Although the first season of 2007 has seen an excellent start, more and more evidences show that the development of clothing industry has not been going on smoothly. Besides limitations set by EU and U.S., appreciation of RBM, increase of cost, lack of resources, intense supply of labor, and other pressures, the popular rumors that the lowering export tax rebate rate has given not only clothing industry but other industries significant pressures. Although China has not officially decided lower extent, the industry association has been starting to make their best effort. We can be nearly rest ensured that the clothing industry can not avoid the trend such as tax rebate lowering.
1. Wide influence
China’s clothing industry has been heavily relying on export sales, belonging to labor-intensive industry, and even higher labor- intensity than average. According to statistics, during Januray~March 2007, the clothing export trade value reached USD36.681 billion, accounting 41.93% of the total sales value, and 17.09% higher than the total export percentage. If the clothing export rebates have been lowered, some impact will be given to the labor market, industry profits, and so on.
2. Prediction of the profit downward adjustment
At present, there are two kinds of statements about the export rebates of the clothing industry downward adjustment. One holds a moderate deduction from 13% to 11%; the other holds an abrupt reduction from 13% to 9%. Up till, no official conformity has reached yet due to the wide range of involvement. Concerning the lowering breadth.
3. Influence on enterprises
In order to intensify the price competition of the export products, many enterprises in China have included the export rebates to their profits and then start to calculate the price of the products. In terms of U.S. market, in 2006, U.S. imported clothing products with a unit price of USD 2.85, about 10% lower than the unit price of the global imported clothing products, even much lower than that from Mexico and India. If the export rebates are downward adjusted, the company’s advantage of the export price will be definitely weakened. In terms of the enterprises who are exporting their clothing products, in order to deal with the downward adjustment, they will have to increase their export price, turning their export sales into domestic sales, adjusting their product structure.
