Chinese textile firms will continue to face problems in H2

09 Jul '12

2 min read

Textile companies in China will continue to face problems in the second half of the current year, according to the Ministry of Industry and Information.

Contracting demand and soaring cost of production is eating away the profits of Chinese textile firms and they are not expected to get any relief from the difficulties they are facing now, the Ministry said in a statement.

Indicative of a year-on-year rise of 11.8 percent, China’s textile output for the first five months of the current year increased to 2.14 trillion yuan or US$ 336 billion, which is much lower than the 30.1 percent growth achieved during the same period last year.

The profits of textile manufacturers during January-May 2012 dipped by 2.4 percent to 91.7 billion yuan, which is quite at variance with last year’s figures, when profits grew by 38.1 percent year-on-year.

Low market demand, increasing cost of production and rising global competition are the key challenges confronting the Chinese textile firms, the Ministry said.

So far, the Chinese textile industry relied heavily on exports. However, it is now losing its global market share to its regional competitors like Vietnam, India and Bangladesh, the Ministry stated.

It added that the domestic industry is losing its competitiveness, mainly due to the widening gap in cotton prices in the domestic market and the rate at which the commodity is traded in the overseas markets.

Fibre2fashion News Desk - China

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