"Blockbuster" Pressure On Textile Enterprises

In addition to the "roller coaster" cotton prices, the industry's export tax rebate cut down once implemented, for Foshan textile and garment industry, is undoubtedly following the financial tsunami, raw materials rise after another "blockbuster".

Running in the city of children's clothing

Since last year, cotton prices such as "ride the roller coaster", resulting in many textile and garment owners uneasy, normal operation has also been greatly affected.

The subsequent impact of rising raw materials has also gradually emerged.

Since April, the price of cotton has declined significantly. The market sentiment is strong, which affects many small and medium-sized enterprises.

The latest news is that the export tax rebate of the textile and garment industry will be reduced by 5%.

For Foshan textile and clothing industry, once the implementation of this measure, it is undoubtedly another "heavy bomb" after the financial tsunami and the rise of raw materials.

People in the industry believe that in recent years, the price of raw materials is unstable and labor costs are rising, and the profit of the textile and garment industry is approaching the "bottom line".

In the event of an export tax rebate reduction of 5%, it will bring a disruptive blow to the whole industry, and many small and medium-sized enterprises will be faced with the fate of bankruptcy.

Cotton prices fluctuate early in the off-season.

Since the beginning of spring this year, the shop has maintained a good sales record, which he thought for a while that the good business will continue.

What he could not hope for was that in May, the sales situation of the shops was on the decline.

Up to now, his wholesale shop can barely reach 30% of its usual sales in May.

As a matter of fact, the shop has been turned off in the early May, and the situation in the last one or two weeks has made him more upset.

"I didn't expect this year's off-season to come so fast.

Recently, we have no guests. My employees have nothing to do and sleep in the shop every day. "

Ah cast said.

Yesterday afternoon at 3 o'clock, the reporter came to Zhangcha, Sha Sha Road jade belt system.

Feng Mei, a staff member of a garment factory, told reporters that from the end of April, she began to become idle.

Basically, every day I go back to the office every afternoon and report to each card for 1 hours or so.

"This month's work time is about seven or eight days, and the rest of the time is only scattered goods."

Feng Mei said that if the piece wage was counted, she would only earn five hundred or six hundred yuan this month.

For employees who have worked in the knitting clothing industry for five or six years, Feng Mei's maximum salary can reach more than 4000 yuan, but now he can only get 1200 yuan minimum wage.

Feng Mei has a slight comment on this. This is only a stalling tactic for the factory to retain employees. Enterprises are short of orders, and employees can only follow the "rest".

"If it hadn't been for the company's pressure on my monthly salary, I would have wanted to change jobs."

According to the reporter's investigation, the industry's off-season has arrived ahead of schedule. Some knitted garment enterprises in Zhangcha have even laid off employees for 3 months' vacation, while some enterprises have been on holiday for 1 months.

Many enterprises in the whole city are already in the "semi shutdown" state, and there are still many enterprises still in rush hour, but few.

In fact, the floating of cotton prices is the trigger leading to the off-season.

In the past half a month, domestic cotton prices have plummeted, dropping 6000 - 7000 yuan per ton.

Affected by this, the price of cotton yarn produced by textile enterprises has dropped by about 6000 yuan per ton.

This also causes many textile enterprises in Xiqiao to complain incessantly.

"Cotton prices are unstable, and our cotton stocks are now bought at high cotton prices, which results in high cost of cotton yarn and low factory price. We are already at a loss."

Xiqiao Textile Industrial Park, a person in charge of textile enterprises who did not want to be named, said.

Liang Yaokun, general manager of Foshan Italy Nanhong Garment Co., Ltd., said that in the past half a month, many textile enterprises in Xiqiao have been in a semi shutdown state. "Dare not take orders, especially large ones," the more serious the loss of production is at this time.

Export tax rebate reduction or "devastating blow" to SMEs

In fact, in recent years, financial tsunami, labor price rise, raw material prices and other unstable factors, the textile and garment industry no longer exists.

Recently, the news that the export tax rebate will be reduced by 5% will make many business owners frown and inquire about the possibility of implementation.

"In recent two years, the appreciation of RMB and the rising price of raw materials have made the profit margins of textile enterprises smaller and smaller."

Liang Yaokun said that in such a context, if textile and garment enterprises export tax rebate rate down 5 percentage points, may cause some small and medium-sized textile enterprises devastating blow.

Wu Haoliang, Secretary General of Foshan textile and garment industry association, said that if the export tax rebate reduced by 5%, it will bring disruptive influence to the textile and garment industry of Foshan.

He thought it would be acceptable if the export tax rebate was cut by 1% or 2%.

In order to keep orders, export tax rebates allowed customers to stabilize orders. If the road was blocked, the whole industry would be "miserable."

