Representatives of more than 260 textile enterprises attended the “2013 China International Cotton Conference” held in Nanjing recently to discuss the current dilemma faced by the Chinese cotton textile industry. 

 

Participants voiced concern that the mainland domestic cotton price is higher by around 5,000 yuan/ton compared to price in the international market, Economic Daily News reported.

 

Since the cost of cotton accounts for 70 percent of the total production cost, the final cost of the product would go up by 10 percent, they said.

 

High cotton prices affect the competitiveness of the cotton spinning industry and enterprises, especially small and medium enterprises (SMEs), which are facing a threat of closure. They are faced with a dilemma to upgrade their production techniques or to extend losses.

 

Yang Shibin, vice president of China Textile Industry Association, said the high cotton prices will erode international competitiveness of the Chinese cotton industry.

 

It will take few years for the industry to catch up with competitors who have greatly enhanced their technology and equipment, as well as staff training over the last 30 years.

 

In addition to domestic cotton prices, Chinese textile enterprises are facing increased competition from cotton spinning enterprises based in India, Pakistan, Vietnam and other Southeast Asian countries, said Yang.

 

In 2012, China imported 1.53 million tons of cotton yarn, which makes for around eight percent of China’s total spindle capacity. Hence, it means at least eight percent of the China’s cotton yarn spindles were forced to close due to import of cotton yarn, Yang added.

 

At present, majority of Chinese cotton spinning enterprises are engaged in low-end processing, and value-addition is not high. So, companies are under pressure to innovate in order to remain in business.