Bad Environment Worsens &Nbsp; China'S Cotton Spinning Enterprises In Uzbekistan Intend To Divest.

In order to protect the domestic cotton textile industry, Uzbekistan has abolished the tax rate of 20% in January 1st this year.

Recently, foreign media reported that

These Chinese enterprises reflect that Uzbekistan's preferential export tax rebate rate (rebate rate 20%) has been abolished for many years, that is, from January 1, 2011 onwards, the Ukrainian tax department will no longer accept the value-added tax refund application for export commodities of cotton yarn export enterprises.

In addition, Wu's price concessions for cotton textile enterprises to buy cotton 15% are also in name only.

As the Ukrainian cotton price index is higher than the international index by more than 10 percentage points, the price after the discount basically meets the international market price.

In view of the above reasons, some Chinese cotton spinning enterprises that are negotiating with the Uzbekistan side are planning to suspend investment or divest.

The bad policy is repeated.

"We originally planned to invest $22 million to buy a cotton mill in Andijon, and now we have invested $about 1300000, but the Uzbekistan government's policy of abruptly abolishing the export tax rebate has caught us off guard. Now we can do nothing but wait for a turn in the policy."

Liu Qiang, head of Shandong Yuncheng Heng Shi textile company, said in a telephone interview with reporters.

Shandong Yuncheng Heng Shi textile company visited Uzbekistan in July last year to purchase a local cotton mill in Andijon.

Liu Qiang told reporters that because of the good quality of Wudang cotton and the cheap labor force, we should consider investing in spinning mills and exporting pure cotton yarn products to Russia and other countries.

"Due to the dry climate of the Ukrainian countries, the lint produced is better than the quality of Xinjiang, and the employment of local workers is only 600 yuan per month.

Most importantly, Uzbekistan's export tax rebate rate is relatively high, and the purchase of cotton can enjoy 15% of the price concessions, the profits of enterprises basically rely on these two policies.

Liu Qiang said frankly.

Since then, the Ukrainian government has been implementing export tax rebates for 20% of value added tax to export enterprises in Ukraine since January 1, 2005, in order to enhance the competitiveness of export products in the international market.

But what Liu Qiang did not expect was that this policy suddenly changed.

"Not long ago, we discovered that in the new tax policy of Uzbekistan, land use fees and other preferential policies have been implemented, but the export tax rebate policy has disappeared."

Liu Qiang said, for example, exporting a ton of lint worth 20 thousand yuan, before a ton can be returned to the enterprise 4000 yuan, after removing other costs, the enterprise is still profitable, but now the tax rebate has been abolished, and the profits of the enterprise will be gone.

Liu Qiang admitted that the company's enthusiasm for investing in Ukraine was badly hurt and had to suspend investment. The $about 1300000 that had been invested included factory building, travel, renting, hiring lawyers, accounting and so on.

Liu Qiang told reporters that the governor of Andijon had personally appeased them in order to retain them.

"The governor said," do it first, and we will slowly reflect the situation to the government. "

Liu Qiang further pointed out that "in fact, policy changes have also damaged the Ukrainian side. Many foreign workers have gone out of business after foreign investors have gone."

Not only is Shandong Yuncheng Heng Shi textile company, but other Chinese cotton textile enterprises in Ukraine are in trouble.

The Shandong cotton group has planned to invest $2 million to buy a spinning mill in Bukhara, and has already paid a deposit of about 400 thousand yuan.

It is understood that the abolition of the 20% export tax rebate policy by the Ukrainian government involved the interests of more than 100 domestic and foreign cotton textile enterprises in Ukraine. The implementation of the new policy will put most of the cotton spinning enterprises in a loss.

At present, the relevant enterprises in the Ukrainian states are joining forces to appeal to the Ukrainian government for the government to resume the export tax rebate policy, but the result is hard to predict.

"At present, we have sent two people to stay there. Once the policy changes, we will continue to invest. After all, we can not let the money thrown out."

Liu Qiang said.

Planning economy

"Ukraine cotton industry is a highly planned economy monopoly industry, in cotton raw material supply, electricity, natural gas rationing and so on will be affected by the" plan ".

An insider, who declined to be named, told reporters.

He also told us that because of the planned economic system, the enthusiasm of local farmers to grow grain was generally not high, making the output of Ukrainian cotton less than that of foreign countries. Therefore, the Ukrainian government adjusted its policies to restrict the export of cotton.

Data show that as of March 15th this year, the amount of seed cotton daily processing in Ukraine has decreased from 3200 tons in early March to 3000 tons, which is 1500 tons lower than that in mid February.

At present, Wu Pu cotton has increased from 110 cents / jin to 230 cents / Jin, doubling.

According to media reports, due to financial constraints, the Ukrainian side is in urgent need of capital repatriation, so the attitude towards selling cotton prices is tough, which makes it difficult for some international cotton traders to accept.

The high price of cotton has made local Chinese cotton textile enterprises more difficult.

According to Liu Qiang, a Henan textile company used 4 level ~5 cotton spinning before, but in order to control the cost, it can only be maintained with leftovers.

A business in Anhui has been closed down for two months due to the sudden increase in costs due to the rise in cotton prices.

Related industry insiders said that the highly planned economy has increased the instability of Ukrainian policy, thus increasing the obstacles to foreign enterprises in Ukraine's investment in the cotton textile industry.

In addition, although the power cost of Wu Lao is relatively low, compared with Chinese workers, Ukrainian skilled textile workers are few and easily lost.

Therefore, Chinese enterprises wishing to invest in Ukraine must make a comprehensive decision and avoid losses.

Liu Qiang told reporters that he now regrets two things: first, before investing, he should not listen to the plation of "only reporting good news without worrying about it". The spirit of adventure is lacking in professional judgment. Two, the relevant policies of the state to support private enterprises to "go out" are not understood.

"After all, we must not" fight alone ".

Liu Qiang sighed with emotion.