Exports Approaching Critical Point, Domestic Demand For Textiles Will Continue To Increase.

The export price of domestic textile and garment enterprises rose by more than 5%.

Coincidentally, speculation on the adjustment of China's textile export tax rebate policy has never disappeared in the market since last year.

A few days ago, there were public reports that this year's textile export tax rebate may continue to decline, or the adjustment will reach 4%, that is, from the current 11% to 7%.

In a sense, the tacit understanding between domestic textile export price and textile export tax rebate is probably not just a coincidence.

Zhao Yumin, a researcher at the international trade and Economic Cooperation Research Institute of the Ministry of Commerce, said in an interview with reporters that since the quota restrictions on textile trade between China and Europe have been abolished, the cost of domestic textile export enterprises previously used for bidding and purchase quotas will be reduced accordingly.

To this end, the timely reduction of textile export tax rebates will, to a certain extent, restrain our country's export of European textile products from a blowout.

With the pressure of China's foreign exchange reserves increasing, the textile industry that contributes the most to China's trade surplus is bound to become the primary objective of export tax rebate adjustment, especially the export tax rebates for polyester, long and short films and cashmere and leather products.

Du Yuzhou, President of the China Textile Industry Association, pointed out that according to preliminary estimates, the accumulated loss of textile and garment enterprises above Designated Size reached 41 billion 700 million yuan in the first 11 months of 2007.

According to relevant research data, the total profit of the textile industry will decrease by 2% to 6%, and the export growth rate will slow down by 0.3 to 0.4 percentage points every 1% appreciation.

Since this year, the RMB has continued the rapid appreciation trend that began in the second half of last year. In February 29th, the RMB bid for the middle price of the dollar was 7.1058, approaching the 7.10 pass. In the first two months of this year, the RMB has risen by more than 2.58% to the dollar.

In March 17th, the central parity of RMB against the US dollar was 7.0815 yuan.

According to the exchange rate of 8.11, the appreciation of RMB has reached 12.69% since the reform.

In response to the current strong appreciation of the renminbi, Zhao Yumin admitted that the rapid appreciation of the renminbi in the first two months of this year largely came from the expectation of domestic inflation and the depreciation of the US dollar.

It is hard to predict whether the momentum will continue in the second half of the year. It is estimated that the appreciation rate of RMB will not exceed 10% throughout the year.

Zhao Yumin said: "in response to the subprime mortgage crisis, the US government has launched an economic stimulus plan in a timely manner, and the US macroeconomic policy effect such as interest rate cuts will gradually show up this year."

The export may have a critical point. Besides the exchange rate effect, it has been involved in the unfavorable factors such as the increase of raw material prices, the reduction of export tax rebates and the increase of labor costs. The total production cost of China's textile and garment industry has increased by more than 10%.

For domestic textile enterprises whose bargaining power is not more than 5%, the pressure of survival is self-evident.

At present, the promotion of export prices is playing an increasingly important role in improving the export growth of China's textile and clothing industry.

In 2007, the unit price of textile and clothing exports increased as a whole, and clothing export prices increased rapidly.

According to the data model of textile and clothing import and export, in 2008, the price of China's textile exports will increase by about 2%, the price of clothing export will increase by about 10%, and the comprehensive export price of textile and clothing will increase by 7.18%.

Some experts predict that in 2008, the appreciation rate of RMB may exceed the increase of export price of textile and clothing for the first time since the reform. The critical point of textile export will emerge, and the difficulty of textile export enterprises will also increase significantly in the middle of this year.

With the emergence of export critical point, the impact strength of China's textile industry will obviously exceed that of previous years.

If we can not fully digest the cost pressure brought by the appreciation of the renminbi, the profit margins of a large number of export oriented textile enterprises will be further squeezed, thus facing the fate of bankruptcy or forced pformation.

Zhao Yumin is not very worried about the critical point of textile and clothing export. She said: "the textile industry is a fully competitive industry dominated by private capital. In the case of changes in internal and external environment, enterprises will adjust their production and operation strategies in response to changes in external environment such as prices."

She believes that for different levels and different strategic positioning of enterprises, its specific measures are also different.

"For those enterprises that only rely on export tax rebates to make profits, timely withdrawal will be an option; some enterprises may take part of their funds to invest in new industries such as new energy," and those who aspire to adhere to the textile field will strive to upgrade their products and technological innovation, and further consolidate and expand the original market space through differentiation strategy.

It can not be overlooked that the negative effects of the US subprime crisis on China's textile and clothing exports have begun to emerge from the end of last year.

China Textile Import and Export Chamber latest statistics show that in the first 10 months of 2007, China's textile exports to the United States increased by 23.42% compared to the same period last year, but the annual export growth rate was only 14.42%.

