Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News Hutai Textile rented 310,000 square meters of land for US$12 million; although it is “burning money”, it is also very profitable!

Hutai Textile rented 310,000 square meters of land for US$12 million; although it is “burning money”, it is also very profitable!

Local knitting giant Hutai Textile Holdings Co., Ltd. (hereinafter referred to as “Hutai Textile”) announced on December 30 that the company’s wholly-owned subsidiary plans to acquire US$11 mi…

Local knitting giant Hutai Textile Holdings Co., Ltd. (hereinafter referred to as “Hutai Textile”) announced on December 30 that the company’s wholly-owned subsidiary plans to acquire US$11 million and no more than US$12 million. , leasing approximately 31.2 hectares of land in an industrial park in Nam Dinh Province, Vietnam. The leasing project will be settled in Vietnamese dong.

However, Hutai Textile also stated that since there are still conditions that need to be met before the lease is completed, the company cannot guarantee that the above plan will be realized as scheduled. The First Textile Network reported earlier that in order to meet future expansion and risk diversification, Pacific Textile is expected to choose a suitable location to establish a new production base in northern Vietnam. The total investment is expected to be approximately 600 million to 1.3 billion yuan. After the new factory is put into production, Overall production capacity may be increased by approximately 3 million pounds to 8 million pounds per month.

Hutai Textile is a local high-end knitting company In addition to having factories in the mainland, the giant has also built factories in Southeast Asian countries such as Vietnam, Sri Lanka and Bangladesh.

It is understood that Hutai Textiles Vietnam factory was put into operation as early as September 2015, mainly serving the company’s largest customer Uniqlo . According to the achievement of 80,000 pounds/day production capacity in April 2016, Vietnam’s production capacity accounts for 12% of the total production capacity. Before the shutdown of the Vietnam factory, its output was 60,000 to 70,000 pounds per day, with a capacity utilization rate of 80%.

However, due to the warm winter and excessive inventory, orders from Uniqlo were lower than expected. In the first half of this year, Taipei Textile achieved operating income of HK$3.025 billion, a year-on-year decrease of 11.1%. Gross profit was HK$540 million, a year-on-year decrease of 14.36%. Profit attributable to the company’s equity holders was HK$412 million, a year-on-year decrease of 17.9%.

As of September 30, 2019, Pacific Textile had a total cash and bank balance of HK$984.9 million, and the group’s net cash level was HK$336.4 million.

From the perspective of sales, during the reporting period, the sales of Hutai Textile’s cold-resistant fabrics (with higher average sales price and sales volume contribution) fell by more than 20%, mainly due to Uniqlo’s Heattech product inventory Backlog; in addition, sales of sportswear fabrics increased by more than 30% year-on-year, accounting for 11% of Hutai Textile’s total sales (8% in the same period last year).

From a regional perspective, mainland China, Southeast Asia and Hong Kong, China Sales fell 11.6%, 7.2% and 26.1% year-on-year respectively.

From the perspective of profitability, due to the decline in average sales price, gross profit margin fell by 0.7 percentage points to 17.9%, but some Offset by a favorable foreign exchange environment (YTD depreciation of the renminbi). The operating expense ratio increased slightly by 0.2 percentage points to 4.1%.

Industry insiders said that the global layout can not only ensure that Chinese textile production enterprises maintain cost advantages on a global scale, but also It can ensure that production-oriented enterprises serve the global market at the fastest speed. The initial shape of the Southeast Asian layout shows that the leading manufacturing companies have broken through regional restrictions in terms of production capacity layout and have the basic capabilities to become a global leader. At present, textile manufacturers with China as their production base are responding to the rising domestic labor costs and increasingly Strict environmental regulations have led to the expansion of production capacity in Vietnam.

