China's clothing production costs continue to rise sharply

In July 2011, the production cost of the garment industry in Mainland China continued to increase substantially. The rise in consumer prices has led to rising labor costs, while financial costs have also steadily increased.

China's textile and garment industry is continuously facing a situation where production costs have increased significantly.

According to official statistics released by the Chinese mainland, garment production costs in Mainland China rose by 4.4% in July after rising 4.4% in the same period of the previous year in June.

In contrast, in July (2010), the cost of garment production in mainland China was only up 1.9% from July 2009.

Inflation and rising wages The continuous increase in production costs is mainly due to rising wages in mainland China and soaring inflation.

In July this year, China’s consumer price index climbed to a new high in the last three years, an increase of 6.5%, mainly due to a 14.8% increase in food prices in mainland China in July.

The decline in fiber prices is modest. In theory, after the price of cotton and polyester dropped sharply in the past few months, mainland Chinese textile companies are currently benefiting from the decline in raw material prices.

However, polyester prices are currently stable at higher prices, and cotton prices may decline further in the near future.

In addition, cotton prices will quickly stop falling because the Chinese mainland government may purchase large quantities of new crop cotton to support cotton prices and stabilize farmers' income. Its cotton collection and storage measures are expected to start formally on September 1.

The more significant increase in yarn production capacity is that mainland China's spinners are trapped in high inventory costs, and yarn prices in the domestic market are already falling.

According to official data from Mainland China in July this year, the spinning industry is currently facing a difficult business situation.

At the same time, in the first half of this year, the yarn production volume in mainland China increased by 11.2%, and its yarn production capacity further increased.

During the same period, investment in the spinning industry in mainland China surged by 46.2%. In the first half of 2010, it increased by 33.8%.

Slowing demand from abroad Due to a substantial increase in production costs, China's textile and apparel industry is facing a decline in orders from foreign buyers.

In contrast, the domestic market demand in mainland China continued to grow substantially, and the raw material prices remained at a relatively high price.

In addition to the increase in raw material prices and labor costs, the increase in corporate financial costs caused by the increase in interest rates and deposit reserves of domestic banks by the Central Bank of China has weakened the competitiveness of Chinese mainland industries.

Although foreign demand has slowed down, the continuous appreciation of *** has also weakened China’s international competitiveness and export capacity.

The cost of electricity restriction measures is high The cost-reduction policy in Zhejiang, China, has led to higher production costs, forcing factories to purchase generators to obtain electricity.

In addition, the interruption of the production process also results in the need to use more expensive energy. When the power supply returns to normal, workers return to work on weekends and the factory must also pay overtime wages.

The blackout also caused delays in delivery, and due to delay in delivery time, it took more expensive freight to catch up with the delivery deadline.