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China has lost its price advantage in low-end cotton textile products

China has lost its price advantage in low-end cotton textile products Source:
Date: 09-05-2012
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China has lost its price advantage in low-end cotton textile products. India, Pakistan, Vietnam and other countries have occupied part of China's market share in the United States with their advantages in low cotton prices and labor costs. Even a large U.S.T-shirt company set up factories in Bangladesh and South America, and then has their products exported to China.

According to statistics, 59 percent of the U.S decrease in imported cotton products was from China, while the increased volume of exports from Southeast Asian countries to the United States accounted for 54 percent of China’s reduction.

Currently the spread between Chinese cotton price and international market is basically around 3000 Yuan/ ton, the 16 percent of export tax rebates is not enough to offset the pressure from rising raw material and labor costs. Now worker’s wages are two times over three years ago, but export price of fabrics is cheaper than three years ago, companies make little gains from exports.

At present the entire textile industry is in a cycle of de-stocking, terminal sales are weak. Enterprises generally say their orders have declined by 20-30 percent since this year.

Statistics also showed that export value of China's textile and apparel in March grew by 13.4 percent year on year, but growth rate dropped by 37.2 percentage points over the same period last year.

In the case of difficult external living environment, the majority of textile enterprises hope that the Government will stabilize cotton price by using administrative means to avoid greater losses of enterprise caused by the "roller coaster" in cotton price.

A person in charge of a large enterprise says that their relationship with customers will become tense, whenever cotton price fluctuates. They would quicken up transaction, when cotton price rises, while they would take a wait-and-see attitude, when cotton price drops, they would even put pressure on fabric suppliers by demanding 5-10 cents reduction/meter.
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