Dongguan Textile Industry Was Hurt By Cotton Price Fluctuation

Zhang Xiangyang runs a small textile enterprise in Humen, which should have belonged to this in May.

During the peak season, his company can not start normal operation.

Due to the lack of orders, the machine can only be idle, and workers are looking for him elsewhere.

Zhang Xiangyang attributed the pressure of business operation to the upside down of cotton prices at home and abroad.

It is understood that the domestic cotton price has dropped to around 19000 yuan / ton, but it is still more than 1000 yuan per ton of foreign cotton price.

Zhang Xiangyang reluctantly said that the price advantage of domestic textile enterprises has disappeared, and the loss of orders has become an unavoidable matter.

It is understood that some small and medium-sized textile enterprises in Dongguan are unable to bear the burden because they can not afford to go out of the market.

Loss of price advantage, loss of orders

Last September, after research and research, the national development and Reform Commission decided to formally implement the policy of cotton collection and storage, aiming at stabilizing the domestic cotton price and preventing the madness of cotton prices from falling.

Once the cotton purchase and storage policy was implemented, the regulatory effect was revealed, and domestic cotton prices went through a stable period.

At the end of March this year, the cotton purchase and storage policy ended.

Although the policy has stabilized the cotton price, it has also caused the domestic and foreign cotton price upside down phenomenon to aggravate, the price difference rapidly enlarges.

At present, domestic cotton prices remain at around 19000 yuan / ton, and the price difference between domestic and foreign cotton prices has reached over 1000 yuan.

Zhang Xiangyang told our reporter that due to the upside down of cotton prices at home and abroad, domestic textile enterprises were forced to use the world's highest price cotton, compared with other textile enterprises, the cost of raw materials of domestic textile enterprises was obviously pushed up, and their competitiveness was weakened.

With the gradual loss of price advantage, orders for many textile enterprises in Dongguan have begun to decline.

Zhang Xiangyang explained that at present, market demand in Europe and the United States is still weak, and the upside down of cotton prices makes it difficult for the textile enterprises that have difficulty receiving orders.

Mr. Li, a marketing manager of another textile enterprise in Dongguan, said that since last year, the amount of orders placed by some major customers before the company has obviously declined.

According to his understanding, these customers have pferred their orders to Southeast Asia, South Asia and other countries, which rely on the lower ones.

And labor cost has occupied a certain market share of China's textile enterprises.

Trouble caused by fluctuations in cotton prices

Although cotton prices are much higher than foreign cotton prices, domestic cotton prices are much higher.

However, from the perspective of time, the domestic cotton price has experienced a "roller coaster" type of violent fluctuation since the second half of 2010.

Cotton prices surged from 18000 yuan per ton to 34000 yuan, and cotton prices began to plummet all the way from March 2011. At present, domestic cotton prices remain at around 19000 yuan per ton.

Judging from the current cotton price trend, domestic cotton prices will go through a period of concussion.

The rise of cotton prices will directly increase the production costs of textile enterprises. According to common sense, textile enterprises should be happy to see the fall in cotton prices, but this is not the case.

In the case of falling cotton prices, textile enterprises may also be hit.

Chen Rongxing, who is doing textile trade business in Humen Fumin textile wholesale city, told reporters that if the price of cotton fell, foreign customers would maintain a wait-and-see attitude. At the same time, it also made customers have an excuse to suppress prices, which made the export situation of textile enterprises even more optimistic.

Zhang Xiangyang's enterprises have often encountered similar situations. Foreign customers see that cotton prices continue to fall, they will ask to lower prices. Zhang Xiangyang, in order to keep orders, sometimes even if it is not profitable, he has to agree to the requirements of customers.

"Coupled with the rising cost of other raw materials and labor costs, our profit margins are getting lower and lower.

Zhang Xiangyang said helplessly.

Small and medium-sized textile enterprises are overwhelmed.

Textile enterprises are most afraid of the sharp fluctuations in cotton prices. Since 2010, the sharp fluctuations in domestic cotton prices have caused the textile industry to suffer.

According to our reporter, some small and medium enterprises unable to bear pressure have already left the market gloomy.

Yesterday, Dongguan City Hall Dehui textile garment factory responsible person Gao Xiang Qin told reporters that because of the sharp fluctuations in cotton prices, business risks also intensified, orders continued to shrink.

Last year, the heavy burden of Gao Xiang Qin decided to terminate the textile production business.

Mr. Chen, the head of another small textile enterprise in Wang Niu Dun Town, told reporters that under the pressure of declining orders, enterprises were forced to withdraw from the textile market.

For those small and medium-sized textile enterprises, due to the lack of internal cost control ability, and usually rely on several large foreign customers to survive, the cotton prices fluctuate and the customer orders reduce, these enterprises are often at a loss and will probably choose to withdraw from the market.

For those relatively powerful textile enterprises, they are trying every means to control costs.

On the one hand, textile enterprises began to increase the purchasing power of foreign cotton; on the other hand, some powerful large enterprises increased the proportion of non cotton fibers and made efforts to reduce their dependence on cotton.

At the same time, some large enterprises are also stepping up efforts to expand the domestic market, and actively expand the domestic market.