China - Over 64% Cotton Textile Companies Have Low Product Profit
Source: SinoCast Date: 2007-07-27
Recent reports show though China’s cotton textile industry achieved profit growth of over 50% in the first half of 2007, many companies could only break even and over 64% of them made product profit lower than 3%.
The cotton textile industry obtained operating revenue of CNY 291.7 billion, climbing 26.05% year on year, and net profits of CNY 10.4 billion, mounting 50.52%, performing well in both sales and benefits.
However, from January to May, 72% of the cotton textile companies thought the supply exceeded the demand, 45% of them have their exports falling and 40% have their product price diving.
Insiders believe the contrast may result from the increase of 2,448 companies in the statistics.
In terms of the interior reasons, the growth of fixed assets investments was too fast. Some investors tried to win the market by oversupply of low- and medium-end products. The enterprise costs swelled.
The exterior factors are the continual appreciation of Chinese yuan and downward adjustment of export rebate rate, which in turn compressed the enterprise profits.
The report also points out the supply shortage of cotton will be the main problem in the future.
To solve it, the industry needs to quicken the pace of adjustment of industrial structure and transformation of economic growth mode.
