China Textile Industry Costs Pressure To Scare Us Orders

In the notebook of Gary Bayer (Gary Byer), the day of April 10th was rolled up by him last year because he was leaving for Guangzhou, China to attend the Canton Fair, which began in April 15, 2008.

"No need to go now," Bayer told reporters on the phone in the morning of April 3rd, Beijing time.

"In the past six months, China's orders are not well done in the US, and the company decided not to import from China this year."

Bayer's company Barrow Manufacturing Co.

Like many textile importers in the US, in the past spring and autumn of the two quarter, the Canton Fair will go to China to purchase.

But this year, Barrow Manufacturing, like many American textile importers, cancelled its trip to Guangzhou.

The National Council of Textile Organizations (NCTO) report on China's textile trade pointed out that in 2008, the US demand for Chinese textiles would decrease significantly, mainly due to higher production costs, appreciation of the renminbi and competition in the surrounding areas.

NCTO President Cass Johnson (Cass Johnson) told our reporter that after the substantial growth in the past few years, the US import of Chinese textiles will slow down this year and may even decline.

Continuous cost pressure

Barrow Manufacturing sells and sells women's casual wear suits in the United States mainly from China and Latin America, Bayer said.

In recent years, the price of China's fabric suppliers has been rising.

Since 2003, annual growth has been around 3% to 4%.

This has caused a lot of cost pressure to the company.

He said the company's suppliers are concentrated in the Pearl River Delta region, where local labor costs are rising quite rapidly.

He recalled that two years ago, when inspecting the supplier's factory in Dongguan, the monthly wage of each worker was 930 yuan, which has risen to 1389 yuan last year.

"As labor costs rise, the price of suppliers rises, and the price of the company's products is hard to maintain," Bayer said.

"Under such circumstances, we have to pfer the increased cost to the consumers, but now the economic environment in the United States is not good, and the desire for consumption is very weak. It is not easy to raise prices."

Last month, according to the preliminary statistics of the US Department of Commerce, the trade volume of textiles imported from Guangdong, China in January and February this year was only 280 million US dollars and 1 million 600 thousand US dollars, of which the imports of pure cotton t-shirts and trousers dropped by more than 10%.

In fact, since the beginning of last year, due to the impact of the subprime crisis, orders for imports of Chinese textiles in the United States have begun to decrease.

In December last year, the number of garments imported from the United States dropped by 15%.

Behind order reduction

According to statistics from the US textile industry website Webtextile, last year, the surplus of China's textile exports to the United States increased by only 16.49%, the lowest level since 2000.

Johannsen said that in the past few weeks, the appreciation of the renminbi has accelerated, increasing by 8% compared with the same period last year.

Because most of the orders of us importers are ordered six months in advance, the appreciation of the renminbi has brought a lot of uncertainty to the paction, which is an important reason why importers dare not import textiles again from China.

Secondly, after the implementation of China's new labor law, the cost of production will increase.

Moreover, even if the factors of the new labor law are excluded, the wage level in China is still rising, which is consistent with the current price rise in China, especially the rise in food prices.

In the United States, the mortgage crisis has caused a great blow to the retail industry in the United States.

Since last December, sales of clothing chains in the United States have declined, and dealers are under increasing pressure. At the same time, Chinese suppliers are raising their prices. Therefore, it is reasonable for us importers to abandon imports from China.

At the same time, competition from India and Vietnam is also one of the reasons for us importers to reduce Chinese orders.

According to Bayer, Barrow Manufacturing is currently in contact with factories in Vietnam. According to the Vietnamese quotations, it is estimated that the company's production cost can be reduced by about 3% to 10%.

//cn.jx