Futian'S Fabric Cost Increased By &Nbsp; Customer Demand Was Strong And Accepted Price Increase.

In the past month

According to Hongkong Ming Pao reported that cotton prices have been rising in the past month, rising to 22684 yuan per ton on the 30 day of last month.

The same price has jumped more than 25% since August, and the mainland government recently auctioned 300 thousand to 400 thousand tons of cotton reserves to ease supply and demand tensions.

The rise in cotton prices will undoubtedly increase the cost pressure of the textile industry. Yan Zhenming, executive director of Futian industries, admitted that in the face of sudden rising raw materials, the company only needs to raise the cost structure and offset the cost pressure.

Increase in price

Fukuda mainly produces knitted fabrics and raw materials are cotton yarn. Cotton prices rose 3% to 28400 yuan per ton in Jiangsu last month due to the rise in cotton prices. Yan Zhenming said that the cotton yarn would be 10% per liter and the company would have to pay 5 to 6% more to make up for it.

"Cotton stocks in the world are low now, and cotton prices will continue to rise due to insufficient supply."

He expects cotton prices will not drop in the short term, because the market demand for cotton is still large.

In addition to rising cotton prices, Fukuda will also face the pressure of RMB appreciation.

At present, domestic sales account for only about 10% of the turnover of the company, and the appreciation of RMB has brought pressure on the export market to Europe and the United States.

Yan Zhenming believes that the appreciation of the renminbi is a common problem facing the industry. It will reduce expenditure by changing the cost structure, such as integrating processes to improve efficiency and energy efficiency.

Strong demand for fabrics, customers accept price increases

Fukuda has 3 cloth factories in the mainland, two in Jiangsu, one in Dongguan, employing over 8900 workers, and rising wages are also troubling the company.

Facing all kinds of cost risks, Yan Zhenming said that the outlook for textile industry this year is still optimistic because the demand for cloth is strong, even if the company increases the price, customers will still accept it.

On the export side, the debt crisis in Europe is more risky, but the US market is relatively stable. It is still China's largest exporter. With the Fukuda customer base scattered, the demand for sportswear or high-end leisure wear is still very large.

As for domestic sales, the group will focus on two aspects of cloth making and garment making, without considering its own brand, and will actively expand its domestic market.

Fukuda nearly 90% of its turnover comes from the manufacture and sale of colored cloth, and only 10.8% of its turnover comes from ready-made garments. Yan Zhen Ming acknowledges that the garment market is dispersed and the competition is more intense. But in the future, it will study and improve the garment sales and will not abandon the garment market.

In addition, Fukuda's Yancheng plant in Jiangsu has been put into operation at the beginning of this year. This year, the production capacity can reach 3 million pounds per month, which has invested 400 million yuan in capital expenditure. It is strictly stated that there are no other plant plans in the short term. As the Yancheng plant still has room for development, it is expected to produce up to 10 million pounds of dyed cloth per month.