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Silk industry in blues due to rising production costs
Jun '08
Of the 107 existing silk enterprises in Zhejiang Province, nearly 56 have incurred a loss in the first quarter of this year. The once resplendent silk industry is facing problems that seem insurmountable.

According to the estimates made by Zhejiang Silk Association some two years ago, profits of the local silk enterprises could reach a total of 1000 million yuan. However, the present situation reflects a different scenario as profits in this spring season were not even 100 million yuan.

Experts believe that rising cost of labor and a relative increase in the cost of production has squeezed the profits coming from silk cloth manufacturing.

For instance, cost of production of reeling silk earlier was 20,000 yuan per ton but now it is more than 30,000 yuan per ton; up by over 50 percent. There were about 76 reeling silk enterprises in 2007 but presently Zhejiang Province is left with only 56 of which 36 enterprises are running at a loss.

Experts believe that the situation is likely to get worse in the second half of this year, and appreciation of RMB is expected to make conditions more difficult.

Fibre2fashion News Desk - China

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