Chinese textile firms face hard times after export rebate rate cut

China's textile industry is estimated to suffer losses of eight billion yuan (one billion U.S. dollars) this year after the government lowered the sector's export rebate rate from 13 to 11 percent on September 15.

"We will lose 10 million yuan annually after the policy adjustment," said Liu Xiaohui, an official with a textile and garment firm in Shenzhen, quoted by China Business Times.

"We have to increase product prices by two percent to make the same profit as before the policy change," said Liu, although most clients had refused to accept the increases.

Jin Xiaoshui, deputy general manager of Shaoxing Tianma Printing and Dyeing Co. in Zhejiang province, said the textile export business was becoming more difficult due to rising labor and raw material costs, currency appreciation and the lowering of the export rebate rate.

Profit margins in textile firms were less than five percent, said Jin. Firms with a profit margin below three percent would suffer heavy losses due to the policy adjustment.

The rebate rate cut is one of the government's macro-control efforts aimed at changing the country's foreign trade growth pattern from focusing on quantity to improving quality.

It is expected to help restrain excess investment in the sector, eliminate outdated production, and reduce resource consumption and improve the environment.

Source: Xinhua