China's textile exports in 2007 reached US170 billion; however, a higher renminbi and rising manufacturing costs have worsened the profitability of exporters. Most textile-exporting firms post a profit margin of 3-5%; however, there are a number of red-ridden firms that do not generate a profit margin. Here is a sample case. In the case of apparel to be retailed at US50 in the U.S., an exporter places an order at US7 with a Chinese manufacturing firm on a subcontracting basis. Since the manufacturing cost is US6, the remaining profit margin is US1.
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