China Textile Industry Must Develop Greater Competitiveness
Textile News Article Posted August 15, 2008
 

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The ministry of Finance and State Tax Bureau declared it will adjust the export rebate rate of some goods. Some textiles and garments' export rebate rate has risen from 11% to 13%. The rebate rate of some bamboo products has risen to 11%. This is great news for the textile industry which needs to become more competitive.


Separately, textile information in Tootoo.com shows that the decreasing international demand, rising prices for raw materials, fast RMB revaluation and rising cost of labor is forcing increased operation costs. The increased export rebate rate is helping to lighten the squeeze that the textile industry is facing. It can also relieve the financial shortage and support the healthy development of small and medium enterprises. It also demonstrates that exports have increased 21.9% to 66 in the first half-year, but it fell about 5.7% compared to the corresponding period of last year.

 

It is speculated that the total profit of textile and garments may reach 184.7 billion this year. A two percent callback of the export rebate rate can help textile industries increase profit by about 17 million RMB. Though the adjustment is a great help for the textile industry, enterprises are still not optimistic about the future because of the rising loan rates and exchange rate, and the increasing cost of materials and labor.

 

The RMB appreciation has become the greatest squeeze, even European customers insist on paying in dollars. Appreciation can reach about 5% in a three-month period, but the average profit is only 3%

 

Insiders think that though the adjustments can relieve the recent industry squeeze, the benefit will be counteracted by the RMB appreciation. The fundamental problems haven't been solved, such as increasing production costs, stressed credit market conditions and weak demand.

 

In addition, the benefit cannot be enjoyed by all the national enterprises. Because of national enterprising's poor bargaining ability, the overseas purchasers will receive some of the benefits.



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