The Textile Industry Was Hurt At The Canton Fair.

The price of home textiles and clothing products may rise at the end.

As a barometer of China's foreign trade, 2010

In October 18th, the country represented the average price of cotton in China.

Data show that cotton prices have risen nearly 40% since September, and the price of cotton yarn has risen from 26 thousand yuan / ton in early September to 36 thousand and 500 yuan / ton in mid October.

"Many companies are afraid to take orders now.

Because cotton prices have risen by 30%~40% a month, and the price of terminal products is difficult to upgrade.

Dong Fulong, chairman of Shanghai red Fuji Home Textile Co., Ltd. told China business reporter.

"Defeated" Canton Fair

It is understood that from cotton to clothing manufacturing is a complete industrial chain, cotton spinning into yarn, and then woven into white embryos, after printing and dyeing to make fabrics, and finally through clothing enterprises to buy garments.

Cotton and cotton yarns are the basic raw materials for the textile and garment industry. Once their prices soar, the production order of the entire industrial chain will be broken.

Because of this, domestic textile enterprises are facing the situation of "riding a tiger hard".

Domestic raw material prices have risen sharply, but the prices of foreign customers have not increased much, so that most domestic manufacturers are facing stagnation.

What's more, the headache for enterprises is the change of payment methods.

In the past, terminal manufacturers could delay payment to upstream suppliers, but now they must pay in cash, thus increasing the liquidity pressure of enterprises.

"Enterprises can only pay cash in time, because they will not pay cash today, and they will also increase their prices tomorrow, and let other enterprises buy materials in advance."

Dong Fulong said.

"Before the financial crisis, we usually received long lists, half a year and a year, but we did not expect too much in the Canton Fair. We estimated that the two or three month short list would be the main reason.

Even if foreign customers want to make long lists, we will not accept them.

Mao Xiahua, director of trade management department of Shanghai flying horse Import & Export Co., Ltd., told reporters.

It is understood that due to rising costs, many local exhibitors held a conservative attitude towards the Canton Fair, and some enterprises even reduced the booth. Its purpose is mainly to understand the situation and propaganda brand, and expect the order is not high.

According to the order process of Canton Fair, there is a half a year's time from negotiation to shipment.

First of all, the business is to negotiate with foreign customers, then the client will compare with each other and make the final order.

Plus the production time, the whole process is 3~4 months.

"It is very difficult to determine the quotations and cost quotations for the next 3~4 months, but without the offer, how can the customers place the order?" Dong Fulong said.

Enterprises are forced to raise prices.

According to the latest data from China foreign exchange trading center, the central parity of RMB against the US dollar was 6.8275 before the central bank announced the resumption of foreign exchange reform in June 18th. In October 20th, the central parity rate of RMB against the US dollar was 6.6519.

According to preliminary calculations, the RMB has appreciated by 2.57% against the US dollar in the past 3 months.

With the increase of raw material prices, labor costs and international instability, the pressure on export enterprises is increasing.

According to the first textile net, the net profit margin of the industry will drop by 1 percentage points every time the RMB appreciation is 1 percentage points, while the average net profit level of the textile and garment industry is only 3%~5%.

Generally speaking, after the cost rises, the downstream terminal manufacturers are afraid to rush to follow up the price increase due to overcapacity, but digest them by compressing profits.

However, because of the fierce price of raw materials, the price rise of terminal manufacturers has become an inexorable trend.

"Because of the fact that the supply and demand relationship of the home textile industry is changing due to the lack of material and the suspension of orders, the production lines of many enterprises are stagnant, and the prices of home textiles and clothing products will probably rise as a result of the limited power production this year."

Dong Fulong said.

It is understood that textile home textiles and clothing products prices are rising in the business.

A well-known brand home textile exhibitors responsible person even told reporters: "I can tell you that we will not take orders at the Canton Fair. After the meeting, the total end products of our enterprises will be fully increased by 20%. If the price is not raised, the business will fail."

In addition, due to a large number of large market for autumn wear, the price of raw materials will be reflected in winter clothing. It is estimated that the factory price of winter clothing will increase by about 20%, and the price of spring clothes will also follow suit next year.

"It should be said that the situation facing the textile and garment industry is very urgent. If the country does not introduce relevant policies, the whole industry may face the risk of collapse.

Once the cotton price is high, the textile enterprises will be faced with the risk of bankruptcy.

Dong Fulong said.

Exiting foreign trade policies should not be too urgent.

According to the data released just now by the Ministry of Commerce, the export growth rate in September slowed sharply to 25.1% compared with the 34.4% year-on-year in August, which is lower than the general market expectation.

From the export market, China's exports to the United States increased from 42.1% in August to 27.5% now, while exports to Japan and the EU dropped to 14.6% and 27.4% respectively.

Data released by the General Administration of Customs show that in the first 9 months of this year, China's textile and apparel exports totaled 149 billion 820 million US dollars, up 23.16% from the same period last year, but the growth rate dropped 6 percentage points last month.

"The export has not yet fully recovered to the level before the financial crisis, and the global economy is very complex at the moment. It may be two times in the next two years, and the withdrawal of the proactive foreign trade policy should be put to an end."

Wu Donghua, an expert in the research center of Chinese enterprises going abroad, said.

In fact, after the financial crisis, China began to withdraw from its active foreign trade policy.

Since July 15, 2010, the state has abolished the export tax rebates for some commodities, involving a total of 406 tax codes, including some steel products, non-ferrous metal processing materials, silver powder, alcohol, corn starch, pesticides, medicine and so on.

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However, the most important reference variable for the appreciation of the renminbi is foreign trade exports. Because the export did not fully recover at that time, the RMB exchange rate remained stable.

But in September, the yuan began to accelerate appreciation, and hit a new high.

In 2009, China's exports fell 16% year on year, and the trade surplus was reduced by 34.2% year on year. This is the first significant decline in export and surplus since the entry of WTO.

But in 2010, China's exports seemed to rebound and get out of the crisis.

Experts say exports are still unstable, and there is little likelihood of continuing to return to high growth before the financial crisis.

"The structural adjustment of foreign trade enterprises needs a stable currency environment. At present, the appreciation of the renminbi has basically been in place, and it is not suitable to further appreciate. Otherwise, enterprises are not a matter of pformation and upgrading, but a matter of life and death."

Professor Cao Heping, School of economics, Peking University.

Cao Heping analysis shows that foreign trade enterprises will accelerate their pformation after rising costs in the relatively stable industrial environment.

Taking the textile industry as an example, the characteristics of the general operation of the former enterprises are large-scale and the price competition is obvious. But with the increase of costs and the decrease of demand, enterprises must improve the added value of products and win the high quality.

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The Canton Fair China Import and Export Fair "China Import and Export Fair", that is, the original "China Export Commodities Fair", also known as the "Canton Fair" (GTF).

The Canton Fair was founded in the spring of 1957. It has been held in Guangzhou in the two quarter of spring and autumn. It has more than fifty years history. It is the comprehensive international trade event with the longest history, the highest level, the largest scale, the largest variety of merchandise, the largest number of traders, and the best turnover effect. It is known as "barometer" of China's foreign trade. However, after the continuous expansion and financial crisis, the quality of exhibitors in the Canton Fair has become a widespread concern.