CHINA: Cotton producers hail end of cotton reserve scheme
High cotton prices have been inflating costs for Chinese manufacturers
A director at the China Cotton Association has welcomed the planned replacement of China's national cotton reserve programme with a system of subsidies.
The move was unveiled in a formal opinion released on 19 January by the country's State Council.
Government subsidies will first be trialled in China's largest cotton production base Xinjiang, north-west China, in 2014, and be gradually rolled out to other areas, according to the note.
The director, who did not want to be named, said: "The purpose of the hoarding [reserve] programme is to protect cotton farmers from huge loss when the price drops sharply. We have to admit in this case it worked well in the past two years.
"However, the programme also keeps the price of Chinese cotton so high that it has seriously undermined the competitiveness of Chinese textile companies in the global market."
Indeed, the spot price of US cotton was US$0.8071 per pound on 28 January, compared with CNY20,197/tonne (about US$1.51 per pound) for Chinese-produced cotton.
High cotton prices have been inflating costs for Chinese textile and clothing producers, pushing some companies to manufacture abroad to keep their competitiveness.
Among them are Shanghai-based Texhong Textile, the major China cotton yarn supplier that opened an operation in Turkey in 2013, as well as its Zhejiang province-based counterpart Keer, which is to build a cotton yarn plant in South Carolina.
An interactive databank with intelligence on the major apparel sourcing countries
- Supply chain takeaways from Sourcing at MAGIC
- Cotton supply chain transparency an ongoing issue
- Why voters don’t want more global supply chains
- No simple way to be sustainable, says SAC CEO
- Denim and athleisure top picks for back-to-school
- H&M takes action over Myanmar child labour breach
- Vietnam garment industry calls for strategy update
- Zara USA faces US$5m deceptive pricing lawsuit
- Li & Fung eyes supply chain speed in 3-year plan
- EU clothing imports from China continue to plunge
- Too Many Standards
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Under Armour, Inc. (UA) - Financial and Strategic SWOT Analysis Review
- Myanmar's Garment Sector in 2015 - now with updated members' directory
- Central America strategic sourcing review - a focus on Guatemala, El Salvador and Honduras