Cost Pressure Rises &Nbsp; Raise Price Becomes The First Choice For Shoes And Clothing Enterprises To Reduce Pressure.

March 22nd cost of raw materials and freight

Recently, Nike, Adidas, Anta, PEAK and other sports brands released the latest financial reports, claiming that "due to rising oil, cotton prices, labor costs and freight rates, the company's gross margin performance is poor."

And price increases have also become the first choice for companies to reduce pressure.

Upper reaches: cotton stocks fall to 10 years minimum

Yesterday, reporters from the Ministry of Commerce monitoring to see, domestic cotton futures in March 18th quoted 30330 yuan / ton, and June 4th last year quoted price of 18105 yuan / ton; international futures, March 11th quotation of 206.69 cents / pound, June 4th 78.18 cents / pound last year.

Since last June, domestic and international cotton prices have continued to develop fever.

In 2011, cotton prices not only failed, but the shortage of cotton became more serious.

"The gap between supply and demand is the main reason for the rise of cotton prices."

Ma Wenfeng, an analyst with the Orient Agricultural Consulting Co. Ltd., told Nanfang Daily that cotton planting is far behind the same level due to the unusual cold weather in the north.

According to his analysis, China's cotton supply and demand gap may reach 2 million to 4 million tons before the new cotton comes into the market.

The National Bureau of Statistics said yesterday that cotton production decreased by 6.3% to 5 million 970 thousand tons last year, while customs data said that China imported 1 million 277 thousand tons of cotton in 2010, an increase of 49.9% over the same period last year.

International market, according to Mumbai's February 28th news, due to less than expected volume of imports, India lowered its cotton production forecast by 5.2% to 31 million 200 thousand bales this year, significantly lower than the January 6th forecast of 32 million 900 thousand packages.

It is worth noting that 2010/2011's global cotton inventory consumption ratio dropped to a minimum of 41.5% in 10 years, down 16.24% from 2001/2002.

"Cotton production in China will not increase significantly in the future, and cotton prices will continue to rise in the future as the end of global cotton stocks continue to decline."

Ma Wenfeng predicts.

Midstream: sharp drop in orders for textile enterprises

Zhu Guomin, chairman of Wuxi natural textile company, pointed out in an interview with the media that cotton prices remained high, and that most of the small and medium-sized knitted garment enterprises could not afford such a high cost of raw materials. Cotton prices were no longer able to pass back links, resulting in a sharp decline in the number of orders.

Recently, Jiang Yaoping, Vice Minister of Commerce, led a team to Dongguan for research and held talks with relevant responsible persons of Dongguan processing trade enterprises.

At the research conference, the head of Dongguan de Yongjia textile factory admitted: "at present, our enterprises are not profitable. If the price of raw materials increases by 1%, the profit will drop by 0.82%, leading to a situation that companies dare not take up or dare to do."

With the high price of cotton raw materials, and the increase of labor costs, many small and medium-sized enterprises in the Pearl River Delta are calling hard.

Research reports from China's first textile network show that since 2010, the labor cost of textile enterprises in eastern Jiangsu, Zhejiang, Shandong, Guangdong and other eastern regions has generally increased by 20% to 30% over the previous year, but there is still a phenomenon of "no recruitment, no retention."

Downstream: brand clothing price rises {page_break}

Reporters from a number of shopping malls, brand clothing enterprises learned that spring clothing this year generally rose two to 30%.

Brand clothing manufacturers said that this year's clothing rose 20% - 30% is not enough to make up for the increase in the cost of enterprises, but too high, consumers are hard to accept, "clothing enterprises are becoming more and more difficult to do."

Cui, manager of "Tian Lan" clothing brand, also told reporters that the pressure from raw materials, production and operation costs increased significantly, and the price adjustment pressure of products was also great.

It is imperative for sportswear brands to "raise prices".

Nike's latest third quarter earnings report said revenue grew by 5.2% in the quarter, but because of rising costs, the company's gross margin was not performing well.

The only way to ease the rising cost pressure is to raise prices.

Lining also said that the average cost is expected to increase by 20% this year, and the price of products will increase by two digits.

Anta also said before that, "production costs will continue to rise, this year's products will increase, but the average range is about 10%."

The price of XTEP and PEAK's sports shoes will also increase.

XTEP said, "footwear prices increase by less than 10%", while PEAK clearly stated that its footwear products will increase by 5% to 10% in 2011.

According to the insiders, in this test, the impact of material price rise on mature brands is not very big, because even if the terminal price rises, mature brands still have fixed passenger flow; but for the clothing brands with many unstable foundations, imperfect channels, and many OEM garment factories, the impact of this clothing price surge is more serious, and may even break their lifeline.