Interviews
Textile sector still hopeful of full refund of export tax rebates
12 Jun '09
2 min read
China's textile industry has been looking forward to a full refund of export tax rebates as early as possible, but the latest increase in tax rebate rates does not include textiles and garments. In this regard, Zhao Chuanxiang, President of the Textile Industry Association of Shandong Province says that, “Since Shandong province has a very large textile export base, we are very much hopeful on that account”.
Zhao points out that due the slowdown in global markets and the financial crisis, demand from international market has significantly reduced and at the same time competition is increasing and pressures from trade protectionism have further aggravated the situation and with the combination of all these factors, Shandong's textile industry faces higher risk of downtrend, at least in the near future.
In Shandong's textile and garment industry, most enterprises are small and medium-sized units mostly surviving on low-level profits, due to which they have difficulty in accessing liquidity, due to which most of these enterprises are facing financial problems. In China, export tax rebate plays an important role for export enterprises to maintain their shares in international market.
For example, every increase of one percentage point of export tax rebate rate will result in an increase in 7.89 percent to total profits of the textile and garment industry. Protecting exports, does not simply mean to maintain market share, it should have more meaning in protecting export enterprises and employment.
Relevant data shows that labour cost is US $0.22 an hour in Bangladesh, US $0.33 an hour in Cambodia, US $0.38 an hour in Vietnam, US $0.51 an hour in India, while in China labor cost is US $1.08 an hour. China's labour cost competitive advantage in the textile and garment enterprises has decreased evidently, due to which part orders of Europe and the United States have shifted to other countries.
A report released by a global business consulting firm points out that China has lost its status as the “Lowest manufacturing cost base” in the world market. The report says that manufacturing cost between China and the United States is moving closer and as of date, manufacturing cost of a Chinese factory is only 6 percent lower than that of a US based enterprise.
Zhao points out that due the slowdown in global markets and the financial crisis, demand from international market has significantly reduced and at the same time competition is increasing and pressures from trade protectionism have further aggravated the situation and with the combination of all these factors, Shandong's textile industry faces higher risk of downtrend, at least in the near future.
In Shandong's textile and garment industry, most enterprises are small and medium-sized units mostly surviving on low-level profits, due to which they have difficulty in accessing liquidity, due to which most of these enterprises are facing financial problems. In China, export tax rebate plays an important role for export enterprises to maintain their shares in international market.
For example, every increase of one percentage point of export tax rebate rate will result in an increase in 7.89 percent to total profits of the textile and garment industry. Protecting exports, does not simply mean to maintain market share, it should have more meaning in protecting export enterprises and employment.
Relevant data shows that labour cost is US $0.22 an hour in Bangladesh, US $0.33 an hour in Cambodia, US $0.38 an hour in Vietnam, US $0.51 an hour in India, while in China labor cost is US $1.08 an hour. China's labour cost competitive advantage in the textile and garment enterprises has decreased evidently, due to which part orders of Europe and the United States have shifted to other countries.
A report released by a global business consulting firm points out that China has lost its status as the “Lowest manufacturing cost base” in the world market. The report says that manufacturing cost between China and the United States is moving closer and as of date, manufacturing cost of a Chinese factory is only 6 percent lower than that of a US based enterprise.
Fibre2fashion News Desk - China
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