"The tax rate will be reduced by 5%, which will directly squeeze more than 5% of the profits of the export enterprises. The big competitive enterprises may be able to carry on for some time, but the next step will be even more difficult."

He said.

"Small and medium-sized enterprises have basically not accepted the tax rebate cut profits support."

Wu Haoliang said that many textile and garment enterprises in Foshan are small and medium-sized enterprises which rely on raw materials processing. They generally rely on large enterprises for outward processing, and they do not have terminal sales links.

If exports are blocked, the industry will reshuffle again.

Tan Mingkuang, chairman of Foshan Everbright Clothing Co., Ltd. believes that the steady rise of the RMB exchange rate has led to an annual reduction of about 0.5% of its profits. The rise in raw materials and the rise in labour prices also directly compress profits. Once the tax rebate rate has been lowered, it is basically "zero profit".

He thought last year was the worst year for the whole industry. This year's overall situation is better than last year.

"We can not decide the environment and do our best. In the worst case, if we do not lose money, we can continue to maintain production. If we start losing money, we will be miserable."

Chen Haidong, deputy general manager of Datang dyeing and printing company, said that compared with last year, the export situation has shrunk to varying degrees in this year's export situation.

But according to Chen Haidong, generally speaking, the gross profit of textile enterprises is more than 10%, while the gross profit of export can reach 20% - 30%. Although the export tax rebate rate will fall, there will still be room for profit in textile exports.

However, the recent cotton prices are unstable, and the textile export trade settlement cycle is longer, the cost of capital is higher, and if the export rebates are lowered, these enterprises will assume greater risks.

Adverse factors forced pformation and upgrading of industries

In the shadow of the export tax rebate reduction, there are also insiders believe that this is not a bad thing.

Unfavorable factors such as raw materials and labor prices will push the pformation and upgrading of the textile and garment industry.

In fact, many large enterprises have long been aware of potential crises and actively pform them.

Beginning in 2006, Foshan Everbright Garment Co., Ltd. began to focus on pformation and upgrading. The company invested 1 million yuan to introduce JIP management, upgrading and upgrading the convective waterline, and the production efficiency of the company increased by about 30%.

Thanks to these pformation and upgrading measures, while many enterprises are facing "off-season", the company's momentum is still prosperous, and the list has been discharged until August.

Tan Mingkuang thinks that the knitting industry in Zhangcha is large in scale but not high in scale.

At present, most enterprises are only responsible for processing links, small and medium-sized enterprises are more, and the enterprises responsible for the sale of terminal products are relatively few.

He said that 80% of the cloth in the Zhongda cloth market came from Zhangcha, but most enterprises in Zhangcha could only get a small part of the processing fees from them.

"The price of a ton of cloth is generally 60 thousand to 70 thousand yuan, but the processing fee only needs about 1000 yuan."

He said.

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He suggested that the government should speed up the pformation and upgrading of the knitting industry in Zhangcha. We must develop the terminal products sales link, improve the industry level and promote the healthy development of the industry.

Another industry leader, Foshan Anthony Knitting Co., Ltd. uses radio frequency identification (RFID) technology to improve productivity and knowability in garment manufacturing.

When problems such as cotton price rise, employment and so on, when compared with some small and medium-sized enterprises, large enterprises usually achieve the goal of reducing expenses and increasing profits by making good production plans, saving materials and improving production efficiency.

In fact, three years ago, the company has set up an information technology development department, and has worked with a number of universities and information systems R & D enterprises to develop an information system for clothing and hanging, and has applied it to actual production.

It is reported that this system can enable enterprises to achieve multiple varieties, small batch, fast delivery mode of production, product delivery rate on time to 98%, the order processing time from one to two days to 1 to 2 hours, the same day on the line of goods can be shipped on the same day.

It can save millions of yuan for enterprises every year.

In addition, in response to various unstable factors and the possible reduction of export tax rebates, some textile enterprises in Xiqiao have begun to pform from the previous export oriented to the export and domestic sales, and actively open up the domestic market.

At the same time, some enterprises have introduced R & D and design teams to increase the added value of products and strive for more profit margins.

Over the years, textile and clothing export tax rebate rate adjustment barometer

In July 1995, the export tax rebate rate for textiles and clothing dropped from 13% to 10%.

In December 1996, the export tax rebate rate for textiles and clothing dropped from 10% to 6%.

In January 2004, the export tax rebate rates for textiles and garments decreased from 15% to 17%, respectively, to 13%.

In September 2006, the textile export tax rebate rate dropped from 13% to 11%.

In July 2007, the export tax rebate for clothing was reduced from 13% to 11%.

In August 2008, the export rebate rate of some textiles and garments was raised from 11% to 13%, and from 13% to 14% in November of the same year.

In February 2009, the export tax rebate rate of textiles and clothing was raised from 14% to 15%, and from April to 15% in April of the same year.