China’s Cotton Textile Industry with Low Profit Margin
Source: Fibre2fashion, News Desk Date: 2007-04-05
From the macro statistical data of above-scale enterprises, the total sales revenue, profits and exports of cotton textile industry have grown every year. But in fact, the operation of the enterprises in the industry is very difficult.
Statistics show that about 64 percent of cotton textile enterprises earn their profits margin less than 3 percent, the number of enterprises with profits higher than 6 percent only accounts for 11.5 percent of the total enterprise number. It indicates that cotton textile industry is a typical industry with very low profit margin.
If the annual growth rate of China’s cotton yarn production were based on 17.35 percent of the ‘10th Five Years Plan’, then, cotton yarn production would reach 33.2 million tons in 2010; cotton consumption would be expected to hit 22.5 million tons. If cotton output could reach 700 million tons by that time, cotton supply shortfall would be 15.5 million tons, meaning that nearly 70 percent of cotton demand would rely on imports.
Such a situation is unimaginable. Could 90 percent of the world cotton output flow into China? It’s obviously impossible. Therefore, China must take the initiative to control the growth of cotton spinning capacity and prevent excess production capacity. Only by a real change in product structure, the industry can maintain balanced and sustainable development.
