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Chinese enterprises face severe test of survival
03
Dec '10
Cotton price has increased up all the way in China's market, resulting in soaring costs and falling profits of textile enterprises. Cotton price continued to rise in September to early November this year, from 18,000 Yuan to over 30,000 Yuan per ton, up about 70 percent.

Cotton is the most basic raw material in the textile industry and cotton fiber accounts for almost 60 to 70 percent production costs of enterprises.

Textile industry faces another severe test of survival. On the one hand, they cannot avoid rising cost of labor and raw materials, on the other hand, they are finding it difficult to increase export prices, due to strong resistance from retailers.

Industry experts say, the rise in cotton price creates the greatest impact on small and medium enterprises producing low-end products, as they can not absorb cost pressure by increasing price and have to avoid losses through scaling down or even stopping production.

However, these challenges are forcing these enterprises to upgrade technology, innovate and improve product design. Experts opine that, upgrading should be across entire chain, rather than a single functional upgrade.

Fibre2fashion News Desk

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