Cotton Prices Soar: Crisis In Europe And America: "Double Kill" In Textile And Garment Industry

The roller coaster of cotton price has not only suffered the cotton farmers, but also has suffered from these small and medium-sized enterprises in the middle of the textile industry chain.

Henry, owner of cotton mill in Xiajin County, Dezhou, Shandong, lamented, "from September to the beginning of the Spring Festival, cotton processing enterprises are busiest. But as far as I know, 95% of the enterprises in Xiajin county have already stopped production like mine.

Some enterprises simply declared bankruptcy and started selling machinery.

"It can be said that this year is the most difficult year in history, which is more difficult than the 2008 financial crisis."

Sun Rigui, chairman of the group, said in an interview with the China Securities Daily reporter that there are two main factors leading to the industrial predicament: first, the cotton price has gone up and down, which has aggravated the risk of enterprise operation; two, it is difficult to see the dawn of the recovery in the us and Europe due to the financial crisis, and the weakening of consumer demand has led to a reduction in orders.

"In the past, European and American customers bought shirts and bought one dozen. Now they are changed into pieces. How big is the difference?"

China Securities Daily reporters in Shandong survey found that the "no money" situation in the textile industry chain exists in all links.

From cotton growers, cotton purchasers to cotton processing enterprises, cotton textile enterprises, and then to cotton finished products enterprises, there is no exception.

The business people and industry experts interviewed by China Securities Journal think that the cost of raw materials in textile enterprises is the highest. Cotton price "roller coaster" has dramatically enlarged the cost control risk of enterprises, and has marked the "old pain" that textile industry can not change for decades.

In the past few years, with the increase in China's accession to the WTO, in recent years, with the rising price of production factors, including the labor force, and the weakening or disappearance of many dividend policies, China's textile industry should not only deal with the "grab sheet" of some Southeast Asian countries, but also face shrinking orders due to the weak demand in Europe and the United States.

This has become a "new wound" in the textile industry.

They believe that the old textile industry may be relocated to export predicament next year.

To deal with the old pain, the relevant departments should co-ordinate the layout of raw material production, and enterprises should improve their market adaptability.