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Half of cotton firms want to quit amid rising costs

(Xinhua)
Updated: 2008-04-02 15:11

BEIJING  -- Rising costs and an appreciation of the yuan currency are squeezing Chinese cotton textile companies, making nearly half of them wanting to quit, a new industry survey reveals.

The survey, conducted by the China Cotton Textile Association, covered cotton textile companies in 17 provinces. In total, 49.2 percent of the companies surveyed said they wanted to quit and restart in other businesses.

About 27.3 percent said the pressure they felt from the yuan appreciation had become unbearable, while 44.4 percent started selling some export-oriented products on the domestic market.

The companies also cut investment in cotton textiles by an average of 15.5 percent last year because of the yuan appreciation, lowered tax rebates and soaring costs in both labor and raw materials.

The companies said they made more investment in the real estate sector, equity markets and other businesses.

A recent survey by the China National Textile and Apparel Council showed the industry's profit margins averaged 3.9 percent last year. Two-thirds of the companies surveyed reported an average profit margin of only 0.62 percent.



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