Crisis looms over Hebei textile industry

Textile industry is one of the most important pillars of Hebei's economy, and the industry is facing unprecedented challenges this year due to RMB appreciation, rapid labour cost rise, increase of raw materials prices and lowered export rebate rate. This year, the industry is also encountering shortage of raw materials like cotton, which constitutes a proportion of 70%-80% in the production of yarn, fabrics and primary products.

Textile enterprises are hit hard by cotton price fluctuations. At the same time, prices of coal, electricity, water, gas and wages also rose, consequently increasing production and operation costs.

On the other hand, domestic market prices for some products did not rise; instead, they declined due to intensified competition in domestic and international textile markets.

Under these circumstances, enterprises are stuck in a peculiar situation of sales and profitability, which declined in the first half of this year. Even if inventory increased significantly, many enterprises had to cut back production in order to reduce losses.