The debt interest burden of my country’s textile enterprises has increased

Since 2008, my country’s textile industry has been under the combined pressure of a variety of negative factors. The industry’s development has been in trouble, and profit growth levels have continued to decline, even showing a negative growth trend that has not been seen for many years. Among them, the increasing financial pressure on enterprises is one of the important factors causing shrinking profits in the textile industry.

Since 2008, my country’s textile enterprises have been affected by factors such as financing difficulties and high interest rates, and their financial burden has increased. According to statistics, from January to November 2008, the financial expenses of textile enterprises above designated size reached 40.357 billion yuan, a year-on-year increase of 19.37%, of which interest expenses increased by 24.81% year-on-year, higher than the main business income growth rate (13.80%) 11.01 percentage points, much higher than the profit growth rate (-1.77%) of 26.58 percentage points.

According to calculations by the Statistics Center of the China Textile and Apparel Industry Association, from January to November 2008, the interest earned ratio of textile enterprises above designated size (the ratio of business income and interest expenses of an enterprise, used to measure the enterprise’s ability to repay borrowing interest) was 3.95, a decrease of 16.84% from the same period last year, indicating that the debt interest pressure of enterprises has increased significantly.

In addition, it is understood that due to the impact of tightening monetary policy, bank loan thresholds generally increased in 2008, making it more difficult for textile companies to obtain loans, which put great pressure on the capital flow of textile companies. Some companies reported that even if they can get loans, the conditions are very harsh. Some small and medium-sized enterprises can only resort to private lending, which carries a heavier interest burden.

In this regard, relevant state departments have introduced a number of support measures to encourage and guide financial institutions to increase financial support. It can be said that policy support is basically in place in terms of credit access. However, many companies have expressed concerns that because banks are operating entities after all and have the operating characteristics of “seeking profits and avoiding risks”, so even if the policy level is in place, it will be difficult to fully implement it in specific implementation. “When will the timely relaxation of funds for small and medium-sized enterprises really benefit textile enterprises?” We still have to wait for the specific implementation of relevant policies by banks.

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