According to relevant information, since January 1, 2018, a total of 205 companies in the textile and chemical fiber industries have been bankrupt due to non-performing assets. These bankrupt companies have a principal and interest of up to 7 billion yuan.

The analysis shows that there are several major reasons for the closure of textile enterprises, mainly as follows:

1, blindly fight the price war

Textile companies like to fight price wars. The prices of some products are originally low, but competitors will push prices down, and quality is certainly not guaranteed.

Because of price wars and vicious competition, many companies have meager profits, and they simply cannot afford technological innovation. As a result, they can only maintain market share by lowering prices, creating a vicious circle.

In the context of large consumption upgrades and overcapacity, companies are still shoddy, seizing the market through low prices, and finally can only enter the dead end.

2, labor costs are too high

Labor costs are getting higher and higher, and many textile companies are facing 15% annual salary increase pressure, but the price of products has not improved.

Most companies have reduced their employees, but they still can't resist the pressure of rising costs. The dominant and hidden forms of the labor force have risen sharply, and many textile companies are overwhelmed.

3, chaos guarantee

In the process of growing the business, the relationship between the textile business owners and the mutual help is inevitable, so there is a chain of guarantees, one glory and one loss.

Banks urge companies to lend and encourage them to guarantee each other. Other local governments encourage big guarantees for local economic and employment considerations.

In the context of overcapacity, when banks began to lend, they were like a fire ship, killing some companies that were still healthy.

4, chaotic investment

Textile companies are not good at making money, and many companies will invest in projects that are not related to the main business. The most common is real estate. Indiscriminate investment in enterprises often puts a lot of pressure on cash flow. Once the bank draws money, the consequences are very serious.

5, the transformation is not timely

The problem of overcapacity in China's textile enterprises is generally very serious. If it is not timely transformed, it can only fail. In fact, there is still room for the transformation and upgrading of textile enterprises. For example, it can be developed in a more subdivided and more specialized field, or abandon low-margin products and focus on high-margin products.

6, environmental protection is not up to standard

Environmental supervision is becoming more and more strict. If it does not meet the standards, it needs immediate rectification and investment of a large amount of funds and resources for self-improvement.

However, many companies still only choose to "see the money", focusing only on the immediate interests, while ignoring the long-term development of the enterprise, it is sooner or later to be shut down and closed down.

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