Textile Crisis Affects Cotton Production

Due to the rise of labor costs, the profit of domestic textile enterprises is only 2%, and the cotton textile industry is more prominent. The profit margin of 70% enterprises is below 0.7%, which is lower than bank interest.

Although the purchase price of cotton is stipulated by the state, considering the affordability of the enterprise, the price increase of cotton is only fine-tuning. "Cotton seed is not as good as grain production", and some cotton farmers begin to abandon cotton and grow grain.

Profits are lower than bank interest rates.

"Because of the rising labor costs, the company's current profit is only 2%."

A person in charge of the textile industry's Zhejiang fortune run group told the China Commercial Daily reporter.

At present, China has become the country with the largest number of anti-dumping investigations and countervailing investigations, and textile enterprises bear the brunt.

In 2011, there were more than 10 garment enterprises in China, of which 1.04 were over scale enterprises, accounting for 90% of the total number of SMEs.

Chinese textile enterprises are an important carrier of "made in China" and are deeply influenced by external markets.

Because of the economic downturn, the European and American countries have begun to choose the Chinese generation processing enterprises carefully while strengthening their industries. Many Chinese textile enterprises have been cut down or even gone bankrupt.

In 2011, more than 30% of the textile and garment enterprises in Jiangsu and Zhejiang went bankrupt and went out of business.

In Guangzhou, Dongguan, Zhejiang, Wenzhou and other domestic textile and garment market collapse is even more serious.

According to the latest news released by China Textile Industry Federation, the growth rate of China's textile industry's main economic indicators slowed down last year. The number of exports and the growth of industrial profits declined particularly. The enterprises above Designated Size realized profits of 295 billion 642 million yuan, up 25.94% from the same period last year, down 27.6 percentage points from the first quarter.

At present, the operating rate of Enterprises above designated size is over 80%, and the operating rate of some industrial clusters in the PRD is only about 40%.

"From last year to this year, the entire cotton textile industry is very difficult to be affected by the international situation and labor shortage. The profit margin of 70% enterprises is below 0.7%, which is lower than bank interest."

Hubei province Xiao cotton industry group responsible person told China Business Daily reporter.

Wang Linxiang, chairman of the National People's Congress and chairman of Inner Mongolia Erdos cashmere products Limited by Share Ltd, put forward that "China's textile industry has come to the rescue stage, otherwise it will go bankrupt."

So what is the cause?

"Labor costs continue to increase."

Wang Linxiang said, "in Kampuchea, wages are only more than 20 dollars, or more than 100 yuan RMB, and our salaries have reached 3000 yuan, and we have to pay various kinds of insurance. The enterprises are already overburdened."

Textiles from Kampuchea, Vietnam and some other Southeast Asian countries have taken a large share of China's original market.

Since the middle of 2011, manufacturing industry has mutated, and the industry has been almost hit by death, especially in the textile industry.

Export oriented textile industry has been seriously affected by the international financial crisis, and domestic labor costs have been increasing.

The textile industry, especially shoes, caps and toys, which are relatively low in technology, have been pferred to the emerging labor market such as Southeast Asia and Eastern Europe, such as Bulgaria and Poland.

"Vietnam, India and other places are cheaper, and our products are under increasing competition pressure."

Ren Quanyuan, general manager of Ji'nan head knitting Limited by Share Ltd, told reporters.

The company has raised wages by 20% last year to stabilize its employees.

The latest customs statistics also show the fact that the overseas market of the textile industry is being embezzled.

Data show that in January 2012, exports of textiles and clothing were US $21 billion 520 million, down 0.5%.

Textile exports amounted to 7 billion 680 million US dollars, down 6.8%.

Under multiple pressures, at present, not only a considerable proportion of international orders have begun to pfer to Southeast Asian countries, but also many large textile and garment enterprises in China have been developing factories in Southeast Asia.

"We are not not competitive, but because of cheap cotton, we have to move out."

Wang Tiankai, President of China Textile Industry Federation, said.

Not long ago, they went to Southeast Asia for a special look. The situation is worrying.

Another bad news is that in March 5th, the Ministry of Commerce and industry of India issued a ban on cotton exports and decided to ban India's cotton exports from now on.

