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Some foreign funded textile cos may face elimination

Mar '07
Compared with other industries, a relatively special feature of textile industry is that its exports account for half of its total output, so the combination of two tax levels into one will have a direct impact on textile and garment exports.

The export proportion of foreign-funded enterprises is greater, but after the combination of two tax levels, the export share of domestic enterprises in total exports will increase. Some Hong Kong, Macao and Taiwan funded textile companies, who have been moved to mainland mainly being attracted by preferential policies, but export low value-added textile products, will face elimination.

According to Yang Yan, general director of Hong Kong General Chamber of Textiles, the biggest pressure for Hong Kong textile enterprises that have invested in mainland is the competition from mainland enterprises.

Tax levels combination will further aggravated the competition. Some Hong Kong funded textile enterprises may be eliminated.

However, overall it will not have too strong impact. Fair competition would promote Hong Kong enterprises in mainland to increase added value of products, even change the competition into cooperation. They could make use of their edge in overseas marketing network to strengthen cooperation with domestic enterprises.

According to Chinese customs statistics, textile and apparel exports in 2006 amounted US $147 billion, an increase of 25 percent. Three modes of enterprises (Sino-foreign joint ventures, Sino-foreign cooperative enterprise, and foreign-funded enterprise) exported $48.099 billion of textiles and garments, accounting for 32.72 percent of the country's total textile and garment exports.

Fibre2fashion, News Desk - China

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