"Three High" Compression Thin Profit &Nbsp; Guangzhou Foreign Trade Clothing Enterprises Struggling

In February 16th, the day before the Lantern Festival, the wet and cold weather in early spring in Guangzhou showed no signs of change.

Jinlong pan foreign trade clothing city is a foreign trade clothing wholesale market in Sanyuanli District of Guangzhou. A large portion of foreign trade stall owners rely on export sales to make profits.

However, they are having a hard time.

The RMB exchange rate and raw material prices have been climbing steadily, making the stall owners anxious and helpless.

Foreign business today

Walking in the Sanyuanli area of Guangzhou and the area of Xiao Bei Road, many African businessmen are often encountered.

Most of them do business in clothing and foreign trade.

"Business was much better before 2007."

Lao Zhang, who manages the stalls of foreign trade fashion in Jinlong pan foreign trade garment city.

Lao Zhang recalled that before 2007, the main source of his business was selling clothes to African customers. At the time, selling a pair of jeans could basically earn more than 2 yuan.

"There are not so many people coming now, and I dare not sell them even if they want to buy it."

The reason why they dare not sell is that there is no profit, and profits are stolen by the RMB exchange rate which has been steadily rising.

Lao Zhang calculated a bill: before 2007, a pair of trousers African customers would like to pay 28 yuan to buy. Now 1 dollars can only be exchanged for more than 6 yuan, while foreigners are buying dollars at the standard price.

The same pair of trousers, now the other side only willing to pay 23 yuan.

Miss Wang, another stall in Jinlong plate, is facing such embarrassment every day.

An African customer came to her for a talk. He thought the price of Ms. Wang was unreasonable. He picked up the calculator skillfully and pressed out the price that he thought was reasonable.

Ms. Wang shook her head and said several "NO".

Insist on losing or changing careers?

Ms. Wang told reporters that at present, the price of an ordinary pair of jeans is twenty or thirty yuan in Jinlong pan foreign trade clothing city. Besides the high exchange rate, the business is becoming gloomy, and the cost of taking them is also rising.

Lao Zhang told reporters that the price of a pair of jeans is now more than 1 yuan more than before.

"The price of materials is rising, and the wages of workers are rising. How can pants not go up?"

Since last year, inflation pressure has been increasing in China.

Since October last year, cotton has also joined the tide of rising prices, which directly led to the rise of the cost of clothing industry.

According to Xinhua news agency, fabric prices rose more than 60% in the first half of last year, making business pressure rise sharply.

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Lao Zhang pointed to a relatively complicated jeans of a lathe operator and told the reporter: "I just opened 35 yuan for this pair of trousers, and no one else, but the factory price will be more than thirty yuan."

He pointed to a relatively simple pair of jeans and said, "if I can get a whole bunch of 10 yuan, I would like to sell it, but no one wants it."

He explained that the cost of such trousers manufacturers is actually more than 10 yuan, because some of these pants have some defects, so the manufacturer sold him 8 yuan, "I now sell a pair of pants will earn a dollar."

Lao Zhang said that there were some African guests who had ordered a large number of goods in his place. After paying the deposit, they found that they could not earn money and ran away, and the goods hoarded were likely to lose money.

Lao Zhang claimed that he was already in a loss.

He said that many people in Jinlong Pan's foreign trade clothing had lost money, and some people had changed careers.

Reporters in the clothing city to see, in addition to a layer and two layers of more stalls are still open, the third floor is above empty shop, some rental advertising.

Ms. Wang and Lao Zhang are helpless for future losses.

"If I have more cash, I may consider opening my own factory, so that I can save middle cost."

Lao Zhang thought for a while and said.

Garment industry is facing a shuffle.

Even with cash, it is not easy to open a garment factory nowadays.

The rising cost of raw materials is testing Guangdong's manufacturing industry, which has a relatively low profit margin.

According to the relevant calculation, the profit of clothing enterprises in Guangdong is generally around 3%, but because of the low bargaining power of domestic enterprises, most enterprises choose to digest the price pressure in their own way.

The rise of the RMB exchange rate is undoubtedly exacerbated by the pressure on garment enterprises under the pressure of high cost.

It has been calculated that if RMB appreciates by 1%, nearly 20% of enterprises will approach the critical point of profit and loss. If RMB appreciation is 5%, more than half of enterprises will be closed down.

Liu Yueping, President of Guangdong clothing and apparel industry association, said: "RMB appreciation will bring serious blow to garment export processing enterprises. At present, the profits of domestic garment processing enterprises are generally less than 5%, and if the RMB appreciation is 6%, it may lead to a loss of garment export enterprises."

Against this background, Lao Zhang's clothing city stalls are hard to survive, but they are only the embodiment of the whole industry's big situation at the very end. The upstream garment enterprises are also facing the choice of life and death.

In addition to the pressure on the cost of raw materials and the high exchange rate, the outstanding labor cost has risen since last year, and this year is more strongly impacting the Raider garment manufacturing industry.

After the Spring Festival, advertising in Guangzhou's major urban villages and garment enterprises concentrated everywhere.

After the pay rise last year, prices soared and workers' expectations for pay increased.

In this regard, bosses are in a dilemma between starting a business and making profits.

The owner of a small garment manufacturer in Guangzhou says there is no way to give up the factory.

In fact, after the haze of the financial tsunami, China's clothing exports have also been warmer.

Data show that in the first half of last year, the export volume of textile and garment industry totaled 88 billion 878 million US dollars, up 22.09% over the same period last year, of which clothing exports amounted to US $53 billion 220 million.

An increase of 16% over the same period.

However, the hidden worry can not be obliterated by these optimistic figures.

Some analysts said that the economic recovery increased the number of foreign orders, but the clothing export orders generally low profits, some enterprises in order to retain customers have to maintain capital or even lose their money.

After the appreciation of the renminbi, some of the export products may be sold to the domestic market, and will also exacerbate the competition in the domestic market.

Insiders predict that the "three high" pressures may stimulate the industry to reshuffle the cards. If enterprises do not carry out industrial upgrading and structural adjustment, they will probably be eliminated.

However, for these large and small garment manufacturers and garment traders, the pay rise is not enough for them, let alone rely on their own strength to upgrade. Just as the body is getting bogged down in the mire, it is difficult to ask them to take off.