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Gloom surrounds Wei Qiao textile unit

08
May '08
Wei Qiao, the largest cotton textile unit of not only China but of Asia, is going through tough times. There are various reasons that have affected the manufacturing unit, including decline in export orders, changes in RBM exchange rates, tax rebate rates and implementation of new laws like Labor Contract Law and state credit policy.

The price of raw material has also increased that has reduced the profit margins of the unit. To add further woes, the textile plant that earlier had 1,35,000 employees, saw almost 17,000 workers walk out in 2007, that has affected the production process to some extent.

In 2007, Wei Qiao produced almost 8,91,000 tons of cotton yarn, 1.64 billion meters of fabrics and 180 million meters of denim, which is slightly higher when compared to previous year.

However, the turnover decreased by approximately 1.24 billion yuan, gross margin reduced by 660 million yuan and average gross margin rate fell from 16.8 to 1.3 percent last year, when compared to 2006.

According to China Textile Industry Association, the actual business profit margin of 2/3 enterprises is only 0.62 percent. These statistics have made the people associated with the sector worry about the future of textile industry in China.

Fibre2fashion News Desk - China


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