Garment Production Costs Continue To Rise Sharply In Mainland China

In July 2011, the production cost of garment industry in mainland China continued to rise sharply.

The rise in consumer prices has led to rising labor costs and rising financial costs.

The textile and garment industry in mainland China is continuously facing a substantial increase in production costs.

According to official statistics released by mainland China, the cost of garment production in mainland China increased by 4.5% in June compared with 4.4% in the previous year, compared with July.

In contrast, the cost of garment production in mainland China increased by 1.9% in July (2010) compared with July 2009.

Inflation and wage rise

The continuous increase in production costs is mainly due to wage increases in China and soaring inflation.

In July this year, China's consumer price index climbed to a new high of nearly 3 years, or 6.5%, mainly due to the 14.8% rise in food prices in mainland China in July.

Fiber prices fell little.

In theory, textile companies in mainland China are now benefiting from falling raw material prices after a steep fall in cotton and polyester prices in the past few months.

However, polyester prices are still at a higher price level, and cotton prices may decline further in the near future.

In addition, cotton prices will drop rapidly, because the Chinese government may purchase a large number of new harvest cotton to support cotton prices and stabilize farmers' income, and its cotton purchase and storage measures are expected to start in September 1st.

Yarn productivity surge

More importantly, the mainland Chinese spinning industry is stranded in the high cost of inventory, while the price of its domestic market yarn is falling.

According to official data of mainland China in July this year, its spinning industry is facing a difficult business situation.

Meanwhile, the number of yarn production in mainland China increased by 11.2% in the first half of this year, and its yarn production capacity increased further.

In the same period, the investment in spinning industry in mainland China increased by 46.2%, and increased by 33.8% in the first half of 2010.

Slowdown in foreign demand

Due to the huge increase in production costs, China's textile and garment industry is facing a decline in orders from foreign buyers.

In contrast, mainland China's domestic market demand continues to grow significantly, and raw material prices remain at a fairly high price.

In addition to the increase in raw material prices and labor costs, the increase in interest rates and the reserve requirement of domestic banks in the Central Bank of China has led to an increase in corporate financial costs and a weakening of the competitiveness of Chinese mainland industries.

Despite the slowdown in foreign demand, the appreciation of the renminbi has also weakened China's international competitiveness and export capacity.

The electricity restriction measures are costly.

Zhejiang's power rationing policy in mainland China has led to higher production costs, forcing factories to buy generators to get electricity.

In addition, the interruption of the production process also resulted in the use of more expensive energy. When the power supply returned to normal, workers returned to work on weekends, and the factory also had to pay overtime wages.

Power outages also cause delay in delivery, and due to delay in delivery time, in order to catch the time of delivery, it is necessary to spend more expensive freight.