Low value-added low-cost advantage is no longer suitable for China's textile industry

If we look at the figures, at the same time as cotton prices “roller coasters”, the export volume of the textile industry in the first quarter is not dismal. According to customs data, in the first quarter, the total value of textile and apparel exports was US$49.866 billion, a year-on-year increase of 23.68%, and the growth rate was 8.24 percentage points higher than the same period of last year.

“This is the reason for the increase in export product prices. On the contrary, the export situation is not very optimistic,” said Gao Fang, secretary general of the China Cotton Association.

In the first quarter of this year, China's textile and apparel exports to the world increased by 19.46% year-on-year, of which textile prices increased by 24.31% year-on-year, and apparel prices increased by 15.99% year-on-year. If the price factor is removed, the volume of textile exports only increased by 3.53% compared with the same period of last year, and the growth rate was reduced by 10.75 percentage points from 14.28% in the same period of last year.

High-priced exports will inevitably affect foreign trade orders, coupled with the pressure of *** appreciation is to make the loss of textile and apparel orders.

"Some orders have begun to shift to Southeast Asia, like Vietnam, Bangladesh, Indonesia and other countries." Gao Fang introduced.

H&M also confirmed this. H&M also has factories in Southeast Asia. Because of the increase in raw material costs, production costs, and labor costs in China, some low-value-added product orders have been transferred to factories in Southeast Asia. “We have transferred some of the more complicated orders from some European factories. Come to China."

In the first two months of 2011, the number of US imports of apparel products from China increased by 8.47% year-on-year, while the US imports from Vietnam, Bangladesh and Indonesia grew by 19.25%, 31.26%, and 17.43%.

In addition to the transfer of orders, the uncertainty of the cotton price has affected companies' inability to take orders or place orders. This has also become an export concern.

"The trend of cotton prices is not clear, and now there are few orders, that is, there is no way to accept large orders." Shandong Heze, a company responsible person after participating in the Canton Fair is considered as "the barometer of foreign trade," after the emotion. The person in charge said that large orders and long orders are “hot,” and they tend to pick up short-term orders with low risk and controllable costs, and buyers also place orders cautiously because of uncertainty about cotton prices.

At the end of March this year, eight departments including the National Development and Reform Commission jointly formulated and issued the “2011 Preliminary Reserve Plan for Cotton”. The scheduled execution time is determined from September 1, 2011 to March 31, 2012. The temporary storage price is standard lint. The warehouse price is 19,800 yuan per ton. "A lot of buyers have taken this as a psychological price point. They use a little purchase point. Who wants to spend more," said a cotton spinning mill in Jiangxi.

If the temporary purchase and storage prices affect the buyer's psychology, then the rumors of "reducing textile export tax rebates" will affect exports. In the Twelfth Five-Year Plan, the textile industry has been identified as the focus of monitoring as an industry with excess capacity, high pollution and high emissions.

“From the beginning of the year to the present, the rumors that the country will lower the tax rebate on textile exports have not been cut off. Some companies are therefore hesitant.” said Zhu Lanfen, Honorary Vice President of the China Cotton Textile Industry Association.

Affected by the previous financial crisis, the export tax rebate rate for textile and apparel products was adjusted from 11% to 16%. The rumors were that the tax rebate rate was lowered by 5 percentage points to 11%. If calculated in accordance with the 2010 export tax rebate, textile and apparel export tax rebates will be reduced by 65 billion US dollars, equivalent to one-third of the profits of the industry.

“Low-value-added low-cost advantages are no longer suitable for the Chinese textile industry.” Gao Fang said, “China’s production costs no longer have advantages, and labor-intensive industries are no longer suitable for China. We need to work hard on products and R&D to increase products. Added value can offset the export disadvantage caused by the disappearance of price advantage."

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