Industry Report - Cotton Growing in China.pdf
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1、CONTENTS Error! No text of specified style in document. January 2011 | 1-800-330-3772 | IBISWorld Industry Report 0115 Cotton Growing in China January 2011 About This Industry . 2 Industry Definition . 2 Main Activities . 2 Similar Industries 2 Additional Resources 2 Industry Performance 3 Executi
2、ve Summary 3 Key External Drivers . 3 Current Performance 4 Industry Outlook 7 Industry Life Cycle 9 Products therefore, China is the largest export destination for cotton products in the world. The policies of major cotton growing countries directly affect the import volume and prices of cotton pro
3、ducts in the domestic market. Some developed countries provide export subsidies for cotton, which causes the prices of imported cotton products to be lower compared with domestically produced items. In August 2007, the United States, which was the largest cotton import source for China, canceled the
4、 export subsidies for cotton products, which caused the international prices of cotton products to increase sharply. The demand for domestically grown cottonseed will continue to increase. Changing consumption trends In the 1970s and 1980s, polyester products were popular in China because people ini
5、tially liked the new material and the style of polyester clothing. However, people gradually realized that cotton products were more comfortable and natural, which increased demand for cotton products, and therefore cottonseed. Substitute products With the development of technologies, many substitut
6、e products for cotton and cotton products appeared around the world, especially synthetic fiber, which is widely used in the textile subsector. The increasing application of synthetic fibers will reduce the demand for cottonseed. WWW.IBISWORLD.COM.CN Cotton Growing in China January 2011 13 Major Mar
7、kets Cotton and flax companies 38.0% Spinning enterprises 28.0% All China Federation of Supply and Marketing Cooperatives 19.0% Independent cotton-ginning factories 10.0% Other downstream markets 5.0% In 1999, China started to reform the cotton circulation system. In 2001, the State Council issued s
8、everal policies, regulating that domestic enterprises that satisfied the requirements of the Provisory Measures of Certification for Cotton Processing and Market Administration could participate in cotton purchasing. The number of enterprises with national certification for cotton purchasing exceede
9、d 8,000. However, there is also a large number of enterprises without any certification that purchase cotton in China. The number of purchasing enterprises totaled about 20,000 in 2010, including those without national cotton purchasing certification. Revenue from the All China Federation of Supply
10、Carbamide was $0.23 per kilogram (up from $0.21 per kilogram in 2006); and diammonium was $0.41 per kilogram (up from $0.38 per kilogram in 2006). Prices for these products decreased in 2008 and increased in 2010. Depreciation costs and rent are estimated to account for about 1.1% and 8.7% of indust
11、ry revenue, respectively, in 2010. In China, the industrys mechanization level is low. Most farmers grow cotton in small plant areas, and prices of cotton pickers and cultivating tillage equipment are relatively expensive. Therefore, very few farmers are able to purchase this equipment. Some farmers
12、 with large plant areas choose to rent this equipment every year, and the rent cost has steadily increased in recent years. Some cotton farmers also rent land from other households that do not farm. Utilities refer to water and electricity. They make up estimated 4% of total revenue in 2010. As cott
13、on fields require irrigation, utilities expenditure is relatively high. In 2007, irrigating expenditures were $471 per hectare per annum, up from $377 per hectare in 2006. These increased again in 2010. WWW.IBISWORLD.COM.CN Cotton Growing in China January 2011 19 Basis of Competition Internal compet
14、ition Production costs: The growing of cotton is strongly affected by the weather, plant diseases and insect pests. Therefore, farmers invest much in irrigation, fertilizer and farm insecticides every year, of which prices have increased substantially in recent years. Meanwhile, fuel, energy and lab
15、or costs continued to rise. Better control over production costs leads to higher profits for farmers. Product quality: The staple length, fiber fineness, fiber maturity and cotton grade are major indicators of seed cotton quality. Most purchasers grade the quality of seed cotton according to the nat
16、ional standard and the grade determines the cotton price. Relationships with participants of downstream industries: Many cotton purchasing enterprises have limited funds, with most depending on loans provided by the government every year. If the loans are not approved or delivered, the purchase of c
17、otton will be negatively affected. Therefore, choosing relatively large purchasing enterprises and establishing good relationship with them is an important factor for the sale of cotton, especially in years when the general price is low. Support from governments: The Cotton Growing industry is one o
18、f the basic industries in China and is supported by the central government as well as local governments. The governments provide market information, technical assistance and equipment to cotton farmers. There is more support in the large production bases of cotton, such as Xinjiang Uigur Autonomous
19、Region, Shandong province and Henan province. There is less assistance in other areas. External competition Substitute products: The main substitutes for cotton include leather, wool, hemp and synthetic fibers. With the development of technologies, many new raw materials have been constantly develop
20、ed. Some enterprises choose these products to substitute cotton to reduce production costs. This affects demand for seed cotton. Competing imports of lint cotton: Although there is no direct competition from imports for seed cotton, this industry is indirectly affected by the imports of lint cotton,
21、 which reduces demand for seed cotton. The competition between domestically-produced cotton and imported lint cotton is mainly reflected in price. In China, the prices of domestically-grown cotton are controlled by the government. When the prices of cotton increase sharply, the government will sell
22、national reserves of cotton to prevent significant pricing increases. Imported cotton is mainly used to meet the balance between supply and demand. Many developed countries provide subsidies for cotton exports, which causes the prices of imported cotton to be lower than domestically-produced cotton.
23、 Therefore, downstream enterprises will increase the import volume within the quota limits. In August 2007, the US canceled its export subsidies for cotton, which raised the international prices of cotton. The price advantage of imported cotton was reduced. WWW.IBISWORLD.COM.CN Cotton Growing in Chi
24、na January 2011 20 Barriers to Entry Barriers to entry are low and steady. Barriers to Entry checklist Level/Impact Industry Competition Low Industry Concentration Low Life Cycle Stage Mature Capital Intensity Low Technology Change Medium Regulation and Policy Light Industry Assistance High SOURCE:
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