China : Crisis looms over Hebei textile industry

Hebei textile industry is facing unprecedented pressure and challenges this year due to RMB appreciation, rapid labor cost rise, increase of raw materials prices and lowered export rebate rate.

Textile industry is one of the most important pillars of Hebei's economy. This year, the industry is encountering shortage of raw materials like cotton, which constitutes a proportion of 70-80 percent in the production of yarn, fabrics and primary products.

Textile enterprises are hit hard by cotton price fluctuations. In the first half of this year, domestic cotton price increased about 1500 yuan to 14000 yuan per ton. At the same time, prices of coal, electricity, water, gas and wages also rose, consequently increasing production and operation costs.

On the other hand, domestic market prices for some products did not rise; instead, they declined due to intensified competition in domestic and international textile markets.

Under these circumstances, enterprises are stuck in a peculiar situation of sales and profitability, which declined by varying degrees in the first half of this year. Even if inventory increased significantly, many enterprises had to cut back production in order to reduce losses.

According to Hebei Provincial Textile Association, the textile industry of the region employs about 1.4 million people, over 80 percent are of rural surplus labor.
 
Fibre2fashion News Desk - China