Chinese companies are cutting job opportunities and relocating factories overseas or to lower wage areas in China. In their report, China is textile industry exported 176 billion US dollars in 2007 and directly employed about 20 million workers. It is now facing a slow downward trend.
According to production data from January to February 2008, production increased by 5.7% compared to the same period in 2007, while it increased by 19% in 2007, which is the lower growth rate since 2003. In Guangdong, a southeastern province close to Hong Kong and also the center of China is export industry, there was a good 11.30% decline in production from January to February this year, partly due to blizzards and the Chinese New Year holiday in February. However, at the same time, demand from the United States and Europe is also declining.
William Lowry, a major purchaser of Chinese clothing and textiles in the United States, said in an interview at a major import and export fair in China in April 2008 that the competitiveness of Chinese products is not that strong.
He said, "I am considering purchasing goods from other countries. China is reduction in tax refunds and the depreciation of the US dollar have led to a 20% increase in Chinese product prices compared to the past." Therefore, it is not surprising that according to a recent industrial survey, nearly 50% of China is cotton textile industry wants to switch careers because cost expansion and the appreciation of the Chinese yuan squeeze corporate profits.
Mr. Lowry is not aware that the situation is different from previous years. He wants to purchase cheap textiles from other countries, but in fact, the source of cheap goods will be quite limited. India is also telling its own story. The appreciation of the Indian rupee, soaring fuel costs, and soaring cotton prices have left Indian textile companies with no choice but to purchase expensive raw materials for their products or face bankruptcy. For example, MH Textile Mill Co., Ltd. located in the Ahmedabad region is continuing to increase its selling price by 15-20%, seeking significant cost reduction measures to save the company, including cutting nearly 500 workers.
In addition, MH Textile Factory has reduced the average age of the workforce from 55 to 48 years old, making more use of cost efficient equipment, saving nearly 25% in electricity costs, and shifting towards a paperless work environment using complete computerization. Even textile giants such as Arvind Textile Factory are actively taking measures to reduce costs.
Now we have entered an unprecedented era of cost reduction in history, where textile mills adopt innovative technologies to improve electricity efficiency, save fuel, compress labor, and link rewards with net departmental productivity growth.