Yarn Expo from March 12 will offer a springboard for exhibitors to capture the potential of the China market. Over 450 exhibitors from 12 countries and regions, including new exhibitors from Egypt and France will display natural cotton, linen and wool, as well as extensive options for fancy yarn, functional fibres and other specialty yarns at the fair.
The three-day fair will see an increase in international exhibitor numbers, as well as domestic. This includes Yarn Expo Spring’s first ever exhibitor from France, as well as Yarn Expo’s first ever exhibitor from Egypt. Together with leading suppliers from Hong Kong, India, Indonesia, Korea, Pakistan, Singapore, the US, Uzbekistan and Vietnam, they will showcase products from around the world.
The trade show will be held along with four concurrent events, including Intertextile Shanghai Apparel Fabrics at Shanghai. The fair has developed a strong reputation for gathering high-quality suppliers, such as CCI, who offer access to their sustainable Cotton USA licensed spinners.
“Manufacturing a high-quality finished product starts with using high-quality raw materials,” explained Karin Malstrom, director of China & Northeast Asia at CCI in a pre-show interview, noting why they chose to exhibit at Yarn Expo Spring this year. “Our US Cotton Trust Protocol is the culmination of years of efforts and research to reduce the environmental footprint of the entire US cotton industry. Our whole US cotton industry is highly regulated and systemised by the US government. That's why, if you use US cotton, you are already way ahead to becoming fully sustainable, transparent and traceable in your operations. #??#We find that more and more consumers prefer natural fibres in performance garments, so this is a very exciting direction for us.”
“Recently, we’ve seen more companies seeking new and alternative ways to source high-quality materials. Cotton USA can provide excellent platforms for sourcing throughout the supply chain – from high-quality US cotton, to spinning, fabric and garment manufacturing, and even down to retail," said CCI.
CCI will showcase their global network of Cotton USA yarn licensees at the fair, creating opportunities for domestic visitors to source US cotton. “We feel that the timing is very good to introduce new and high quality sources of cotton and cotton-blended yarns to the market, especially in China,” observed CCI. “We can easily link Chinese manufacturers up with spinners anywhere in the world.”
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VAT is to cut down from 16% to 13% since Apr 1 2019. Its direct impact on polyester profit results from the reduced rate and players’ buy and sell spread.
Distribution of the profit squeezed from VAT cut depends on each sector’s bargaining power. For example, if polyester plants hold stronger bargaining power against downstream, they may keep selling price stable or raise offer before the VAT is cut, which can be seen from recent price fluctuation in polyester products. PFY and PET bottle chip producers maintained the price firm as usual. Meanwhile, if polyester plants have stronger bargaining power than upstream, polyester plants are likely to push feedstock to decline. If bargaining power is so-so, polyester plants may arrange feedstock purchase as early as possible, and draw up invoice for deduction. Downstream producers will also demand pre-tax settlement, to cater to future development. But this will involve producers’ feedstock purchase invoice, if downstream and upstream can reach consensus, then uniform tax rate is negotiable, and vice versa.
Assume PET bottle chip selling price at 8400yuan/mt after tax, and with no fluctuation within short, based on 16% VAT, the tax=after tax sales revenue/(1+16%)*16%=8400/1.16%16%=1158.6yuan/mt, while after Apr 1, the tax=8400/1.13*13%=966.4yuan/mt. The spread is 192.2yuan/mt, but this is not the ultimate VAT PET bottle chip plant needs to pay, the figure needs to deduct VAT generated during feedstock and auxiliary materials purchase. In this way, actual impact on market price and enterprises’ profit is limited, while cash flow may be the one to bear the brunt of VAT cut.
Hence, for highly competitive industries, VAT cut may bring limited positive impact, or in other words, impact on the industry depends on which sector holds more power. One thing for sure is that delivery of polyester plants is quite likely to expand in drastic.#??#
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