Textile companies' competition is affected by labor costs

One day at work, Guo Xinzhong's first thing is to turn on the computer to see the trend of global oil. Every change in the price of oil may affect the next move of the company he manages.

Although looking at the changes in oil prices, Guo Xinzhong is not doing oil business. He is not the owner of a logistics company. His identity is the general manager of Yufang Textile Co., Ltd. This company located in Weifang City is a textile backbone enterprise of our province. The main products are cotton yarns, special thread yarns, high-count high-density fabrics, and apparel fabrics. The comprehensive competitiveness has entered the top 20 in the national cotton textile industry and the competitiveness of the national textile and garment enterprises 500 Strong.

Guo Xinzhong paid attention to oil prices because his cotton textile company is closely related to oil. Since the cotton price advantage has ceased, the Chinese side has significantly reduced the use of cotton. At present, the company uses only 50% of the raw materials for cotton, and the other 50% is a variety of fibers. The fibers, such as polyester, polyamide, and spandex, are all from the petrochemical industry. In general, when the price of oil rises, the prices of various chemical fiber products will also increase.

The connection between textile and garment companies and the international market is much closer than most people think. Although the domestic market is huge, the province's textile and clothing enterprises have faced a globalized market from the very beginning. The cost advantage was once the biggest advantage of the entire industry.

Since 2012, international cotton prices have generally shown a downward trend, while domestic cotton prices have remained high under the support of the country’s temporary purchase and storage prices. Domestic cotton prices are 5,000 yuan more than foreign countries and even reach 6,000 yuan for a long time. "Take the domestic cotton to participate in the international cycle, the competitiveness is simply not." Guo Xinzhong said that since last year, who is the textile company who lose money, "a difference of 5,000 yuan a ton, and then big companies can not do it." In 2012, Fujian used a total of 16,000 tons of cotton, all of which were imported cotton requiring quotas. In the face of huge spreads, cotton import quotas have also become a tool for rent-seeking. A one-ton quota can often make more than 3,000 yuan.

With cotton as the raw material, it lacks competitiveness, and Fang has chosen to increase the use of other fibers. Chemical fiber is one of them. In the past few years, Fang has developed modal fibers, bamboo fibers, and flame-retardant fibers. Among them, biomass hemp fiber functional yarns and new ultra-imitation cotton yarns have also entered the province's technological innovation program.

The Modal fibres of Sangfang are from the Austrian maple fiber. “As in the production process, papermaking uses coarser products and clothing should be thinner.” The biomass hemp was originally not well colored. The fabrics produced were mostly grey and yellow, and now they can be improved in any color through technical improvements. These new fibers have become the flagship product for the two years.

The cost of labor has also increased dramatically in the entire textile and apparel industry. For a long time, the low labor cost allowed the industry to meet a variety of challenges, but this advantage is no longer present. In 2011 and 2012, the salary level of the workers in the Sui Dynasty increased by more than 20% every year. At present, the average wage of the frontline workers is around 3,000 yuan.

More worrying is the difficulty of recruiting workers. In recent years, although the wage level of the clothing and textile industry has not been low, many young people are no longer willing to dry because of noise, labor intensity and other issues. Guo Xinzhong clearly remembers that before and after 1985, employees entered the textile factory to bring in money, and each person had to pay a training fee of 15,000 yuan. Now, not to mention paying money, that is, employees have to pay for the door one day after the wages; workers eat for free meals, each meal according to the standard of 5 yuan, each month's meal expenses will be 205,000 yuan. .

The problem of rising costs and difficulties in employment forced the government to accelerate the pace of transformation and upgrading. “Currently, the cost of labor in Vietnam is between 80 and 100 US dollars per month, and India is at 60 US dollars. China cannot lose its advantage over them and must avoid weaknesses and must adjust its structure.” said Guo Xinzhong.

As it is at the low end of the industrial chain, cost reduction has become one of the top priorities for the company. In the past two years, the Chinese side has eliminated more than 50,000 spindles, more than 260 looms, imported more than 30 million yuan, imported more than 20 Taiwanese machines, and "one over the top 10", employing 5,000 workers from 2005. Compressed to the current 3800 people.

In 2012, the company’s machine material consumption decreased by 20% year-on-year, its packaging materials decreased by 11.6%, pulp content decreased by 11%, electricity consumption decreased by 5.9%, and water consumption decreased by 7.82%. Do not underestimate electricity consumption by 5.9%, saving 3.5 million yuan in one year. As the boss, Guo Xinzhong was clear about the cost of the company. He opened his mouth and said the price changes in the main time period: during the day, from 8 to 10, 1.09 yuan per kilowatt hour; from 11 o'clock to 5 pm, 0.8 kilowatt per kilowatt hour. Yuan; from 11:00 pm to 7:00 am the next day, it costs 0.25 yuan per kilowatt hour. In order to reduce costs, the Chinese side only opens the main engine during the day and the attached equipment is not open.

Although there has been continuous progress on new fabrics, there is less and less room for the company's products to obtain excess profits, because other companies are catching up faster and faster. Take modal fiber as an example. This fiber was previously a relatively profitable product, but companies in the entire industry are currently producing modal. "The profit will go down."

"Although textile and clothing are facing many difficulties, people always wear clothes. Only the closed down companies have not closed down the industry." Guo Xinzhong said with emotion. In 2012, Shengfang achieved sales revenue of 1.05 billion yuan, an increase of 14.64% year-on-year; exports earned US$21.29 million, a year-on-year increase of 25.94%. This situation is much better than the industry average.