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Chinese textile industry to face crisis

April 10/2012
(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.
Author:Marina Ivanova
Category:General News
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