Textile And Garment Industry: Cost Increase And Profit Reduction, Garment Factory Closed

Recently, 9 enterprises in Feng Qiao Town, Zhuji, Zhejiang, have closed down, and 7 of them are textile and garment factories.

In some clothing enterprises in the town, these enterprises have closed down one after another. The most direct reason is the involvement of financing guarantee.

A town in maple bridge, Zhuji

Mr. Zhang, the office director, said: "because of the debts of the other party, you must guarantee that the enterprise will repay it. If a business goes bankrupt, the bank's credit to me will be reduced, and it will be pumped out, and it will produce a Domino domino effect."

But is the capital chain breaking really the only straw to crush the business?

He Zhijiang, chairman of the Kerr garment manufacturer in Zhejiang, Feng Qiao Town, Zhuji, said: "because of the increase in labor wages, welfare and the price of raw materials, coupled with the increase of various taxes and fees, the competition in foreign exports has been weakened.

After weakening, there are many orders abroad.

It is understood that the current Zhuji Maple Bridge Town

From the original more than 50 has been reduced to 30 home, the entire Zhuji textile and garment enterprises, from the most time more than 650 to two hundred or three hundred now.

Yang Yungui, deputy director of the comprehensive Department of Zhuji Municipal Bureau of information technology, said: "when the cost is rising and sales prices are not rising, the profit margins of enterprises are very small, or even losses.

Choose to stop production, or pfer to other low cost areas, or choose bankruptcy.

The profit is zero, the cost account of an export suit.

Garment manufacturing industry is experiencing a cost constraint. What are the costs of processing a garment? Next, we will give an export.

Calculate the cost account.

In Zhuji's maple bridge town, He Zhijiang, chairman of the Kerr garment manufacturer in Zhejiang, a foreign trade agent, said: "in order to maintain production, this is a piece of paper."

Profits have bottomed out.

If you had worked as a foundry before, you could earn 30 to 40 yuan. Now it's a guaranteed cost.

Reporter: no money?

He Zhijiang: if factories and equipment are going to buy new ones, plus bank loans, there is no profit at all. It is a loss.

He Zhijiang introduced this ordinary wool.

The retail price in the UK market is 150 euros, equivalent to about 1120 yuan.

But each piece

The export price of the foundry is only 470 yuan, and the price has not changed for ten years.

The cost of accessories, packaging, logistics and so on has risen from 30 yuan to 60 yuan now, accounting for 13% yuan. Water and electricity and other energy expenditure increased from 2 yuan to 3 yuan to 10 yuan now, accounting for 2% yuan. The value added tax and the added value were 25.85 yuan (accounting for 25.85). The depreciation and maintenance cost of machinery and equipment increased to RMB yuan. Judging from the cost of 470 yuan, the raw material of woollen material costs 300 yuan (64%).

From this piece

In terms of cost structure, the highest proportion is the cost of raw materials and labor, and the rising proportion is labor cost.

OEM OEM, foreign trade export lacks bargaining power.

Although labor cost is an important aspect of the cost burden of enterprises, it is not the only factor.

Products lack bargaining power, so the added value is not high, and as competition intensifies, orders are less and less, and prices are also getting lower and lower.

A family in Feng Qiao Town, Zhuji

According to the company, the number of garment workers in the factory dropped from 650 to 350 at the most time this year, all of which came from the decrease in overseas orders.

Mr. Zhang, the head of his office, said: "the quotation outside is lower than before, because the choice of the other side is large, and many countries are doing it, especially when the low-end clothing industry is now being pferred to Southeast Asia, so the bargaining power of the enterprises is getting smaller and smaller."

Huang Xubing, manager of Human Resources Department of a hosiery company in Datang Town, Zhuji: foreign trade is commonly known as "generation processing". The profit is very dead. If a company acts as an agent, even if it does not do it for 100 years, it will not give you the order if others do not know it.

Scale efficiency, machine substitution and cost reduction

Because of the rising labor costs, there are many in Zhuji.

Enterprises are struggling.

However, in Datang Town, another town in Zhuji, since last year, through the "machine substitution" to reduce costs, the socks industry has come back from the desperate situation.

Let's see how they do it.

In the survey, almost all enterprises regard labor cost as the main cost burden.

This is especially evident in the Datang Hosiery Industry, which started with manual workshops.

Zhang Qiang, deputy general manager of Zhejiang socks industry Co., Ltd., Datang Town, Zhuji, said: "now the labor cost and the wages of workers have increased very rapidly.

In the past, workers' salaries were only more than 1000, more than 2000, and now average three thousand or four thousand.

For companies, the pressure is still relatively large.

In Datang Town, every household has made socks for over 30 years.

In this household registered population of only 30 thousand people, but has more than 12000 enterprises Township, mainly rely on migrant workers to work.

As the industry is "low, small and scattered", low quality and low price competition of products, in the past long period of time, enterprises also fell into the unprofitable predicament.

In view of the present situation of the Datang socks industry on the verge of extinction, by the end of 2014, the Zhuji municipal government was determined to close down the "low and scattered" enterprises, and with the "machine replacement" as the driving force, the supporting socks industry was produced.

Now, in the stocking workshop of Datang Town, no worker can be found in most production lines.

From the original manual workshop to semi mechanized production, and now highly automated and intelligent robots, machines almost replace all aspects of stocking production.

Huang Qunhui, director of the Institute of industrial economics of the Chinese Academy of Social Sciences, said: the trend of machine substitution is a big trend. Of course, the labor cost will be greatly reduced for the manufacturing industry. The core of this is that you need to improve the efficiency of the entire manufacturing industry through the improvement of labor productivity, not only increasing its scale economy, but also expanding its scope of the variety economy.