conservation and emission reduction, the company has invested more than 1000 yuan in environmental protection funds this year to pform the existing sewage treatment equipment and technology, and to recycle waste water and waste materials by new technologies of energy saving and emission reduction.

5, foreign competitors are becoming stronger and stronger, and the competitiveness of Chinese cowboy enterprises in the international market is weakened.

In recent years, the status of China's textile giants is increasingly being challenged and challenged by some developing countries in Southeast Asia. After many years of development and accumulation, the textile industry in these countries has been greatly improved in technology and management level, and is still developing. Its lower labor force and raw material cost have brought great competition pressure to China's textile industry.

In particular, the denim business has been struggling under the influence of macro policy. Our original price advantage is no longer in existence. Export orders have been losing to varying degrees. Competitiveness in the international market has been weakening. The export market is constantly being eaten up by countries such as India, Pakistan, Bangladesh and Vietnam.

Since this year, under the pressure of many unfavorable factors, the export denim production enterprises have been pushed to the "crater". Under the severe situation, we have changed the pressure into power, and have been carrying out some explorations and attempts.

1, recognize the situation, strengthen confidence and respond positively to challenges with high morale.

Through various forms, we have carried out extensive situation education activities so that cadres and workers can uplift their spirit and work together in the face of severe difficulties, and enhance their courage and confidence in overcoming difficulties.

Under the current severe economic environment, complaining, worrying, worrying, making no progress, expecting market improvement and policy change have no way out. They can not change the status quo. Only by actively coping with them, changing pressure into motive force, developing and surviving in innovation, and doing everything possible to find ways to overcome difficulties, can enterprises continue to move forward.

2, speed up the pace of product restructuring and find ways to develop in innovation.

Since this year, we have further accelerated the pace of product structure adjustment and actively produced products with high added value.

Especially in the field of production technology, companies aim at the high end of the market, shoulder to shoulder the world-famous brands, in the new materials, new technologies, new processes, new products, according to the business policy of "people without me, people have me, and people are superior to me", take product research and development as the top priority in developing the market, take the way of "going out and coming in", grasp the market trend in time, and improve the new market concept based on myself.

The company integrates existing resources advantages and sets up a one-stop sample workshop, which is fully equipped from spinning, dyeing and finishing, weaving to clothing washing. It embodies the advantages of technology and technology of enterprises, increases capital investment, enriches R & D teams, and provides a unified and efficient R & D platform for new product development and product attachment.

Invest more than 500 yuan, increase the finishing equipment, and constantly meet the market's new requirements for product finishing process.

The two achievements of the new product of independent research and development, "new technology research and product development of new dyeing and dyeing of jeans" have filled the gap in China and reached the international advanced and domestic leading level. The two achievements of "denim printing technology research and industrialization", "antistatic denim fabric and clothing" have reached the leading domestic and international advanced level.

Products with high technology content have been favored by foreign businessmen. The company has established stable trade relations with LEVI, S, TCP, SQZ, GAP and other famous foreign enterprises such as Japan KIT Co., Ltd., ensuring the stability of product orders.

3, actively splicing orders, and strive to avoid the risk of RMB appreciation.

This year, we have the courage to face up to difficulties, dare to face challenges directly, and set up our minds to take the market as "change" and follow the market's "turn" strategy. We should take effective measures to find business opportunities, splice orders, and strive to expand market share.

While continuing to increase cooperation with large US companies, enterprises have focused on developing the European market and expanding the Russian market.

On this basis, enterprises take positive measures to eliminate and avoid risks brought by RMB appreciation as far as possible.

After in-depth analysis of the export situation, we have raised the price of export products by 5%, and adjusted accordingly according to the exchange rate changes.

At the same time, when signing export contracts with some merchants, changing the way of quoted prices in the US dollar and adopting Renminbi quotations, of course, all these depend on the comprehensive strength of the enterprises.

4, pay close attention to product quality and consolidate management foundation.

Improving the competitiveness of the market is the guarantee of orders. Only when quality is improved steadily can we remain invincible in the increasingly fierce market competition.

Especially in the current slump industry downturn and market downturn, the quality of products is directly related to the survival of enterprises.

Since the beginning of this year, we have focused on the problem of product color stability. We have been heavily instructing domestic and foreign dyeing experts to conduct regular guidance. Through adjusting the dyeing and finishing materials and improving the production process, we have made the fabric closer to the fashion trend on the color light, and the stability of the product color has been further improved, which is more suitable for the market demand.

At the same time, we further improve.