Disaster Faced By Garment Enterprises

RMB continued to appreciate.

The RMB has entered the 6 Yuan period against the US dollar. On the one hand, China's low cost competitive advantage has been greatly reduced, and garment orders have been pferred rapidly to Southeast Asia. On the other hand, the risk of doing foreign trade orders has intensified because international orders are more likely to be settled in US dollars, and exchange rate risk is directly pferred to the domestic garment enterprises.

The implementation of the labor contract law.

The labor contract law and the employment promotion act, which have been promulgated and implemented, raise the cost of labor in enterprises, especially the garment manufacturing enterprises characterized by labor intensive, premium payment and overtime restrictions.

International consumption is weak.

The subprime mortgage crisis in the United States has jeopardize the European and American countries, resulting in economic stagnation or even retrogression in Europe and the United States. Consumer demand has shrunk dramatically, especially in the middle and high-end demand, reducing the total number and total amount of international orders and improving the "voice" of international order customers.

Production costs rise.

The rise in oil prices has led to a substantial increase in the cost of fabrics and the promotion of other alternative products, such as the price of viscose staple in March, which was more than 24000 yuan a tonne, double the price of last year.

In response to the impact of inflation, the minimum wage standards have been raised throughout the country, and the pay increase has further increased production costs.

The domestic purchasing power has declined.

Domestic CPI continued to rise, reaching 7.9% in the first half of 2008, and the rise in people's living costs, resulting in a decline in purchasing power. A large number of enterprises failed and reduced their jobs, resulting in a decline in the employment rate, affecting people's real incomes and further reducing their purchasing power.

Purchasing power is decreasing, and "clothing" may be the most affected in the four elements of clothing, food, housing and travel.

There are many other reasons. For example, the export tax rebate gradually weakens, which further reduces the competitiveness of textile and garment enterprises in the international market. The imbalance of domestic orders, the rate of return and the speed difference are also another problem that puzzles textile and garment enterprises. The overall quality of the industry is low, the ability to operate is weak and the ability to avoid risks is also a great pain.