Li Chao, a researcher at Huatai Securities, said that in recent years, Vietnam’s industrial structure has been undergoing rapid transformation, especially in the manufacturing field. The rapid growth of industries such as electronic processing and textile clothing is mainly due to the fact that Vietnam has attracted a series of labor-intensive manufacturing industries to transfer to Vietnam due to its lower factor costs, location advantages, institutional incentives, etc. in the process of integrating into the global industrial chain. The government is actively planning for the future in terms of energy, electricity, transportation, etc., and a series of industrial planning policies have been implemented one after another, aiming to promote Vietnam’s rapid development and achieve the goals of industrialization and national modernization by 2020. For example, in the energy field, the “Vietnam National Electricity’s Seventh Electric Power Development Plan 2011-2030” is implemented, in the transportation field, “Building an infrastructure supporting system to make Vietnam basically become a modern industrial country by 2020”, “By 2020 “2020 Highway Construction Plan”; the coal field and the textile industry have the “Coal Development Plan to 2020, Looking forward to 2030” and “To 2020, Looking forward to the Textile Industry Development Plan to 2030”.

What needs to be noted is that low factor costs and high return on industrial investment are important comparative advantages of Vietnam’s manufacturing industry. As a developing country, Vietnam’s economic development is still at a low level, but it has certain factor cost advantages. As of 2017, per capita GDP was only US$2,342. The lower per capita GDP reflects that Vietnam has lower labor costs, which are also at a lower level compared with Southeast Asian countries such as the Philippines, Malaysia, and Thailand. It also takes into account the rapid growth trend of the total labor force. , the scale effect will also play a positive role. Low factor costs have become an important advantage for Vietnam to undertake industrial transfers. In particular, labor-intensive industries can increase profit margins by reducing costs and increasing production by “bringing in” enterprises.With the way of “going out” of products, Vietnam’s manufacturing industry has good development prospects.

It is understood that in Vietnam’s reform and opening up, opening up to foreign investment is an important institutional foundation for promoting Vietnam’s economic growth. . From the perspective of regional encouragement policies, the administrative areas where the Vietnamese government encourages investment are divided into two categories: areas with particularly difficult economic and social conditions (Area A) and areas with difficult economic and social conditions (Area B), which enjoy special incentives and incentives respectively.

Specific preferential policies include:

1. Corporate income tax preferential treatment: Zone A enjoys a 4-year tax exemption (calculated from the generation of net profit, no more than 3 years at the latest) and a tax holiday 5% is levied for the next 9 years, 10% for the next 6 years, and then it is levied as a normal project; Area B enjoys a 2-year tax exemption (calculated from the generation of net profit, no more than 3 years at the latest), and 4 years after the tax exemption period expires The annual tax rate is 7.5%, followed by 15% for the next eight years, and then taxed as ordinary items.

2. Import and export tariff preferences: Zone A is exempt from import tariffs on fixed assets and is exempt from tariffs on raw materials, materials or semi-finished products for the first five years from the date of production; export products that are produced and processed are exempt from export tariffs or tax rebates .

3. Land rental fee reduction and exemption: The maximum exemption for renting land in Area A is 15 years, and the maximum exemption for renting land in Area B is 11 years.

According to the economic sector classification of the Vietnam Statistics Bureau, various economic activities in Vietnam can be roughly divided into 20 categories. The proportion of Vietnam’s primary industry, agriculture, fishery and forestry, in the national economy has declined slightly. By 2017, the primary industry accounted for 15.3% of GDP. The secondary industry accounts for about 30% of the national economy. Processing and manufacturing and mining are the main sectors of Vietnam’s secondary industry, accounting for 15.33% and 7.47% of GDP respectively. Among them, the processing and manufacturing industry has developed rapidly, and its output value and proportion have continued to increase. Mining has shown a downward trend in recent years. Among the tertiary industries, the highest proportions are wholesale and retail, maintenance of automobiles, motorcycles and other vehicles, finance, banking and insurance, real estate, residential and catering services, and education and training activities. Among them, the wholesale and retail industry as well as the maintenance of automobiles, motorcycles and other vehicles, education and training activities showed greater growth, while the proportion of the real estate industry declined. Overall, Vietnam’s primary industry is relatively small, and there is still room for improvement in the secondary and tertiary industries.

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