Fierce Competition In The Industry, Textile And Apparel Companies Struggle To Raise Prices

Fierce competition in the industry, textile and apparel companies struggle to raise prices

According to data released by the National Bureau of Statistics on the 11th, the ex-factory prices of clothing rose 2.4% year-on-year in July, which was significantly lower than the 10.0% increase in the ex-factory prices of industrial products in my country during the same period. Textile and apparel companies in interviews with the "China Business News" stated that although production costs have risen sharply this year, due to multiple factors such as fierce competition in the industry and market recession, it is difficult for clothing to rise sharply and profits are becoming thinner.

Self-adjustment to absorb cost pressure

In an interview with our reporter yesterday, Zhu Sujun, assistant to the president of Ningbo Shanshan Co., Ltd., said that due to factors such as raw materials, labor costs and the RMB exchange rate, the company's overall cost has risen by about 10% to 15% this year. Compared with some old customers It is difficult to raise prices, and we can only continue to develop new products and new markets to absorb cost pressures.

"Our largest export market, the United States, has seen a sharp decline in orders this year. Due to the impact of the subprime mortgage crisis, some buyers did not accept our price increase, and began to transfer some low-priced orders to neighboring countries such as Vietnam and Indonesia," Zhu Sujun said "Because of rising costs, we no longer have any advantages in terms of price. Shanshan has increased its efforts to mid-to-high end this year, basically abandoning low-end orders, and constantly developing new products with high added value, such as through the'wool lining process' The price of such high-tech suits is raised. These products can now be smoothly increased by more than 10% in the European Union, Russia and other markets. Therefore, although the global export volume has declined, the overall export value is basically the same as the same period last year. In the domestic market, Shanshan used to focus on the mid-end market. This year, Shanshan has begun to explore the high-end market, and domestic sales have also increased to a certain extent."

Zhou Xiaonan, deputy general manager of Ningbo Dunhuang Import and Export Co., Ltd., said in an interview with this newspaper that since many of the raw materials of the company’s yarns are by-products of petroleum, the cost of raw materials increased by about 30% due to the impact of oil prices, and the production process used Coal prices have doubled compared with last year, labor costs are also rising, and the appreciation of the renminbi, etc. as a whole, the overall cost of the first half of this year has risen by about 8%, but only a slight increase of 3% for customers. Self-digesting, profits are getting thinner and thinner, and some orders have already suffered losses.

Zhang Yisheng, general manager of Guangdong Kaiping Leida Garment Co., Ltd., also mentioned in an interview with this newspaper that China’s textile and apparel industry is very competitive, and it is very difficult to raise prices to customers or consumers. Once the price is raised too high, customers will immediately When orders are transferred to other domestic factories or neighboring countries, most of the rising costs are still absorbed by themselves. On the one hand, the company adjusted its product structure and improved its technical content to make it difficult to be replaced by other companies. On the other hand, it has moved half of its production lines to Jiangxi this year to reduce costs.

"Overproduction" restrains companies from raising prices

According to a survey conducted by the China Garment Association on well-managed enterprises, the production costs of garment manufacturers in the first half of 2008 increased by 15.16% on average, of which labor costs rose by 13.25% on average, and raw materials costs rose by 8.89% on average. The cost of transportation, monitoring, energy, etc. rose by an average of 7.34%, and the sales profit margin of the surveyed companies fell by an average of 2.31%.

Wang Qianjin, a senior analyst in the textile industry, said in an interview with this newspaper yesterday that despite the sharp increase in production costs, the clothing consumption index CPI has been negative this year, squeezing upwards and downwards. Therefore, the ex-factory prices of clothing have basically only kept rising this year. %Amplitude. At present, clothing manufacturers have basically reached the limit of bearing costs. In this case, they can only raise prices, or they will be eliminated.

According to data from the National Bureau of Statistics, in June this year, the price of clothing for residents nationwide fell by 1.5% year-on-year. Among them, clothing prices fell by 1.6%.

"It is difficult to raise prices. The current industry competition is too fierce. There are more than 43,000 large-scale textile companies with sales revenues of more than 5 million yuan, while the number of textile companies below the scale is expected to exceed 400,000. Excessive demand. Coupled with the downturn in the international clothing market this year, some products will return to the domestic market, which will intensify competition in the domestic market, so it is more difficult to raise prices than in the international market." Wang Qianjin believes.