A Major Problem In Risk Control Of Textile And Garment Enterprises Is Raw Material Price Fluctuation.

The sharp fall in cotton prices once caused the stock price rise of the related stocks in the A share market.

Market participants believe that the cost of raw materials such as cotton accounts for the highest cost of production in textile enterprises, and the fall in prices will naturally help companies improve their performance.

However, China Securities Journal reporters in Shandong, Dezhou, Weifang, Binzhou, Zaozhuang and other places found that many small and medium-sized cotton processing enterprises and textile enterprises have ceased production or closed down, some large.

"This is the most difficult year for my textile industry in more than 10 years."

Feng Jun said, "the factory that has not stopped production during the financial crisis has been shut down for over a month now, and it can not start yet, and it will lose money when it starts.

There are still 200 tons of inventory left unsold.

China Securities Journal reporter saw that in Xiajin Henry cotton mill, these unsold stock "Fortress style" scattered in nearly 1000 square meters of factory area.

Sun Rigui said that in previous years, this time was the busiest, and sales department orders came to compete with the production departments for machines, but this year there has not been such a situation.

"In the past, twenty percent of our output depended on the outsourcing plant. Now it is difficult to ensure that all the factories are working, and we have to work hard to protect those factories that have certain strength and loyalty."

Yu Fengjun said the rapid decline in cotton prices has amplified the business.

"Other costs have been improving.

Labor cost increased from 60 yuan per day per person per ton to 80 yuan per day per person per ton last year and 300 yuan per ton of processed cotton.

In addition, the electricity bill has increased by more than 3 points this year.

In this way, the total cost of a ton of cotton is about 17000 yuan.

The current price is more than 17000 yuan.

Counting the hidden costs, selling at such a price will lose money.

"In spite of the fact that the state has issued 19800 yuan / ton,"

If you want to pay for storage, you won't get the standard; sell it and lose money.

Cotton processing enterprises have been in a dilemma. Many enterprises have to choose to suspend production or declare bankruptcy.

Guo Yaozhong, owner of Shandong Zaozhuang Heng Xiang Textile Co., Ltd., said: "nearly 10 enterprises in Zaozhuang have stopped production, and more than 40 enterprises in surrounding Linyi have closed down, and more businesses have failed in Yuncheng."

According to the statistics of Dezhou Cotton Industry Association, at present, the operating rate of 103 cotton processing enterprises and 247 textile enterprises in Dezhou is basically maintained at around 70%.

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Why is the price of Cotton falling sharply this year, which is worse than the price rise last year? Wang Yong, a cotton futures researcher at Hongyuan Futures Co., believes that the root cause is that the export situation of terminal cotton products has changed.

Because the export price of cotton products was high and large last year, it could be said that the textile industry was "profitable" one year, from terminal export enterprises to middle reaches of textile enterprises, then to the upstream cotton processing enterprises, and then to the most upstream cotton growers, every link has made enough money.

This year, the export of terminal cotton products has been reduced, which first leads to the sale of cotton yarn in textile enterprises, thus backlogging large quantities of stock.

In addition, some enterprises bought raw materials at high cotton prices last year and have not yet been digested. Therefore, the high cost of materials and the high inventory cost have led to textile enterprises falling into the dilemma of whether to continue full load production.

We can see from Wei Qiao textile.

Wei Qiao textile, located in Zouping County of Binzhou, is the largest textile enterprise in the world, and is regarded as the "weathervane" of the industry.

Industry evaluation is "Wei Qiao rises, cotton price rises, Wei bridge falls, whole nation falls".

In normal years, it is time for Wei Qiao to purchase cotton in large quantities.

In November 7th, the China Securities Journal reporter found that a large number of companies outside the factory area did not see the shipment.

"The cotton processed by our factory is shipped to Wei bridge by 1/3.

Last year pported about 1000 tons, only 200 tons were pported this year, and Wei bridge stopped buying.

Yu Fengjun said.

The reason for stopping buying can be found in Wei Qiao textile semi annual report: cotton prices rise first and then fall, and downstream customers take a wait-and-see attitude, which affects sales in the first half of the year. It is expected that the demand for textile products in the international market will increase or slow down in the second half of the year, and the trend of slow downward export may continue.

"Buying up or buying a down mentality lets foreign customers not dare to place orders, resulting in a reduction in demand.

In addition, although domestic cotton prices have fallen sharply, foreign cotton prices have also fallen, or even lower than domestic ones, which has led to a decline in competitiveness of Chinese textiles. "

"The more important thing is that foreign customers do not think that the price of cotton is in the end," said the head of a large company.

This is evident in the new contract. "

He suggested that the state should increase the intensity of cotton storage and storage, increase annual reserves to 5 million tons, reduce the impact of international giants on cotton prices, achieve the effect of smoothing the cotton price volatility, and protect the interests of farmers in the cotton industry and textile industry chain from the source.

In fact, raw material price fluctuations test the cost risk control ability of enterprises is an old problem in the textile industry.

The industry is known as "seven yarns and eight cloth". Generally speaking, the cost of raw materials in yarn products accounts for 70%, while the cost of cloth products accounts for 80%, while the proportion of raw materials in clothing costs generally reaches 60%.

Liu Xin, deputy director of the Statistics Center of China Textile Industry Federation, said that the cost burden of textile industry has not changed much in the past ten years.

At the beginning of joining the WTO in 2001, the main business cost of the industry accounted for 88% of the main business income, and by 2010, the proportion was 87.79%.

Many people in the industry are worried that the cost and risk control ability of enterprises has not been improved substantially in the past ten years, and the future development of the textile industry will still face this old pain.