Textile Export Tax Rebate Rate Increase Is Actually A Delaying Tactic?

The Ministry of Finance and the State Administration of Taxation announced recently that since August 1, 2008, the export tax rebate rate of some textiles and clothing has increased from 11% to 13%.

Sun Huaibin, a spokesman for the China Textile Industry Association, said the move showed the government's concern and support for the difficult textile and garment export enterprises and played a positive role in relieving the pressure caused by rising costs.

First aid: export growth fell by 11.6%

The latest statistics from the China Textile Industry Association show that the total export volume of textiles and clothing in the previous June was 83 billion 851 million US dollars, an increase of 11.11% over the same period last year, an increase of 6.44% over the same period last year.

If converted into RMB, the export growth rate of the former June was only 1.6%, an increase of 11.6% over the same period last year.

These figures are in line with the news of the failure and loss of the spinning and weaving enterprises in the first half of this year, showing the difficult situation of the whole industry.

The increase of the export tax rebate rate is equal to 2% of the profits directly sent to the relevant enterprises.

For many textile and clothing SMEs, it is undoubtedly a timely relief, providing a breathing space for a large number of export oriented textile and garment enterprises on the verge of collapse.

But at the same time, it is easy to be diluted when international consumption demand is reduced, domestic production costs are rising, and RMB appreciation continues to rise.

"Just the appreciation of the renminbi is enough to offset the profits that the government has given us."

A garment export enterprise official said.

Impact: slowing down speed

China's textile and garment enterprises have always been highly dependent on exports.

According to the statistics of China Textile Industry Association, although textile and garment exports declined this year, the total value of textile and clothing exports in June accounted for 12.58% of the total share of the country, compared with 29.32% in the same period last year.

Figures show that the national textile and apparel exports to the United States in June were only 0.65% in dollar terms.

With the weakening of international demand and the rise of domestic prices, many enterprises worry that the new profit after the adjustment of export tax rebate rate will be shared by all relevant links.

For example, the raw material dealer may ask for a raise in price, while foreign importers may lower the quoted price.

"Although the new policy is conducive to reducing the pressure of enterprises and improving the profitability of the industry, the multiple factors that are troubling the development of the textile and garment industry are difficult to change in a certain period and will not be eliminated because of the increase in the export tax rebate rate.

Raising the tax rebate rate will not change the downward trend of the industry's profit growth rate, but it only slows down the rate of decline.

Someone in the industry said.

Way out: enterprise "self rescue" is the root

The purpose of lowering the export tax rebate rate is to regulate the traditional industries with low labor intensity and low added value through tax levers. The industry generally believes that this policy can only be regarded as a "stalling tactic".

Textile and garment enterprises must rely on their own upgrading if they want to really get out of difficulties.

Sun Huaibin said.

Sun Huaibin believes that in the current export environment situation is grim, enterprises should make greater efforts to increase structural adjustment efforts, improve export bargaining power and value-added products, enhance brand awareness, pform export growth mode, and improve enterprise management level.