Textile Industry: Seeing Opportunities Through Crisis

The textile industry, which is mainly outside the long-term demand, has encountered the most serious predicament and crisis in recent years under the global economic depression.

Most of the textile enterprises increased their business difficulties, of which more than 11000 enterprises were losing money, and the deficit expanded to nearly 1/4.

As the most representative labor intensive industry in China, the textile industry is facing a severe test.

Plight: ten enterprises nine difficult to say "two years ago, a pair of shoes export average price of 6 US dollars and profits, but now the offer must be more than 7.2 U.S. dollars or more, enterprises will be able to maintain capital."

Ding Youyi, chairman of Fujian Jinjiang WorldCom Footwear Co., Ltd., said that in the past two years, the total cost of enterprises has increased by about 20%.

The statistics of China Textile Industry Association show that in the first half of the year, the total export of textiles and clothing totaled 83 billion 851 million US dollars, an increase of 11.11% over the same period last year, an increase of 6.44% over the same period last year.

If converted into RMB, the export growth rate of the former June was only 1.6%, an increase of 11.6% over the same period last year.

Besides, there are more than 11000 loss making enterprises in the textile industry, and the deficit has expanded to nearly 1/4.

Experts believe that the international market demand is shrinking, China's export tax rebate policy adjustment, RMB appreciation accelerated significantly, raw material prices continue to rise, labor costs continue to rise, energy saving and emission reduction efforts are increasing, and international trade conflicts continue.

These factors cause the textile industry "ten enterprises nine difficult" dilemma.

RMB appreciation against the US dollar, the profit margins of enterprises are "swallowed up".

Since the beginning of the year, the exchange rate of RMB against the US dollar has increased by 4.3%, which means that the profit of textile enterprises mainly engaged in foreign trade processing is evaporating at the same speed. In fact, the average profit margin of textile and garment enterprises is not more than 4%.

The increase in raw material costs has also made the enterprises overburdened.

In 2007, cotton prices increased by 2000 yuan per ton, and a large and medium-sized enterprise purchased about 50 thousand tons of cotton a year, which led to a sharp increase of 100 million yuan in cost.

At the same time, due to the impact of the US financial crisis, the demand for the US market has shrunk considerably this year, which has caused great pressure on many foreign oriented garment enterprises.

For a long time, the United States has been the largest market for textile exports in China, and many processing textile and garment enterprises in the southeast coast of China rely almost entirely on us orders.

Policy: to support labor intensive products export crisis, the state's adjustment of financial policies is undoubtedly a timely relief for many textile and apparel SMEs.

In August 1st, the Ministry of Finance and the State Administration of Taxation raised the tax rebate rate of some textiles and clothing from 11% to 13%. Through the window guidance, the central bank raised 5% of the national commercial banks on the basis of the original credit scale and increased 10% to the local commercial banks, and requested that the quota should be used in small and medium-sized enterprises, agriculture or earthquake stricken areas. Then the policy was released to loosen the loan amount for small and medium enterprises, and the maximum amount of small secured loans for labor-intensive small businesses increased from 1 million yuan to 2 million yuan.

Among them, the increase of export tax rebate rate is equal to 2% of the profits directly sent to related enterprises.

Chen Deming, Minister of Commerce, said that although the callback was only two percentage points, it gave a signal to the entire business community and the international community that the Chinese government still supports exports of labor-intensive products.

Bai Jingming, deputy director of the Financial Science Research Institute of the Ministry of finance, thinks that raising the export tax rebate rate of textiles can relieve the pressure of enterprises and stimulate exports.

"The improvement of the export tax rebate rate indicates that the government has conducted a thorough investigation of the actual industrial situation.

Through local adjustment of fiscal and trade policies, the aim is to achieve a global balance. "

Sun Huaibin, a spokesman for the China Textile Industry Association, believes that the improvement of the export tax rebate rate is the biggest benefit of the export tax rebate policy at this stage, which can effectively alleviate the cost of domestic production and operation, thereby improving the export profitability of enterprises.

However, with the reduction of international consumption demand, the rise of domestic production costs and the continuous appreciation of RMB, the change of tax rebate policy alone can not guarantee that garment exporting enterprises can rest easy.

A way out: independent innovation is a magic weapon. Facing the tight environment of foreign countries, many textile enterprises clearly realize that the old road of low cost, low technology and low price can only be a "dead end road". Relying on R & D, industrial upgrading and independent innovation to seek a turning point is the "bright road".

Innovation is to grasp the two sides of "smile curve", that is, technological innovation and brand network innovation, constantly developing new products and improving the added value of products.

It sounds a bit like Arabian Nights to make cloth from milk and soybeans, but the innovative fabric of this double protein fiber is popular because of its soft and breathable air, which makes Zhejiang a profitable company.

Many textile enterprises regard independent innovation as a "magic weapon" to get out of the predicament. They believe that only by improving the capability of independent innovation of enterprises, enhancing the capability of independent development of science and technology, and grasping their own intellectual property rights, can they strive for a more favorable trade position and competitive advantage, and provide important support for enhancing international competitiveness and resisting risks.

Zhou Haijiang, the party secretary and President of the red bean group, said frankly, "as long as my new clothing quality is better than that of others, the cost is lower than that of others, service is better than others, delivery is faster, new products are better, and I will develop better than others."

"Textile and garment enterprises must rely on their own promotion if they want to really get out of difficulties."

Sun Huaibin believes that in the current export environment situation is grim, enterprises should make greater efforts to increase structural adjustment efforts, improve export bargaining power and value-added products, enhance brand awareness, pform export growth mode, and improve enterprise management level.