Cotton Rises In Price And Loses Money Rather Than Shutdown.

"Now you dare not take orders, the more you get, the more you will lose. You may as well go out of business temporarily." Li Cheng, the chief business owner of Dongguan based on export garments, is very anxious recently. The price of raw materials such as cotton and cotton cloth has skyrocketed, and the cost of production has increased sharply.

The clothes produced by Li Cheng company are mostly sold.

"Although our production costs are soaring, foreign customers are unwilling to pay higher prices. The bitter fruit is only the digestion of enterprises themselves."

Li Cheng said that the increase in factory price is far behind the increase of raw materials, so that enterprises can not earn money, and some orders even lose money.

"The orders that can not be answered as far as possible are not answered, only some big customers who can't afford to blame can be taken. These customers can't be found in the future if they lose them."

Li Cheng said helplessly.

Like Li Cheng, Foshan

"Although the raw materials have gone up, we are more difficult to downstream brands. Last year the price of 110 yuan clothes could only be raised to 120 yuan this year, and the price of finished products is far lower than the increase of raw materials."

Liu Bisheng explained that in the environment of rising prices of raw materials, small and medium-sized manufacturing enterprises have become the most vulnerable ones.

Cotton price per day, clothing companies must also be ready to pay a considerable amount of cash, after purchase can quickly purchase fabrics, lock costs, otherwise it will lose money because of the rise in cotton prices.

A company in Taizhou, Zhejiang, advocated training and learning. It also revealed that in addition to the rising prices of raw materials, there had been a time when the upstream cotton merchants stopped stockpiling and sold cloth and the shortage of fabrics made it impossible for a skilled woman to cook rice without rice.

"Because clothing companies usually purchase raw materials and arrange production after receiving orders, enterprises usually do not store too much fabric. In nine and October cotton prices went up fastest, they could not buy cotton cloth with cash, and upstream materials merchants hoarded up cloth and waited for the price to rise."

Zhang Peixue said that only waiting for the state to introduce policies to reduce cotton and cotton prices.

Pan Rihui, Secretary General of Dongguan textile and garment industry association, pointed out that cotton generally accounts for about 40% of the cost of clothing. If the price of cotton rises by 5%, the profits of enterprises will drop by 2%.

At present, the profit margins of China's textile industry are very low, some enterprises even lower than 3%, cotton prices have risen sharply, and enterprises are easy to fall into losses.

Analysts believe that the current round of rising cotton prices is a concentrated expression of the contradiction between supply and demand, high inflation and hot money speculation.

First of all, the climate is unfavourable, and cotton production has been greatly reduced. This year we expect to reduce production by more than 10%.

Followed by the resumption of growth in China's textile industry, demand recovery has brought support to the cotton market.

The three is the flood of liquidity. The depreciation of the US dollar has led to a sharp rise in international cotton prices.

Finally, the speculation of hot money, especially after the introduction of the real estate control policy, a large number of hot money poured into the upstream links such as cotton purchasing, resulting in a sharp rise in prices.

The textile and garment industry is suffering under the background of the rise of cotton prices. In fact, the soaring cost of textile and garment enterprises is only a microcosm of the current manufacturing difficulties. Almost all industries are facing the cost pressure brought by the rising raw materials. The rise of international copper prices has already worried the household appliances enterprises to make gross profit. The high sugar prices also bring pressure to the downstream food manufacturing industry, and only one side is careful to raise the price to consumers. While trying to cut costs by internal control, the price of soybeans and other crops also directly drives up the price of edible oil, and at the same time, the profit margins of processing enterprises are eroded.