"Cost Upside Down" Into The Textile Industry Killer In The Second Half

According to statistics from Ministry of industry and information technology, the profit of textile industry increased by 61% from January 2010 to May. "However, we expect the second half of this year to face the situation of high and low levels, and the textile industry is faced with many uncertainties."

The textile industry belongs to the labor intensive industry, and the upstream market price pmission is slow. At present, the rapid rise of raw material prices is bound to pmit to the processing link in the second half of the year.

Wang Wei also said that the Ministry of industry and commerce is studying policies to encourage the sustainable development of the textile industry.

A good year is just a flash in the pan.

Amid the haze of the financial crisis, the textile industry has been hard to see. At the beginning of 2010, the entire textile industry was very bright.

Not long ago, the China Textile Industry Association visited many textile industrial clusters in order to work out the textile industry plan in 12th Five-Year, and the sight of all of them was uplifted.

Yin Jinghui, Secretary of the Town Committee of Dalang Town, Dongguan City, Guangdong Province, told reporters that "in the first half of this year alone, there was a situation of overall rise in production and sales in Dalang, and exports increased by 37%. In the first half of this year, the output value of wool textile industry increased by 71.4%, and the profits of textile enterprises above designated size increased by 115%."

The growth of the textile industry has also led to the development of the loom industry. Dozens of looms manufacturers have been added to China's international wool textile products fair.

All these circumstances are very exciting for the textile industry association.

However, with the continuous appreciation of RMB and the export tax rebate adjustment and other uncertain factors, the textile industry is now under great pressure.

Wang Wei, deputy director of the Department of consumer goods industry, Ministry of industry and information technology, reminds us that while observing the rapid recovery of the textile industry, we must also be vigilant against the uncertainties in the second half of the year.

The Ministry of Commerce has also warned that there will be a slight appreciation in the year.

For the textile industry, the appreciation of RMB is a big blow to small and medium-sized enterprises, but has a relatively small impact on large enterprises with stable customers and bargaining power.

At present, 80% of domestic textile and clothing exports are settled in US dollars, and the appreciation rate of RMB will have a serious impact on the export of domestic textile and clothing.

The excessive appreciation will make the majority of the small and medium-sized OEM export profits significantly diluted or even losses, which will affect the export enthusiasm of enterprises.

"Cost upside down" into the industry killer in the second half

"There is another important point that can not be ignored. Now cotton prices have reached the highest level in history. The upstream cost increase has a time lag in the downstream. It can be expected that textile enterprises will face cost pressures in the second half of the year."

Wang Wei, deputy director of the Ministry of industry and information technology, consumer products industry, said.

In Wang Wei's eyes, the reason why the current textile and garment enterprises profit is closely related to the low price of raw materials last year. "In the second half of last year, the cost of raw materials was low. Now the raw materials for textile processing are mostly purchased during that period, which has created great profit margins for enterprises in the first half of this year".

The reporter interviewed a clothing manufacturer at the same time, he made Wang Wei's analysis to reporters.

"In the second half of last year, the price of down is 100 yuan per kilogram, half of it is cheaper than in 2008, and the price of terminal down clothing has not dropped, which has created a great profit margin for us."

It is understood that the winter clothing is one of the most profitable garment processing products in 2009.

However, such a scene did not last too long. "Now the price of the down has increased to more than 200 yuan per kilogram, and the profit of processing down garments has been greatly reduced."

Deputy director Wang Wei told reporters, "at present, PTA and ethylene glycol are also at a high level, but the price of the garments is even lower than the price of raw materials."

It is understood that in July, the listing price of PTA was 7600 yuan / ton, and the output of ethylene glycol was 5800 yuan / ton.

In addition, Xu Wenying, vice president of China Textile Industry Association and President of China Cotton Textile Industry Association, said that cotton prices began to increase since last October and reached 14833 yuan / ton by the end of last year.

As of June 30th this year, the domestic 328 cotton spot index was 18309 yuan / ton, up 42.6% over the same period last year.

"At present, the trend of cotton rising is still continuing, and each ton has increased by more than 8000 yuan from the beginning of last year."

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The Ministry of industry and Commerce seeks to protect the competitiveness of the textile industry

In addition to market factors that may affect the textile industry's profit in the second half of the year, a series of policy adjustments to export tax rebate may also involve the textile industry.

In June 22nd, the Ministry of Commerce and the State Administration of Taxation issued the notice on canceling the export tax rebates for some commodities, and the export tax rebates for 6 categories and 406 tax numbers will be abolished in July 15th.

The industry is very worried that the future export tax rebate adjustment will involve the textile industry, Wang Wei said, "we tend not to adjust the export tax rebate of the textile industry."

Wang Wei told reporters that "the burden of the textile industry is already heavy, and we still hope to have policy support to safeguard China's leading position in the textile industry."

Not long ago, Wang Wei visited a large textile enterprise in Shandong. Due to the implementation of the "labor law", "more than 30 thousand employees of the textile mill pay 78 million yuan per year for labor insurance, and the burden is too heavy."

In order to ensure the sustainable development of China's textile industry, the Ministry of industry and commerce is formulating relevant policies to ensure a good environment for the development of the textile industry.

"For example, the current cotton sliding tax, we hope not to undertake the downstream textile industry."

Wang Wei said.

At present, China implements a sliding tax on certain quantities of cotton imported from the tariff quota to ensure that the price difference between imported cotton and domestic cotton is small, so as to maintain the market share of domestic cotton.

"Sliding tax protects the interests of cotton farmers, but the textile industry has been affected."

Wang Wei said, "soon after, the state will publish the industry operation data, these data will be very good-looking, but we should pay more attention to the many uncertain factors that affect the industry in the second half of the year."

Nominal interpretation tax

Sliding tax (Sliding Duties), also known as sliding tax, is an import tariff imposed on the same price of the same commodity in the import tariff according to the market price standard.

The price of high-grade commodities is low or not taxed, and the price of low-priced goods is high.

The purpose of such a tariff is to keep the price of the imported goods, regardless of the price of its imports, at a predetermined price standard, so as to stabilize the market price of the domestic goods in the importing country and minimize the impact of international market price fluctuations.