Chinese Cotton Textile Firms Feel Squeeze
7 April 2008 According to Xinhua, the official press organization of the government, the survey was conducted by the China Cotton Textile Association and covered cotton textile companies in 17 provinces. In total, 49.2% of the companies surveyed said they wanted to quit and restart in other businesses.
About 27.3% said the pressure they felt from the yuan appreciation had become unbearable, while 44.4% started selling some export-oriented products on the domestic market.
The companies also cut investment in cotton textiles by an average of 15.5% last year because of the yuan appreciation, lowered tax rebates and soaring costs in both labor and raw materials. The companies said they made more investment in the real estate sector, equity markets and other businesses.
A recent survey by the China National Textile and Apparel Council showed the industry’s profit margins averaged 3.9% last year. Two-thirds of the companies surveyed reported an average profit margin of only 0.62%.
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