Three Reasons For Declining Clothing Profits

According to the National Bureau of statistics, from 2011 to October, the retail sales of clothing increased by 24.5% over the same period last year, down 1.31 percentage points from the same period in 2010, and the volume of retail sales increased by 4.17% over the same period last year, down 8.16 percentage points from the same period in 2010. The unit price of clothing sales increased by 19.52% over the same period last year.

According to customs statistics, from 2011 to October, China exported 127 billion 433 million US dollars and 24 billion 412 million pieces of clothing and accessories exports, representing an increase of 21.37% and 0.07% respectively over the same period last year. The number of garment exports increased by 13.81 percentage points over the same period in 2010. Although export prices rose significantly at the end of 2010, the increase in export unit prices directly led to a sharp rise in export volume throughout the year.

Visible, whether domestic or export data are clearly manifested: throughout the 2011 garment industry is always rising prices. However, textile enterprises still complain incessantly, indicating that profits have gone up rather than improved. Some small and medium-sized textile and garment enterprises are struggling and even have to take measures to stop production. What is the strange phenomenon of "rising profits and falling profits" in the whole industry? Who has stolen the profits of textile and garment enterprises?

　　 raw material cost

"At present, the price of high quality sheepskin has risen from 24 yuan per foot to 29 to 30 yuan per foot, and fur price has risen from 28 yuan per foot to 52 yuan per foot, almost doubled, and the price of leather has also increased 50%." The head of a leather enterprise in Guangdong said that the price of leather raw materials has increased by more than 40% this year. Facing the present situation, enterprises have to make a difficult choice between "protecting profits" or "protecting customers". The responsible person said that many enterprises can only choose to sacrifice profits to retain some customers.

Cotton is also similar to leather. Since 2010, cotton prices have been soaring all over the world. In the face of soaring cotton prices, the impact is mainly on export oriented fabric enterprises and upstream cotton yarn production enterprises. Among them, especially small cotton enterprises, which are the main raw materials, suffer the most serious impact and losses.

In February 2011, Rossi, the owner of a small textile enterprise in Fuzhou, quoted 22 yuan per metre for a customer ordering velvet fabrics. However, from the time of the customer's order to May, the price of the fabric would be 24.5 yuan at the time of the cotton price. But the customer still pays 22 yuan per meter according to the contract price. In this way, Rossi's profits were lost. Such losses can only be borne by the enterprises themselves.

In the Luohu District village, Shenzhen, once famous for its collection of hundreds of large and small garment processing enterprises, it is hard to hear the machine rumbling of the electric sewing machine when the factory starts. Liu Quande, the owner of a local garment processing enterprise, said that in terms of clothing materials, cotton rose from 10 thousand yuan per ton to more than 30 thousand yuan last year. In order to save costs, many garment enterprises chose chemical fiber fabrics as far as possible, and the quality of products dropped sharply, resulting in a large number of products being unsalable. On the other hand, many enterprises are hoarding raw materials at the high point of cotton prices. With the price of cotton returning to 10 thousand yuan from 30 thousand yuan per ton this year, many bosses have lost their fortune.

　　 artificial cost

After 20 consecutive years of 40 Canton Fair, Mr. Ho, the boss of Shenzhen textile export business, shut down businesses that had been operating for decades. He calculated an account, and the order was reduced to less than the original 1/10. cost It has risen to more than twice two years ago, working hard. If we dismiss the staff rental workshop as an office building, we will earn more than one million per year, saving energy and effort.

Weitais is the leading enterprise of Shenzhen home textile export. Ceng Xiangjin, the chairman of the company, said that the profit margin of the order was diluted, and the book was counted as money making. It really fell to pocket and was close to zero. The factory was in a state of maintenance. And the cost, especially the manpower cost, is too high to be able to bear. Even so, it is still unavailable and not enough workers. Even if you have arrived, it will be difficult to deliver on time.

The head of a leather clothing enterprise in Zhejiang revealed that because the leather was mainly made by hand sewing, the annual salary guarantee price of the lathe workers was 55 thousand yuan this year, only 40 thousand yuan last year, at least 25%, and some skilled teachers have increased to 70 thousand yuan to 75 thousand yuan a year.

Another leather clothing enterprise also indicated that the average wage of the workers has increased continuously for 4 years, and this year has increased by 15% - 20%, plus the expenses of accessories and store rents. If the leather garments produced this year are sold at last year's price, there will be no profit.

In order to offset the pressure of rising cost of raw materials and labor, this year, leather companies generally raised the price of products, which ranges from 8% to 15%, but far below the increase of 40% of raw material cost.

"Cost increase is the main reason for the increase in footwear prices this year. The cost of footwear is mainly leather and artificial, such as the women's shoes we produce because of the increased cost of human resources, and the price of leather raw materials nearly doubled, and logistics costs, etc., the cost of each pair has increased by about 20%. A shoe manufacturer in Chongqing said that although the price of terminal products was raised, it was still difficult to offset the increase in production costs.

　　 Channel cost

There is no doubt that site rentals, in store fees and logistics costs are another major factor affecting the profits of China's textile and garment enterprises.

Li Rugang, vice chairman of YOUNGOR [9.35 2.86% shares, said that the sales volume of the store in Nanjing East Road in Shanghai is about 20 million to 30 million yuan a year, which has been bought out by YOUNGOR. But if it is to rent other people's stores, the rent and income have been basically flat because of the sharp rise in rents. If the enterprises want to maintain their original profit level, the retail price may reach 10 times the cost price. In the past, clothing retailers could sell their clothes at a price of 3 to 4 times the factory price.

And for other clothing enterprises stationed in shopping malls, the pressure can not be ignored. Some manufacturers have said that brand clothing and shopping malls are basically co operation modes. There is a turnover period. This month, the sellers sell invoices to the shopping malls next month, and the shopping centres only return money. The shopping mall with good returns is fast and the bad ones are in a few months or even years. In addition, 30% of the shopping malls will be deduct, plus taxes, costs, labor and utilities, which will account for more than 50%. profit 。

In addition, clothing enterprises should also deal with the high price entry fees of department stores and the arbitrary charges of "nonsense", and the only way to adopt them is to raise the selling price of products. Insiders revealed that a price of tens of dollars of shirts in department stores are often priced at more than 1000 yuan. In fact, the Chinese style "business geek" has become a gold absorbing black hole that encroachment the profits of textile and garment production enterprises and the exploitation of consumers' pockets.

In addition, the excessive logistics cost is also unknowingly eroding the original profit margins of textile and garment enterprises. Geng Shuhai, deputy director of the State Economic and Trade Department of the national development and Reform Commission, pointed out at the 2011 China logistics development conference that the toll standards for expressways in China are too high, and all kinds of crossing fees have reached 1/3 of the cost of transportation enterprises.

"Suppose that the price of a down garment in Beijing last year was 450 yuan, and this year it will rise to 500 yuan." Lin Tao, a market trader who has been doing garment business for more than ten years, said that the logistics cost of a down to Beijing shipment to Linyi is about 20 yuan, plus the labor cost increased at the time of factory leaving, the cost of a down garment will increase by 50 yuan after coming to the Linyi market.