Chinese textile companies were quoting price increases of as much as 30% at the massive Canton Trade Fair, telling customers that a global cotton shortage and persistent labor shortages were driving up costs, according to several reports.
Spot prices for standard grade Chinese cotton have risen to 30,000 Yuan from as low as 15,000 Yuan earlier this year as a global shortage of the fiber and speculators have driven up prices. Meanwhile, Chinese apparel and textile factories continue having to raise wages to comply with minimum wage laws or compete for migrant laborers who now have more employment options. That resulted in much higher price quotes at the fair, which ended Nov. 4.
Those price increases will begin translating into higher U.S. retail prices in fall/winter 2011, U.S. brand executives have said. The Canton Trade Fair is widely recognized as the world’s largest. This year it drew 98,000 buyers from 201 countries, down 5.5% from a year earlier.
Chinese textile companies are expected to focus more on innovation and branding to prop up their margins, which are often below 5%.
