Chinese textile companies say they're facing a double-barreled set of problems: reduced sales to the United States because of export quotas and rising labor, energy and currency costs.

"We've given up 5 million yuan (US$617,000) of US orders in the past three months because no one knows when the textile trade row will be settled," said Huang Jun, vice president of Tianjin Textile Group.

Her company is not alone among those avoiding the US market. Textile exporters across the country are facing similar difficulties.

Shortly after the global textile quota system ended on January 1, the United States and the European Union reimposed limits on several types of Chinese goods after noting a dramatic rise in shipments to their shores.

China and the European Union reached a deal this month to unblock orders that were piling up on European docks, but a US agreement to end the trade dispute has proven elusive.

Many domestic textile companies say the uncertainties are causing them to look elsewhere for customers. Tianjin Textile Group, for example, reported a drastic decline in its exports to the United States.

In the first eight months of this year, the company exported US$10 million worth of textiles to the United States, compared with US$25 million last year.

"The unsettled trade row has left us with too many uncertainties. We can't project our quotas or predict our costs," said Huang Jun, a company vice president.

Contributing to the challenges is a shortage in technical workers. To fill the gap, companies have to pay higher wages and improve compensation packages to attract workers.

In addition, rising prices of oil and other raw materials have caused operating costs of most manufacturing companies to mount. And the 2.1-percent revaluation of the Chinese yuan on July 21 has also burdened domestic textile firms, knocking down their profit margin from 7 percent to 5 percent.

(China Daily September 19, 2005)