Dongguan Fuan Textiles Limited, a large garment industry layoffs are seen as the alarm.
29 February, this Hong Kong-listed company’s largest subsidiary, Fountain Dongguan Fuan announced layoffs of more than 4,000 one-time layoff more than 3,300 companies.
In the “Description of Fuan company letter to employees” in the company explained, “because the international economic situation worsened, the yuan continues to appreciate, the market slump, rising energy costs, the impact of companies by industry and many other factors, the company last year began the second half of sustained huge losses, although the company has various efforts to overcome adversity, but so far little success, the company now has serious difficulties in production and operation. “
Futian Group back in 2007 can see the company’s Annual Report on the American market recession. As of August 31, 2007 year ended, the company turnover and net profit have declined. Turnover in the Americas by the 2006 proportion of 11.4% to 10.4% in 2007. In its “Outlook”, the company that the pessimism on the U.S. market. Notice that, although the U.S. Thanksgiving holiday retail sales report better than expected, but many customers still show their concerns about the market next year. U.S. retailers have been conservative ordering a negative impact.
Fu is a famous enterprises, their production and operation into difficulties with some kind of typical. Fan Min, president of the first textile web, said reduced orders from the U.S. textile and apparel industry has been a common phenomenon.
Engaged in the clothing industry for many years, Fan Min Tan Yan, the U.S. business more difficult. First Textile Network publicly available data, in January china’s textile and apparel exports to the U.S. growth has slipped to 0.73%, while exports to the U.S. grew last year at least 15.26%. Garment export growth is down sharply to -8.26%.
At the same time, restrictions on textile exports value (cell), (number) amount of homogeneous or situation. Fan Min that amount or explain the reduction of consumption, which reduced imports; drop in price, indicating the price decline in consumer acceptance, that decline in purchasing power. 1 to 2 months of data on the U.S. visa quotas are also depressed. “While the general annual export of 1 to 2 month comparatively little bit, but it can be seen from these data, the trend has been.”
Fan Min, a friend to do wedding factory in Guangdong, the products exported to the U.S. market accounted for five percent of total production. In previous years, the plant can reach 30 million yuan net profit around, but in 2007 this figure less than 10 million yuan, it is estimated the cost level in 2008 can play pretty good. Fan Min said that textile and garment enterprises are now at 10% gross margin, net profit of 3% to 5% on the already very good, and most enterprises do not make money or even losing money.
In this context, some enterprises have shifted the focus will be exported to the EU. The first textile network data, in January China’s textile and apparel exports to the EU growth rate as high as 29.52 percent, while export growth to Europe last year, only 0.46%. Clothing exports to Europe a 11.80% price increases, volume also increased by 12.50%.
Although the 2008 chinese textile exports to the EU to enter without a quota period, Fan Min worried that the subprime crisis spread to the EU market, how should these companies to avoid risk?