Textile And Garment Export Tax Rebate Adjustment Short-Term Good Clothing Enterprises

In August 5th, at least 8 listed companies including Jiangsu sunshine and Jiangsu Shun Tian announced that the export rebate rate of textiles and garments should be adjusted.

According to their calculations, the adjustment of the export tax rebate rate has little effect on them, nor does their performance rise.

In July 31st, the Ministry of Finance and the State Administration of Taxation jointly issued the notice on adjusting the export tax rebate rate of some textiles and garments.

The circular pointed out that since August 1, 2008, the export tax rebate rate of some textiles and clothing has increased from 11% to 13%.

Zhao Meiling, an analyst at Anxin securities textile industry, pointed out that the export tax rebate rate of textile and clothing was raised, which was mainly benefited by small and medium-sized garment export enterprises, but the rate was lower than expected, and the contribution to the industry's profits was limited.

Zhao Meiling introduced that, in particular, this adjustment directly increased the net profit of the textile industry for 2008-2009 years, 2 billion 155 million yuan and 5 billion 253 million yuan respectively, and the net profit of the garment industry for 2008-2009 years was 4 billion 30 million yuan and 8 billion 134 million yuan respectively.

She said that the export tax rebate rate increased, small and medium-sized garment enterprises more benefit, which is positively related to the industry's dependence on foreign trade.

As the garment industry's dependence on foreign trade is obviously higher than that of textile enterprises, and for the clothing industry, the dependence of SMEs on foreign trade is even higher. According to the calculation of the first textile network, the dependence on foreign trade of the above scale enterprises in garment industry is about 24%, while the dependence on small and medium-sized enterprises under the scale is 55%.

The announcement of 5 listed companies confirms Zhao Meiling's view.

Jiangsu sunshine announced in the announcement that "the adjustment of the export tax rebate rate will have a certain impact on the company's performance in the second half of the year and in the future.

It is expected to increase the pre tax profit in the second half of this year by about 6 million yuan.

Other businesses have less impact.

For example, Jiangsu's three Lane Lane (600370, stock bar) industrial Limited by Share Ltd said, "because of the small proportion of the company's exports, the export tax rebate rate adjustment will not have a significant impact on the company's second half year and future business performance.

According to our company's exports in the first half of 2008, we expect to increase profits by around 900 thousand yuan in the second half of this year.

The Fujian Nanfang (600483, stock bar) Limited by Share Ltd also said that the company's monthly sales profit is expected to increase by nearly 80 thousand yuan, which has limited direct impact on the company.

Another two companies, Jiangsu sainty and Kaiyuan, Jiangsu (600981, stock bar) mentioned the additional pressure they face in the announcement.

Shun Tian pointed out that "the adjustment of the export tax rebate rate of garments and textiles can enhance the profitability of the company's contracts in the short term. Due to the competitive incentive of the garment export industry, its profit level is affected by many factors such as the global industry competition, the level of domestic industry development and the price guiding ability of the buyers and sellers." the board of directors of the company believes that the increase in the export tax rebate rate mentioned above has no significant impact on the company's profits.

Kaiyuan pointed out that "because the company will be affected by the price increase and price reduction of domestic manufacturers and foreign customers, the adjustment of the export tax rebate rate will not have a significant impact on our company's future profits."

"This is a short-term good, not to change the direction of long-term industrial upgrading."

Zhao Meiling believes that the increase in the export tax rebate rate can effectively curb the further expansion of the industry deficit, and will largely alleviate the pressure of survival on the medium and small textile and garment enterprises with relatively high dependence on exports, and will form a short-term positive effect on the whole industry; however, because of the lack of brand names and low added value in China's textile and clothing industry, the export lacks independent pricing power; the export rebate rate will be raised, and foreign purchasers will take the opportunity to lower the price. Finally, the profits raised by the export tax rebates will be encroachment by foreign purchasers. Therefore, the adjustment of the export tax rebate policy has little effect from a longer period of time, and technological innovation and industrial upgrading are the final way to recover the prosperity of the textile and garment industry.