Three Big Fishbone Stuck In Cotton Textile Enterprises To Develop Throat

"In the past one or two years, it has first witnessed the strange situation of soaring cotton prices, and then caught up with the depreciation of the euro. Now the dispute over the RMB exchange rate against the US dollar has been in the firing line. Cotton spinning enterprises have yet to appreciate the taste of the industry, and they have been somewhat breathless by the new problems." Shijiazhuang Changshan stock company, a shop director surnamed Zhang, reluctantly told reporters.

Indeed, many cotton spinning Businesses have similar feelings. The rise in cotton prices has squeezed part of the profits of the enterprises, and the European debt crisis has caused the euro to depreciate sharply. Cotton prices, depreciation of the euro and appreciation of the renminbi are just like the three big fishbone in the throat. The development of enterprises is facing great risks. Especially in the second half of the year, foreign trade enterprises may face greater development problems. Where is the way out?

Exchange rate puzzle

From the beginning of December 2009 to the beginning of June 2010, the US dollar showed an obvious unilateral upward trend in the past six months, the increase has reached 19%. The euro fell more than 21% against the US dollar from its 1.51 high position, and has fallen below the low point of the financial crisis. What is even more worrying is that it has not slowed down after breaking the 1.20 barrier. Those foreign trade enterprises holding European orders indicated that the profit of the orders had basically been offset. What worries them more is that the rising prices of raw materials including cotton and the increasing cost of employment have already challenged the ability of enterprises to bear. With the strengthening of the background of RMB appreciation, the unfavorable situation faced by enterprises is likely to further expand.

A textile boss surnamed sun in Shandong said that cotton is now growing more frenzied than house prices, and the space for enterprises to move around is getting smaller and smaller. "The last thing we can do is raise prices, but the bargaining power of textile enterprises is very weak." Sun boss reluctantly said that another result of the depreciation of the euro led to a decline in the purchasing power of customers. At this time, the price increase will undoubtedly make him more passive. Moreover, the price of textile products has increased by more than 30% compared to the same period last year.

It is believed that the sharp fall in the euro's leading non US currencies and the rise in the US dollar were mainly caused by the European sovereign debt crisis. After successfully curbing the most threatened eurozone in the developed economies, the next goal of the US may be directed directly to the "leader" in emerging economies - China. US Senator Schumer said it would push the Senate to take action to impose countervailing duties and anti-dumping duties on Chinese products in order to cope with the impact of China's exchange rate operation. He predicted that the Senate would pass the relevant bill by an overwhelming majority.

Many textile enterprises have said that the euro has fallen by 15% since the end of last year. As foreign trade orders were signed at the end of last year, the goods were not delivered until July and August this year, so the impact of the current depreciation of the euro has not yet been fully revealed. In the second half of the year, the hard days for foreign trade enterprises may come with them.

"There are no good countermeasures yet. I heard that the US dollar may depreciate further, so that the foreign trade situation we face is even more unfavorable." There is infinite worry in sun's boss's words. After all, the pressure of exchange rate and cost has been very severe. If RMB appreciation is added, the survival of enterprises is really worrying.

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The pain of cotton price

Industry analysts pointed out that the current exchange rate risk borne by purchasers is likely to lead them to not dare to make big orders and long bills, and turn to small bills and short lists. If the RMB appreciates further, the profits of enterprises will not only be squeezed, but the accumulated order resources may also be lost. Compared with large enterprises, the impact of higher raw material prices on small and medium-sized enterprises is bigger. Some enterprises have to give up orders and compress production. The head of a textile enterprise in Jiaozhou, which has more than 700 employees, said that at present, the enterprise has been caught in a dilemma. On the one hand, orders can not be stopped. After all, it is necessary to maintain the operation of the enterprise and the expenses of the workers. We can not stop the work. On the other hand, the rising raw material prices and labor costs increase the profit margins of the enterprises are getting smaller and smaller, and there may even be a possibility of losing money. At present, enterprises can only reduce the scale of production and no longer blindly take orders.

"Compared with the beginning of the year, the average price of cotton has now increased by about 30%." Yang Weidong, general manager of the group, said, "the price of ordinary cotton has risen to 15 thousand yuan / ton from the beginning of the year to 15 thousand yuan / ton, or more than 20%. The cotton yarn has gained even more, and the price of Xinjiang cotton yarn has risen from 24 thousand yuan / ton in the beginning to 34 thousand yuan / ton in the near future, or about 40%."

Analysis of the relevant people, cotton prices are mainly caused by insufficient supply. First of all, last year, the continuous low temperature in Xinjiang, the main cotton producing area of China, combined with other bad weather, led to a decline in production. Second, now cotton is in the black, and cotton is sold out last year. This year's cotton will not come down until September. In addition, India's main cotton importing country has suspended cotton export registration, making it more stressful for cotton to supply and demand internationally. According to the National Bureau of statistics, the cotton planting area of this year may be reduced by more than 2% compared with last year. In addition, the yield per unit area of the disaster has declined, and the cotton harvest in the whole country is still not optimistic. The trend of cotton prices in the second half of the year is still unsolved.

Save against a rainy day

If the relationship between supply and demand has not been fundamentally solved, the pain of cotton price has no special effect of slow release capsules for the time being; although there is no conclusion yet on the argument of RMB appreciation, most experts still think that appreciation may be the trend of the times, and it can be avoided for a while. Improving the added value of the product may be a feasible way; the depreciation of the euro is the established fact and the situation is likely to develop further. Facing the complex and changeable development puzzle, the textile enterprises only have to prepare for the rainy day and seek breakthroughs from themselves, that is the best policy.

Some enterprises began to adjust the structure of export market, increase the research and application of new materials, improve the added value of products through technological innovation to change the current unfavorable situation, but at the same time, some experts say that the development of independent brands is not a day's work. Because of the large cost of the construction of an enterprise's market network, the design team's training is not completed in one or two years. Therefore, the gradual development, gradual and orderly way can be more operable.

Some people engaged in foreign trade enterprises concluded that when the exchange rate fluctuated significantly, when dealing with export settlement, enterprises should choose forward settlement and sale of foreign exchange, that is, according to the company's production cost, the exchange rate and time limit of customers' payment should be stipulated, so that enterprises can avoid risks in a certain degree when the exchange rate changes. Chen Yu, a textile enterprise in Quanzhou, said: "to avoid the risk of order reduction in the eurozone debt crisis, enterprises must take the road of market diversification and further strengthen the development of emerging markets such as ASEAN and Africa and the US market."