Henan Textile And Garment Enterprises Generally Encounter Difficulties
The survey found that Henan's textile industry has gone through unprecedented difficulties under the combined effect of a series of macroeconomic factors, such as the continued appreciation of RMB, the reduction of export tax rebate rate, the rise in prices of raw materials and energy, and the increase of wages and social security funds.
By the end of June, the average profit margin of 30% of textile enterprises in Henan was below 3%, while the average profit margin of 60% enterprises was only 0.73%. In the province's textile enterprises above Designated Size, there were 124 loss making enterprises, an increase of 8.77% over the previous year, with a deficit of 10.39%, which was 10.15 percentage points higher than the national deficit.
Xiangcheng Cotton Textile Co., Ltd. ranks the top in the same industry in the whole province. The equipment is first class in China. Some key equipment is world-class and the spinning scale is 100 thousand spindles. In 2007, it realized a profit of 16 million yuan, about 30000000 yuan in taxes and a flourishing production and marketing. But since 2008, the main raw material cotton has increased by 700~1000 yuan per ton compared with the same period last year, and the wages of workers increased by 100 yuan per person per month, the electricity price rose by 0.0306 yuan per time, and the cost per ton of yarn increased by 500 yuan. In 1~6 months, the company only realized profits of 10 thousand yuan and was at the edge of losses. What is more serious is that the sales of products are not smooth now, even if the price is reduced, the products will not sell well. In July of this year, the company had shut down 25%.
The survey found that most of the above 1194 textile enterprises in the province lack financial support and business difficulties. Some are unable to pay for water, electricity, gas and co-ordinate payments, and will be forced to stop production. What's more, continuous pay is difficult. Small textile enterprises of Xinye County, which are more concentrated and larger in Henan textile industry, have lost 1/3. The chief executive of Changtai Textile Co., Ltd. said, "in 2008, textile enterprises should not make a profit, do not lie down, and survive."
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