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Margins of Chinese textile units hit in 2012
05 Jun '12
1 min read
Nearly 20 percent of big and major Chinese textile enterprises are losing money says a report of the China Textile Industry Association.
The report titled “Operational Situation of Textile Industry between January and April 2012” says the loss amount grew by 120 percent in the first four months of 2012.
Most of the enterprises were operating their units at lower capacities and this period which is normally considered a peak period, witnessed a drastic slowdown of orders.
Most of these enterprises work on very tight margins, depending on huge volumes to boost profits.
Despite rise in raw material and labour costs, producers could dare not hike prices, for fear of losing whatever orders they could get.
So, in absence of timely overseas orders, margins took a hit as capacities also needed to be clipped.
The report says the situation is very grim and if the situation does not improve, there could be many plants closing down.
The report titled “Operational Situation of Textile Industry between January and April 2012” says the loss amount grew by 120 percent in the first four months of 2012.
Most of the enterprises were operating their units at lower capacities and this period which is normally considered a peak period, witnessed a drastic slowdown of orders.
Most of these enterprises work on very tight margins, depending on huge volumes to boost profits.
Despite rise in raw material and labour costs, producers could dare not hike prices, for fear of losing whatever orders they could get.
So, in absence of timely overseas orders, margins took a hit as capacities also needed to be clipped.
The report says the situation is very grim and if the situation does not improve, there could be many plants closing down.
Fibre2fashion News Desk - China
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