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China : Rebate reduction may induce export deduction |
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2006-9-18
Government decision to reduce the tax rebate from 13 to 11 percent effective from Friday has drawn different reactions from various textile companies based in Yangtze River Delta.
Violet Home Textile Co Ltd, Senior Manager, Song Yan looked unperturbed by the move saying that it does not affect them on large scale. The company manufactures medium and high-level bedwears which are sold at departmental stores across US, Canada, Europe and Middle East with sales figures at US $10 million annually.
She feared that company might lose around $100,000 for the orders which had been placed but not delivered till date. She informed that the company would take into account the rebate in tax reduction for future pricing.
On the other hand, China Artex Taizhou Import & Export Co Ltd Senior Manager, Liang Qun, seemed furious at the move saying it will help textile companies become bankrupt. The company manufactures shoes, fabrics and garments with turnover of $10 million annually.
He looked worried while saying that company will lose $15,000 for shoes and fabrics as their profit margins are already very thin.
The move has come as another big blow especially for shoe industry which was already reeling under the pressure of rising raw material prices, higher tax rate and increasing workers’ remuneration.
Qun projected the closure of one-fifth of textile units in Wenling by next year which will force people to migrate to big cities in search of work.
As per a survey, more than 65 percent of people surveyed said that the reduction will have effect on their companies and 75 percent of people surveyed did not approve the move.
fiber2fashion.com
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