Clothing Manufacturing Industry Is Going Through A Cost Trap And Closing Down Is Not A Rare Thing.

China is the largest clothing producer and consumer country in the world. It has absorbed a large number of employees and has contributed a lot of fiscal and tax revenues to the region.

However, in recent years, China's garment manufacturing industry is experiencing the cost of being hit by two sided attacks, which are narrowed by market demand and operating costs are rising.

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.

Mr. Zhang, director of the office of a garment factory in maple bridge, Zhuji, said: "because of the debt 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 at present, the garment factory in Maple Town of Zhuji has been reduced from more than 50 to 30, and the entire textile and garment enterprises in Zhuji have been reduced from more than 650 at the most time 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 and even losses. Therefore, some garment enterprises choose to stop production, or pfer to other areas where the cost is relatively low or choose to go bankrupt."

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

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In order to maintain production, the profit of the men's suit has already bottomed out, said He Zhijiang, chairman of Zhejiang Kerr garment making company.

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

He Zhijiang introduced that the retail price of this ordinary wool suit in the UK market is 150 euros, equivalent to about 1120 yuan.

However, the export price of each suit is only 470 yuan, and the price has not changed for ten years.

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It is an important aspect of the cost burden of enterprises, but it is not the only factor.

In a garment company in Maple Town, Zhuji, the number of garment workers in this 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:

Commonly known as the generation processing, the profit is very dead, a company as a foundry, even if 100 years do not have their own brand, others do not know will not give you the order.

Because of the rising labor costs, many garment enterprises in Zhuji 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.