Time for problem-solving of state reserve cotton

Recently， cotton textile enterprises find their cotton shortage problem is getting worse and worse. After 34 textile enterprises in Henan Province drew up a petition to relevant state departments， about 150 textile enterprises in Hubei， Hunan， Shandong， Hebei， Zhejiang， Fujian， Jiangsu， Guangdong and other places recently reported the problems of cotton reserve by telephone or in form of petition to China Cotton Textile Association， hoping to advise this issue to relevant state departments， so as to solve the cotton textile enterprises difficulty in cotton resource as soon as possible and to ensure their regular production.

In this regard， China Cotton Textile Association organized a cotton textile enterprises forum to discuss the concerned problem of reserved cotton on July 21， 2016. Nearly a hundred people， including the relevant leaders from Ministry of Commerce， Ministry of Industry and Information Technology of the Peoples Republic of China， China National Cotton Exchange， China Fiber Inspection Bureau， China Cotton Association and China Cotton Textile Association and people from over 70 cotton textile enterprises， attended the meeting.

The national policies regarding reserved cotton distribution are to alleviate the problem of cotton shortage for cotton textile enterprises， to stable cotton prices， to narrow price differences of domestic and foreign cotton and to achieve the target of destocking cotton reserves. However， in practical implementation， the trend in the cotton market is a far cry from the original intention. ZHU Beina， President of China Cotton Textile Association， indicated that， due to insufficiency in daily distribution amount， difficulty in stock removal， and speculation of the participating traders in the process of reserved cotton release， cotton price rises rapidly， and sales of cotton products are further slowed down. The price of cotton futures in Zhengzhou reached RMB 15，570 per ton on July 15th， 2016， rising by nearly RMB 5，000 per ton as compared with that at the beginning of April， and spot price of cotton went up by about RMB 2，700 per ton， so the market speculation atmosphere getting intense， causing damage to the textile business entities.

The rapid rise in cotton prices directly increases the cost of raw materials for the textile enterprises whereas weaving factories and downstream markets do not accept yarn rise in price， which significantly reduces market orders， Chinas cotton textile international competitiveness is again weakened. With the reduced export orders， imported yarns will re-enter the domestic market， and give another round of impacts to the domestic textile enterprises. Seen from the research of China Cotton Textile Association， operating conditions of textile enterprises are getting more and more severe since May， with production continuing to decline and companies being shut down one after another.endprint

At the forum， problems reflected by textile enterprise are mainly in four aspects： insufficiency distribution amount of cotton reserves， difficulty in stock removal， slow release in gerent money， and large shortage on high quality cotton.

First， the urgent problem to be solved by the textile enterprises is the insufficient daily distribution amount of cotton reserves.

National Development and Reform Commission， Ministry of Finance point out in the notice regarding cotton reserves distribution that： if prices in domestic and international markets rise significantly and rapidly in a period of time， turnover rates of bidding sales of cotton reserves exceed 70% for more than three days a week， listing service amount would be appropriately increased. The reality is， since May 3 turnover rates of bidding sales of cotton reserves has exceeded 70% per day， but the state has not correspondingly the distribution amount with the daily distribution volume of proximately 25，000 tons. Currently， no improvement in raw cotton market conditions allow panic growing with each passing day for cotton textile enterprises， and more textile enterprises intend to halt production and take holiday， thereby making it the most urgent appeal to increase the distribution amount of cotton reserves for textile enterprises.

All participants of the textile industry propose to speed up the progress of public inspection to mobilize additional forces， to increase the human and material resources for inspection， and to add additional public inspection warehouses. Non-production temporarily stop circulation enterprises to purchase of cotton reserves from non-production communication enterprises should be suspended temporarily， and textile enterprises are defined according to auction eligibility audit results of cotton reserves provided by the Cotton Textile Association. Part of the textile enterprises have small stocks of cotton due to various reasons， so it is proposed to continue to distribute cotton reserves in September to October to ease cotton shortage issue for corporates.

Textile enterprises reflect that the current indicator of public prosecution of cotton reserves is generally reliable. In the case of less than 50，000 tons of daily distribution capacity， two options are proposed to increase the distribution amount： firstly， distribute the re-inspected cotton and non- inspected cotton at the same time for respective auctions， wherein for the non- inspected cotton， the starting price of auction can be determined in accordance with the discrepancy between the inspected warehousing index and index of this distribution. Second， in the case where batches are determined， cotton from Xinjiang Corps in the years of 2011 and 2012 can be distributed by the sampling inspection ratio of 30% and weight re-inspection， other cotton bags are still under inspection once in a time. In addition， the distributed cottons strictly undergo quality complaints and claims mechanism.endprint

Second， to solve the problem of difficulty in stock removal

Some warehouses deliberately delay time of stock removal for reasons such as “move stack， stock removal”， contrary to the wishes of textile enterprises， designate logistics company， and take the opportunity to charge unfair fees to illegal textile enterprises， which increases the cost of textile enterprises to purchase cotton reserves， thereby seriously affecting textile enterprises normal production. As to such problems， businesses advice： strengthen supervision regulations on the repository， especially on the third party repository， clarify main responsible person， instruct the warehouse to remove stock within the specified time， as for the warehouse which cannot remove stock on time， the main responsible person fines it 5 yuan/ton daily. In addition， the main responsible person supervises the warehouse， and gets rid of the logistics outside the warehouse from the third party repository. For warehouses that deliberately delay the removal of reserve cotton， once reported， the main responsible per- son studies and verifies the specific situation in the five working days， and gives the preliminary treatment advice to the complainant on the sixth day. For the case occurred wherein extra charge under the policy is charged for stock removal， the cost should be refunded to enterprises， and the main responsible body charges the same amount of fines from the warehouse and gives the money to the central Finance & Administration Department. For the case occurred wherein extra charge on logistics is charged， the cost is instructed to be refunded to enterprises， and the main responsible body instructs the logistic companies to refund the textile enterprises the extra charged logistic fee. Attach great importance to customer complaints， and simplify procedures of complaints submission and purchase return.

Third， to solve problems of release of guarantee money

According to relevant regulations， the textile industrys guarantee money can be released after lading of all goods. However， the long stock removal time of cotton reserves and the fussy invoicing process take up enterprise funds and seriously affect the companys further auction on cotton reserves and production. In this regard， textile companies recommend： to timely release guarantee money after full payment， to simplify the invoicing process within a specified time， to lay appropriate penalties for the delay in working days by the time on the voice provided by textile enterprises.

Finally， to solve the problem of shortage in high-quality cotton

Based on the urgent needs for high-quality cotton in the market and shortage in distribution amount of cotton reserves， cotton textile enterprises calls for national increase of import quotas of cotton to stabilize the market price， so that Chinese textile enterprises can directly and equally participate in the international market competition.endprint