Affected by factors such as declining consumer demand in Europe and the United States and increasing labor costs, processing trade companies in the Pearl River Delta region saw fewer orders in the second half of the year, and the sudden drop in profits became more prominent. Due to insufficient employment and rising living expenses, many migrant workers have taken the initiative to resign and return to their hometowns.
Since 2008, the appreciation of the RMB, rising raw material prices, increased labor costs and environmental protection costs have all squeezed corporate profit margins. The low-cost era is no longer the same, and the competitiveness of the manufacturing industry has dropped sharply. Due to unprofitability, some companies were eliminated in the fierce competition, and some companies simply closed down or switched to other industries. Taking the textile industry as an example, Shanshan is testing the waters in the field of non-ferrous metals, Youngor is venturing into real estate, and Vosges is venturing into the photovoltaic industry. There are countless such examples. In addition, some textile business owners currently want to sell their factories, but it is difficult to do so.
Especially since 2007, affected by factors such as increasing industry development pressure and declining profitability, textile companies have obviously lacked confidence in the investment prospects of the industry. Coupled with the impact of macro-control, the corporate capital environment has generally tightened, the scale of fixed asset investment in the textile industry has shrunk, and the investment growth rate has dropped significantly, which directly reflects the industry’s downturn.
Exports are even less optimistic. Relevant statistics show that the EU has contributed 64% to my country’s textile and apparel export growth since 2008. It is precisely because of the high growth of exports to the EU that textile and apparel exports can still achieve a growth rate of 8.92%. Year-on-year growth rate.
The recent fluctuations in the euro exchange rate indicate that the euro seems to be entering a downward channel. Many textile export companies are clearly feeling pressure from orders. If this trend cannot be changed in the short term, a rapid decline in the growth rate of textile and apparel exports to the EU is inevitable, which will mark the my country’s textile and apparel export growth will decline, and there may be zero or negative growth at the end of 2008 or early 2009.
Due to concerns about the global economic outlook, uncertainty about the euro exchange rate and consumption expectations in the euro area market has increased. Relevant data and changes indicate that the trend of euro depreciation against the renminbi or the cycle of downward fluctuations will definitely be extended, perhaps for half a year or one year. After this year, exports to the EU will, like those to the United States, show a pattern of declining quantity and value. The decline in exports to the EU will mean that life for the textile manufacturing industry will be more difficult, the adjustment cycle will be further extended, and the confidence of enterprises to support the winter will face a severe test.
Of course it is too early to conclude that the EU economy has fallen into recession. The EU will gradually implement a series of policy combinations to deal with the crisis, but there is considerable uncertainty about whether it can reverse the economic decline in the medium term. If EU consumption and investment can proceed steadily and GDP continues to grow under the stimulation of strong policies, then the EU economy may only slow down temporarily and the impact on China’s textile exports will not be significant. Once the EU economy truly falls into recession, it seems difficult for China’s textile exports to avoid a period of poor economic performance.
From the above, it is not difficult to see that a series of difficulties and uncertainties have emerged in China’s economic operation, which stings the most sensitive cost “nerve” of the processing manufacturing industry. In addition, a series of policies to promote industrial transfer and structural adjustment have been introduced, energy conservation and emission reduction and labor contract laws have been implemented, environmental protection thresholds have been raised, and labor rights such as minimum wage standards have been mandated. The high costs accumulated by various complex factors have caused China’s textile industry to lose its glory and lose a large number of labor forces. Its labor costs have also gradually increased. It is expected that the labor costs of the textile industry will continue to remain high in the first half of 2009.