According to us customs statistics, in December 2007, China's textile exports to the United States even increased by -1.41%.

The growth rate of the domestic demand market will exceed 20%. Wang Qian said that in 2008, China's textile and clothing consumption is bound to enter the upgrading period. The domestic demand market is expected to maintain a high growth rate of over 20% in the future. The main driving force of the textile industry growth will gradually shift from export to domestic consumption.

Zhao Yumin is also very optimistic about the growth prospects of the domestic demand market of textile industry in 2008.

She said: "this year is the Olympic year, which will stimulate the demand for the domestic textile and garment market, especially because China's textile and apparel has established a good reputation in the world."

In fact, in 2007, the growth rate of domestic clothing sales exceeded the export growth rate for the first time. This undoubtedly conveyed a positive signal to the textile industry: to tap new economic growth points in China or to become a wise choice for textile exporting enterprises to tide over difficulties.

Take YOUNGOR group, a leading clothing company in China as an example, its listed company recently released a report that it is not expected that garment export will make greater contribution to the company's net profit growth in 2008, and the domestic garment market is expected to achieve steady growth.

It is predicted that this year's apparel domestic sales growth is expected to reach 20% to 30%, domestic net profit growth will be around 50%; and garment export scale accounts for only 50% of the domestic sales scale.

In addition, in order to maintain the fast development of the domestic garment market in 5 years, YOUNGOR will also make a larger adjustment in marketing and channel construction this year.

Reading links: at this stage, China's export tax rebate policy mainly covers three types: first, the implementation of full export tax rebate policy for products with high technological content and high added value; two, the implementation of some export tax rebate policies for other products other than high value-added products and resource products; three, the abolition of export tax rebate policy for "two high and one capital" products.

In addition, the export tax rebate rate of our products now includes five grades, namely 17%, 13%, 11%, 9% and 5% respectively.

Unlike China's successive reduction or cancellation of export rebates in recent years, the US, EU and other trading partners have implemented a full refund policy for all products exported.

Accordingly, China's export enterprises actually need to pay 4%~17% more value-added tax than their competitors.

Related reports: since the beginning of January 1st this year, the EU Europe textile trade quota growth has been officially declared to an end and replaced by China EU dual monitoring system.

Judging from the import and export situation of textile industry in January this year, China's textile and apparel foreign trade has maintained a relatively stable growth pattern.

The industry expects that the trend of high and low textile exports will continue in China this year. As the export market is becoming decentralized and rationalized, China's dependence on the United States and other traditional markets will gradually decrease in the future. Europe, Africa and Latin America will become the main growth areas for exports.

According to the monitoring data of the customs in January, the total import and export volume of textiles and clothing reached US $16 billion 334 million in the same month, an increase of 22.97% over the same period last year.

The total value of exports was US $14 billion 984 million and the total value of imports was US $1 billion 350 million, up 25.21% and 3.13% respectively over the same period last year.

In view of the rapid growth of China's textile and clothing exports in January this year, Dai Lin, an analyst with China's first textile network, believes that this rapid growth is mainly due to the fact that most textile companies maintain the habit of concentrating exports before the festival, leading to a substantial increase in exports of textiles and clothing in that month.

According to Dai Ling, according to the development track of textile and clothing exports before and after the past years, it is estimated that the proportion of textile and clothing exports in the monthly total value will continue to decline in the future.

Coupled with the impact of multiple factors such as snow disaster during the Spring Festival, the rising cost of labor and raw materials, and the acceleration of RMB appreciation, it is estimated that the growth rate of China's textile and clothing exports will fall to a certain extent in February.

Judging from the main export areas, Asia, Europe and North America still rank the top three in China's textile and garment export market, accounting for 43.82%, 27.94% and 14.99% respectively.

However, China's exports to Asia, North America and other regions have declined to varying degrees, especially for North American exports, from 36.98% in the same period last year to 2.42%.

Exports to Africa, Latin America and Oceania rose from 21.12%, 15.59% and 2.27% in the same period last year to 41.35%, 41.58% and 42.59% this year.

Dai Lin believes that this is because the accelerated appreciation of the renminbi since the second half of last year has directly promoted the structural adjustment of China's textile export market.

From different countries, in January this year, the 27 countries, the United States and China's Hongkong region still occupy the top three of China's textile and clothing exports, but their share has decreased compared with last year.

Among them, China's exports to Europe and the United States account for about 35.08% of total exports, down 0.5 percentage points from the same period last year.

Dai Lin admitted that structural changes in the export market showed that China's textile exports are becoming increasingly decentralized and rationalized, and their dependence on China's Hongkong, Japan and the US market has gradually decreased, while Europe, Africa and Latin America will become the main growth areas for China's textile exports in the future.