At present, India is the second largest importer of cotton in China. If the ban is strictly implemented, it will have a greater impact on domestic textile enterprises.

In recent years, India has become an opponent of China and other textile exporting countries in the international market, especially in terms of low-end textiles. India relies on cheap raw material cost and labor cost advantages, and constantly nibbled China's international market share.

India's move is also to enhance the competitiveness of terminal textiles in the international market.

But for China's textile enterprises, it is no small blow.

In addition,

Wang Linxiang, chairman of Inner Mongolia Erdos cashmere products Limited by Share Ltd, has repeatedly called on: "corporate tax burden is too heavy!"

Textile industry is difficult to survive, especially in cotton spinning industry.

"As the deputy to the National People's Congress, I have made five motions on cotton issue."

Sun Yingan, chairman of the National People's Congress and chairman of Hubei Xiao Mao industrial group, said.

The "high tax and low deduction" of cotton purchase and processing value-added tax mentioned by him is a topic that has been continuously appealed by the whole industry for many years, but it still has little effect.

Cotton is the main raw material of cotton textile processing enterprises, accounting for more than 70% of the total production cost.

For a long time, the cotton textile enterprises' cotton purchase and deduction tax rate is 13%, while the value-added tax rate of cotton textile products is 17%, the difference tax has been borne by the enterprise itself. This means that even if the cotton textile products are not added, the cotton textile products also bear 4% tax burden, which is undoubtedly worse for the textile enterprises with a very thin profit.

Affecting the production of cotton

The recession of the textile industry has spread to cotton production, and the enthusiasm of cotton growers and cotton growers has been affected.

Although the purchase price of cotton is stipulated by the state, due to the recession of the textile industry, taking into account the affordability of textile enterprises, the state's price increase for cotton can only be fine-tuning.

In order to protect the enthusiasm of farmers to grow cotton, in March 1st, the national development and Reform Commission and other departments jointly formulated the "2012 cotton temporary storage and purchase plan", the standard grade lint to the warehouse price per ton 20 thousand and 400 yuan, compared to the previous year increased by 600 yuan per ton.

The NDRC has made great efforts in raising the price, but it is a drop in the bucket for the vast majority of cotton farmers.

"Raising 600 yuan per ton, raising about 0.2 yuan per kilogram of seed cotton, and increasing revenue per mu is about 50 yuan, which is still much lower than that of grain."

A cotton grower in Dezhou, Shandong told the China Commercial Daily reporter.

"Although the price is not losing money, it can not earn money."

Grain prices are getting higher and higher, and labor costs are becoming more and more expensive. If it's always the price, then it's better to grow wheat.

"It is precisely because of relatively low income that some farmers are beginning to give up seed cotton and turn to grow grain crops."

Ma Junkai, Deputy Secretary General of Dezhou Cotton Association of Shandong Province, said.

In the past few years, the cotton planting area in Dezhou reached about 2000000 mu, but it was reduced to about 1600000 mu last year.

According to the situation of wheat seeding this year, the cotton planting area in Dezhou will be reduced by 25% to about 1 million 200 thousand mu.

Dezhou is the case, and the national situation is not optimistic.

According to a survey conducted by the China Cotton Association, nearly 40% of cotton growers are prepared to reduce their cotton planting area in 2012, and 40% of cotton farmers intend to maintain their cotton planting area in the previous year. Some farmers plan to increase their planting area, while some farmers are still considering the planting area in 2012.

According to the weighted average, the average farmers' planting area decreased by 10.5% in 2012.

The Cotton Research Institute of Chinese Academy of Agricultural Sciences has recently conducted a survey of 120 designated counties and 2962 designated farmers in 16 provinces and autonomous regions in China, indicating that cotton planting area may be reduced by 6.1% in 2012.

Although the survey data of different agencies are different, the reduction of cotton planting area in 2012 is an indisputable fact.

For this reason, the Cotton Research Institute of Chinese Academy of Agricultural Sciences has suggested that the price of temporary storage and storage be raised by 5%, which is calculated at the price of 19 thousand and 800 tons last year, or 990 yuan per ton.

In fact, it only increased by 600 yuan.

The increase in the price of cotton purchasing and storage is far lower than that recommended by the Cotton Research Institute, which is obviously affected by the less optimistic future of the textile industry.

