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Chinese garment firms feel impact of eurozone crisis
Jul '12
Apparel companies in China are beginning to feel the impact of the ongoing financial crisis in the eurozone countries.
The eurozone debt crisis, which is not likely to end very soon, has brought in economic recession, leading to high unemployment and a dip in consumer spending across Europe. This has, in turn, led to a corresponding reduction in demand for Chinese clothing items in Europe.
The direct effect of the fiscal woes in European countries is being felt by small garment firms, including those in south China’s Guangdong province, whose profits have already declined owing to the sharp appreciation of the Chinese currency against the euro.
Since 2010, the Chinese yuan has appreciated by 23 percent against the euro, which makes Chinese apparel products less competitive in the eurozone.
In addition, there is a rise in labour costs and price of raw materials, which means lower profits for Chinese clothing exporters. 
As a consequence, several Chinese garment exporters have reduced the number of workers and also resorted to pay cuts for existing employees. These companies plan to hire temporary workers if there is a surge in orders in near future.

Fibre2fashion News Desk - China

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