Domestic textile mills in China currently have excess capacity and are unable to operate at optimum capacity.
In 2010, Chinese textile mills had a capacity of around 120 million spindles, which is likely to increase to about 150 million spindles by the end of 2011.
While large enterprises are able to better utilize their capacity, the small and medium enterprises (SMEs) are finding it difficult to ensure their operations at full capacity.
In this context, it is the newly built capacities that will face problems of sales and profitability. Hence, an industrial reshuffle looks inevitable. Volatility in price of raw material would only hasten the shuffling process, resulting in industrial concentration.
SMEs that are unable to utilize their full capacity will either collapse or be acquired by large companies.
Fibre2fashion News Desk - China
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