Interviews
Textile cos suffer declining margins
03 Mar '08
2 min read
In spite of an 8 percent increase in the prices of clothing exports of China, a huge number of domestic textile companies incurred heavy loss last year.
At an industrial conference held in the province of Guangdong, Du Yuzhou, President of China National Textile and Apparel Council(CNTAC) stated that nearly 17 percent of the 44,200 textile companies have lost money in the first 11 months of 2007.
Surprisingly, most of these companies were in their fifth consecutive year-on-year rise in export prices for textiles.
Reports show that a decline in the profit margins is largely due to rising labor cost and weakening dollar.
While on an average the industry secured a 3.9 percent profit, the weaker companies registered an average margin of mere 0.74 percent.
Textile sector of China shows no sign of slowing, with exports growing by 19 percent last year to US $175.6 billion. On the other hand, the average price for the country's exports, increased 7.9 percent last year.
Additionally, with domestic consumer price index hitting an 11-year high of 7.1 percent in January, exports could worsen the inflationary pressures in the US, European Union and Japan.
Nonetheless, sales momentum of China continued even for January, contributing to a trade surplus of $19.5 billion for the month, up 23 percent.
Its time the perplexing situation is given serious consideration to ensure substantial gains for the companies, without which the industry is unlikely to flourish.
At an industrial conference held in the province of Guangdong, Du Yuzhou, President of China National Textile and Apparel Council(CNTAC) stated that nearly 17 percent of the 44,200 textile companies have lost money in the first 11 months of 2007.
Surprisingly, most of these companies were in their fifth consecutive year-on-year rise in export prices for textiles.
Reports show that a decline in the profit margins is largely due to rising labor cost and weakening dollar.
While on an average the industry secured a 3.9 percent profit, the weaker companies registered an average margin of mere 0.74 percent.
Textile sector of China shows no sign of slowing, with exports growing by 19 percent last year to US $175.6 billion. On the other hand, the average price for the country's exports, increased 7.9 percent last year.
Additionally, with domestic consumer price index hitting an 11-year high of 7.1 percent in January, exports could worsen the inflationary pressures in the US, European Union and Japan.
Nonetheless, sales momentum of China continued even for January, contributing to a trade surplus of $19.5 billion for the month, up 23 percent.
Its time the perplexing situation is given serious consideration to ensure substantial gains for the companies, without which the industry is unlikely to flourish.
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