Although the just-concluded 107th Canton Fair showed “restorative growth” as a whole, for Chinese textile and apparel export companies, it also came with the pain of double squeeze from changes in customer procurement needs and rapid cost increases.
Statistics released by Guangzhou Customs on May 12 showed that Guangdong’s textile and apparel exports from January to April were US$9.75 billion, an increase of 11.4% over the same period in 2009. Among them, the export of textile and clothing in April alone was more than 2.6 billion US dollars, a month-on-month increase of 22%.
Data show that Guangdong’s textile and apparel exports to major traditional export markets such as Hong Kong, the European Union, the United States, and ASEAN are growing, while emerging markets such as the Middle East and Africa are showing a downward trend. The Hong Kong market also experienced a slight decline of 1.2% in April alone.
Customs pointed out that textile and garment export companies are facing the pain of double squeeze from changes in customer purchasing demands and rapid cost increases.
Customs analysis said that in addition to the risks faced by Guangdong’s garment exports, in addition to the appreciation of the renminbi, which has compressed corporate profits and the emergence of international trade barriers, the rise in raw material prices is more difficult to accept than the increase in labor costs. After all, the rise in labor costs is relatively slow and only rises once a year, but raw materials are rising in rounds. This “price increase trend” has expanded to almost all raw material fields and even terminals in the clothing industry.
It is understood that in 2010, abnormal weather across China plagued farming. Cotton sowing progress in Xinjiang and the Yangtze River Basin was delayed compared with the same period in 2009, resulting in insufficient reserve cotton production. In addition, India, China’s second largest source of cotton imports, has recently suspended cotton export registration, making the international cotton supply and demand relationship that is already experiencing “high price shocks” even more tense. Since 2010, the price of cotton yarn has increased by more than 20%. Textile and garment export companies are in a dilemma between “protecting customers” and “protecting profits.”
