(chinadaily) --
The Chinese textile industry is facing crisis as current typical profit margin
in the sector is lower than the cost of finance. During 2011, more than 30
percent of textile and clothing firms in Jiangsu and Zhejiang are reported to
have gone out of business.
Rising labour costs are cited most
frequently as a cause of the industry's difficulties. Low technology,
labour-intensive processes have increasingly been transferred to cheaper
production sources in South East Asia, such as Cambodia and Vietnam, or to
eastern European countries, such as Bulgaria and Poland.
Industry
sources also comment that the corporate tax burden is excessive. The difference
between sales tax on processed goods (17 percent) and the purchase tax payable
on cotton (13 percent) cannot be recouped, for instance.
However,
industry participants appear rather gloomy about prospects for the next several
months, owing, in particular, to a poor outlook for demand from the
euro-zone countries. The call for tax concessions appears thus to be
increasing. |
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