Xie Fangming, director of the industry department of China Textile Information Center, pointed out that, in the domestic aspect, the difficulty of recruiting workers continued in 2012. Due to the lack of orders and shortage of labor, the operating rate of enterprises is very low at present.

The growth of textile and garment retail sales is weak, which may be dragged down by a larger base.

On the international side, exports to Europe will continue to "lose the wheat city", "because the textile and garment production cycle is relatively long, this decline may continue to 2013."

Xie Fangming said, "in the EU countries, the situation in other countries is very serious except that the situation in Britain is slightly better.

At the recent French TXETWORLD Exhibition (France international fabric exhibition) and PV Exhibition (Paris first visual top fabric exhibition), the attendance of audiences has been greatly reduced, which confirms the global textile industry's recession.

How to resolve the crisis?

Where is the way out for the textile industry in the future?

"I hope to save the textile industry from reducing the tax burden on enterprises," said Zhao Linzhong, chairman of the board of directors of Fu run holdings.

On the issue of how to lighten the burden of enterprises, Zhao Linzhong put forward three measures: first, the deduction of cotton input from 13% to 17%; second, the allowable deduction of artificial wages for levying VAT in the textile industry; third, allowing the R & D investment and brand marketing expenses of the textile industry to be included in the scope of the VAT input tax, or the vat of some of the dominant innovative enterprises and brand enterprises.

Sun Yingan, chairman of Hubei Xiao cotton industrial group, believes that the conditions for tax reduction are very mature now.

He said: "after years of development, our country has strengthened its national strength. Last year, the tax revenue had already been over 10 trillion yuan. Instead of pferring payments from the state, it would be better to reduce the burden on the industry directly, so that the industry could develop itself.

In addition, to raise the income of residents and industrial workers, it is better to directly support the industry so that the industry can solve the problem of workers themselves. "

The recession of the textile industry has affected cotton safety.

"In the long run, in order to take into account the interests of the textile industry and cotton farmers, we should increase financial support for cotton farmers, establish a" cotton target price subsidy system ", and not raise the cotton price unilaterally to protect the interests of cotton farmers. In the current market situation, it is difficult for the textile industry to digest high cotton prices.

Ma Zhanping, deputy director of the economic and Trade Department of the national development and Reform Commission, said.

Foreign aid may be far from water, so how can textile enterprises save themselves?

"Bad external environment is bad for the textile industry, but it is also a good thing."

Du Yuzhou, President of the China Textile Industry Association, told the China Commercial Daily reporter that "the market mechanism is the best way out. The upgrading and pformation of enterprises is not called out, but under the intense competition environment and under the pressure of economic cycle adjustment, enterprises must take the road of upgrading and pformation."

If external demand has been strong, enterprises are willing to repeat simple processing instead of making great efforts to carry out technological pformation and industrial upgrading. Spontaneous reform is hard to achieve.

Shandong is a big textile province. Before 2008, due to the good export situation and the relaxed capital environment, many enterprises in Shandong province were expanding their scale. Now the situation is almost 1/3, which is called "born in trouble and died in peace and happiness".

Sun Ruizhe, vice president of China Textile Industry Association, further pointed out the way to pform textile enterprises.

"China's textile enterprises must pform as soon as possible, take the high-end product line, and get rid of the past relying on low labor development mode with higher technology content and added value."

Sun Ruizhe told the China Commercial Daily reporter.

A correct understanding of the development trend and objective laws of the global textile and garment supply chain is of great significance for guiding the development of China's textile and garment industry.

The division of labor in the global textile and garment enterprises is becoming more and more specialized. This trend further compresses the profit margins of China's domestic textile and garment enterprises. Only by changing the product manufacturers to buyers and service providers, can the one-stop service be able to grasp the mainstream of the supply chain and gain greater profits.

Sun Ruizhe stressed: "strengthening supply chain management and building a harmonious, healthy and sustainable development of textile and garment supply chain is an important measure and means to promote the upgrading and structural adjustment of China's textile industry. It is also a powerful guarantee for promoting the revitalization of textile industry, enhancing the ability of independent innovation, accelerating the construction of independent brands, enhancing industrial competitiveness, and promoting the textile industry from big to strong."