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Chinese silk exports decline in Q1 2014
13
Jun '14
In the first quarter of 2014, a decline was observed in silk exports from China, and profit margins of silk textile enterprises also dropped due to rising business costs.
 
According to the figures from the National Bureau of Statistics, from January to March 2014, statistics of 989 large-scale silk textile finishing and industrial enterprises show that the industry’s main business income increased by 5.61 percent year-on-year to 27.356 billion yuan, while profit rose by 4.05 percent to 1.157 billion yuan. Although the whole industry realized modest growth in profits, the actual growth has slowed down compared to the same period in 2013.
 
Among other indicators, during the first quarter, inventories of silk textile and finishing industry increased by 7.85 percent to 13.064 billion yuan, corporate operating expenses increased by 4.73 percent, administrative expenses were up by 6.21 percent, while financial expenses, including interest payments, increased by 4.71 percent.
 
Statistics show that the total number of loss-making silk textile enterprises grew by nearly 60 percent during the three-month period. 
 
According to customs statistics, from January to March, the national silk merchandise exports earned US$ 713 million, down 12.6 percent year-on-year. Of this, silk garment exports decreased by 21.5 percent to $244 million. In terms of volume, China exported 23.077 million pieces during the quarter, showing a decrease of 68.7 percent. The unit price, however, increased by 150.59 percent.
 
Silk exports to only Italy and Germany, among the top ten Chinese silk export destinations, showed a slight increase in exports, while exports to India dropped by 27.85 percent year-on-year.
 
Looking at the performance of the Chinese silk industry in the first quarter of 2014, the situation is not optimistic. The first main factor that is likely to affect the performance is the frequent fluctuation in currency exchange rate, which puts Chinese domestic export enterprises at foreign exchange risk. The second factor is the gradual weakening of domestic labor price advantage, resulting in gradual transfer of orders to India, Vietnam, Cambodia and other Southeast Asian countries, that have low labor cost advantage.
 
In addition, there is also raw silk cocoon production pressure. The gradual transfer of rural labour to urban areas has severely constrained the traditional cocoon production in Jiangsu, Zhejiang and other coastal provinces.
 
However, due to the favourable government policy, as reflected in the September 2013 joint declaration by the Ministry of Commerce and eight other departments for further promotion and healthy development of silk industry, China’s silk industry will gradually adjust and upgrade.
 

Fibre2fashion News Desk - India

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