New statistics show that the advantage of low labor costs in the Chinese textile industry is facing a threat from some other neighboring Southeast Asian counties. Gao Hucheng, the vice minister of Finance Ministry of China, revealed that, according to statistics provided by a consulting institute, that textile industry labor costs, the most competitive industry of China, has been three or four times as some other neighboring Southeast Asian counties. "Those developing countries have become the most competitive rivals of Chinese industries regarding value-added popular products," he said.
It's not good news for China's textile industry, which situated in the low end of the world industrial chain. The key reason for the booming Chinese textile industry lies in abundant labor resources. This advantage is being reduced by other developing countries.
Gao Hucheng quoted a source in the 2007 report covering the global comparison of primary textile industries labor costs per hour. It stated that the average labor cost in South China's coastal cities has risen to about one dollar per hour. But according to official statistics from Vietnam, Cambodia, Bengal and Indonesia, their average labor costs are respectively 0.29 dollar per hour, 0.36 dollar per hour, 0.22 dollar per hour and 0.36 dollar per hour.
On the other hand, increasingly severe competition will increasingly cut China's textile industry profits. According to other statistics from the China Chamber of Commerce for Import and Export of Textiles (CCCT), the average profit of Chinese textile export companies is only 3 to 5 percent. They usually only gain 10 percent above the wholesale cost due to export charges.
Much of this year's data shows China's low technology textile industry listed as a primary industry in its macro-control. An unidentified message says that export tax rebates will be slashed by two percentage points. Gao Hucheng didn't confirm this news yesterday, but he reminded Chinese textiles companies abandon pure turnout increase. This signal indicates that China will accelerate its transfer of the domestic textile industry.
For more details, please read the full story in Chinese. (http://www.morningpost.com.cn/article.asp?articleid=132362)
(China.org.cn October 23, 2007)