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Textile & apparel firms edge in for heavy losses

May '08
Textile and garment exporters in Shandong Province are facing immense problems due to multiple factors including RMB appreciation, increase in labor cost and adjustment in export tax rebate.

According to the research made by Shandong Provincial Foreign Economy and Trade Department, only 30 percent of the textile enterprises in the province perform well, while more than 20 percent are suffering losses and have to either cut or change the line of production.

The Department made a survey on about 1,464 textile and garment exporters which revealed that profits of the entrepreneurs are squeezing day by day. Of these, only 433 enterprises had their margins crossing 3 percent, accounting for 29.6 percent of the total companies while nearly 21.3 percent were incurring losses or had suspended production or transferred to other industries. The remaining had balanced profits of about one percent.

Reports reveal that last year, the profits of textile and garment exporters got reduced by about 700 million yuan due to export tax rebates alone resulting in 30 percent of the textile enterprises standing at the edge of losses.

Moreover, in the first quarter of this year, the average cost of textile enterprises increased by 20-35 percent while the export prices showed no signs of pushing up. In the recently concluded 103rd session of Guangzhou Fair, prices for textile and apparel prices rose to the highest by about 15 percent while the growthrate of most of the products remained below 5 percent.

Fibre2fashion News Desk - China

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