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Rising raw material & labor costs force textile exporters to struggle
Nov '10
Chinese textile exporters revealed that they are struggling to continue their business in the midst of increasing raw material as well as labor costs, at the largest trade fair of the country – the Canton Fair.

According to an official from the biggest home textile company of the country, the labor wages have increased by 30 percent and a number of textile plants have closed down their production units due to the scarcity of laborers.

Further, cost of raw materials is increasing at a very fast rate. Price of cotton has increased from 18,160 yuan (2,720 U.S. dollars) to 27,405 yuan per ton, recording an increase of 51 percent. Other fabrics are also experiencing a rise in their prices.

Apart from this, labor and raw material scarcity is also hindering the production of textile units, which is causing delay in delivery. It has become one of the biggest concerns for the customers. Textile products from China have lost their aggressiveness. Most of the textile products are recording a rise in their prices.

The textile sector of the country is facing tough competition from several Asian countries, which have lower labor costs than that in China. These Asian countries are experiencing a rise in the quality of their textile products as well as efficiency in their manufacturing and are expected to catch up with China soon.

China exported textile products worth US $149.8 billion in the initial nine months of 2010, registering a year-on-year growth rate of 23.14 percent. However, the exporters are of the opinion that these figures are unreliable. The growth in the figures is due to the large-scale orders placed by the customers.

Earlier, the customers used to place an order keeping in mind the demands for one or two months but the scenario has changed now as they place an order for six month at one shot. The reason behind this is the apprehension among the customers about the rise in prices of the products. Besides, they want to avoid any delay in the delivery of goods.

In order to face the challenges, the textile plants are expected to pay more attention on innovation and brand building. For instance, one of the companies in China has been successful in its effort to continue its business by putting conventional designs on jeans. The company had also established its own brand in US.

Opening of company's outlets in foreign countries has increased the earnings of the company as well as helped in building the brand image, according to a company representative. The current crisis has presented a lot of opportunities for the aggressive companies which are likely to survive once the small as well as medium-sized firms are thrown out of the market.

Fibre2fashion News Desk-India

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