The Impact of the Tax Imposition on Textile Enterprises

The levy of quasi-tax revenue has a negative impact on textile companies, which is mainly reflected in the increase in the production costs of cotton spinning companies. The proportion of cotton in the cost structure of cotton textiles is as high as 65%-70%. The rise in cotton prices will further increase the production costs of cotton spinning enterprises. According to the statistics, the labor cost in China has exceeded the threshold of US$1 per hour in 2007, and the labour costs of the textile competition countries such as Vietnam, Cambodia, Bangladesh, and Indonesia are all below US$0.5/hour. China is facing the turning point of Lewis’ population and the demographic dividend Less, and the cost of imported cotton increased further, resulting in a downward trend in the competitiveness of China's textile export products. According to statistics, in September 2012, China imported 137,440,000 tons of cotton yarn, an increase of 62.29% year-on-year, and exported cotton yarn of 356,220,000 tons, an increase of 52.33% year-on-year. According to the historical data released by the General Administration of Customs, from January to June 2012, China's total imports of 663,300 tons of cotton yarn, an increase of 63.24%; cumulative exports of 225,500 tons of cotton yarn, a year-on-year decrease of 2.97%. In September 2012, the cotton yarn import volume was still at a high level, while the export volume increased significantly from the previous year.

In summary, the economic slowdown, increasing inflationary pressures, loss of demographic dividends, and many other negative factors have caused China's textile industry to gradually lose its competitive advantage in the international arena, and its industrial transformation has been severe. In particular, under the implementation of sliding tariffs, the price of cotton raw materials in China's textile industry is still higher than the international cotton price of 4,000 to 5,000 yuan per ton. As a result, many companies have moved to Vietnam, Cambodia, Bangladesh and Indonesia, and the textile industry has declined. The effectiveness of the sliding tax implementation remains to be tested.