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Clothing factories in suspended state
May '11
Latest market reports indicate that, medium and small garment enterprises in Zhejiang, Guangdong and Jiangsu provinces are in semi-suspension state or even suspended state.

Struggling enterprises are not only in the clothing production industry, but some footwear enterprises also have fallen into such plight.

Concerned by the situation, the Industry and Information Ministry issued a circular, requiring various authorities in all provinces and cities to carry out a survey on financial condition of various SMEs.

A recent survey carried out by the National Business Federation has also raised great concern. The survey which took two months to complete carried out a systematic survey in 16 provinces, including Guangdong, Zhejiang and Jiangsu province.

The findings show that business conditions of small and medium enterprises, especially small and micro enterprises are more difficult than they were in the global financial crisis of 2008.

The survey reveals rise in raw material prices, wage hikes, labor shortage, RMB appreciation, fall in external demand, increase in competition from surrounding nations, power shortages, among many reasons, for the current situation.

The report states that, it may be very difficult to reverse the situation.

After the 2008 financial crisis, government largesse in form of subsidies and incentives amounting to four trillion Yuan saved SMEs from closure.

A similar four trillion Yuan is needed once again to avoid mass closures of small and medium enterprises, which could have a cascading effect on the garment industry as a whole, opine experts.

Fibre2fashion News Desk - China

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