Domestic clothing brand raw material cost is only about 30%
The rise in apparel prices in 2011 is still largely a phase to absorb the cost increases from 2010, and a 20% price hike is considered within a reasonable range. Looking ahead, there's still potential for cotton prices to climb further in 2011. Factors such as strong demand, excess liquidity in the market, and ongoing inflation provide solid support for this current upward trend in cotton prices. A price above 25,000 yuan per ton reflects the normal supply and demand dynamics as well as rising production costs. However, reaching 30,000 yuan per ton would likely be a level where government intervention or policy measures come into play.
He added that, for domestic fashion brands, raw material costs typically account for around 30%, while the costs in the middle stages of the supply chain are significantly higher. Whether or not price increases can be smoothly implemented depends largely on market demand and supply conditions, and it's not something that happens overnight. Currently, the overall clothing market remains well-supplied, and there's a general oversupply situation. As a result, price adjustments are likely to be uneven. Mass-market products may find it difficult to raise prices, while more niche or personalized brands may have greater pricing flexibility and control over their margins.
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