The Biggest Temptation For India To Build Factories Is The Zero Tariff Of Market Kampuchea.

This is Li Chunwei's sixth visit to India this year.

After coming back, he will feedback the contents of the year's investigation to his boss and decide whether to build a textile mill in India.

Li Chunwei is deputy general manager of Zhejiang Shaoxing Fei ang Textile Co., Ltd. (hereinafter referred to as "Fei ang textile").

Due to the global economic downturn in recent years, the export volume of main bedding companies such as velvet blanket has dropped markedly.

In order to increase orders and raise profitability, Li Chunwei, who is responsible for export business, sprouted the idea of building factories in overseas markets.

"The company's export to India is about 1/4 this year."

As the largest clothing import and export company in Anhui, Anhui garment import and export Limited by Share Ltd (hereinafter referred to as "Anhui clothing") has built a faster pace to build factories overseas than Fei Yang.

Two years ago, the company set up a large-scale garment factory with more than 800 workers in Kampuchea.

"The cost of operation of the India plant is higher than that of China.

China's factories are highly efficient and relatively high profit margins. "

Huang Decheng, director of product development of Haier Group South Asia India, has entered India for ten years, told reporters.

9 years after entering India, Haier India began to lose money. The company ranked third in the fridge market in India, one of the most popular Chinese brands among locals.

Huang Decheng's statement refreshed many people's view of the low cost of manufacturing in India.

Li Chunwei concluded that the comprehensive manufacturing cost of India's textile industry is not much lower than that of China after taking into account factors such as artificial efficiency, power supply, technical personnel stationing, political and cultural factors.

"If we set up factories in India, we will not consider other markets, but only in India.

In terms of tax revenue, if it's all domestic sales, India's tax revenue is definitely lower than China's, probably about 4%~5%. "

The cost of workers can be reduced by 30%, but the company needs to send management and technical personnel from China. This part of the cost will almost wipe out 30% of the cost of workers.

In terms of the cost of land and hydropower, India and China do not look very different, but the lack of electricity brings other costs.

Zhang Qinghua, director of the business development department of Shanghai electric India branch, said that the self provided diesel generator is the standard for commercial buildings in India, and the industrial area is also necessary.

Shanghai city construction site in India also has its own power generation equipment.

Li Rongxiang, the project manager of the company, told reporters that the value of its own generating equipment is about 10 million yuan, which consumes 3000 liters of diesel fuel a day, almost 20 thousand yuan per day.

The power outage has doubled the cost of electricity in India than in China.

For Li Chunwei, the biggest problem of blackouts is that it will affect efficiency and increase the rate of defective products.

"Switching to self provided power generation equipment will not only take time but also increase the rate of defective products when the machine suddenly stops."

If the factory is built in India, sold in India and produced in China, and then exported to India, the former can save nearly 25% of the cost, including tariffs and pportation costs.

Raw materials for printing and dyeing have to be imported from China at present, so it is estimated that the cost will increase by about 5%. "

Li Chunwei told reporters that India's local manufacturing will have a cost advantage of around 20%.

In the difficult period when the domestic profit rate is only 5%, it is probably the biggest problem at present to ensure that the continuous orders can make the enterprises survive.

Li Chunwei thought clearly about the fundamental purpose of overseas construction.

"In the long run, India's economy is on the rise and its foundation is poor, so there is a big room for growth, coupled with a huge population and a considerable market."

For Haier, Shanghai electric, Shanghai city construction and other enterprises, the biggest purpose of entering India is also to look at the local large-scale market and the potential of the future.

The Kampuchea factory of Anhui clothing has been in operation for over 2 years.

Meng Zhuo, Japan's manager of the company, collected data from three or four factories and Anhui factories in Phnom Penh, Kampuchea, and estimated that the overall manpower cost of the Kampuchea factory was slightly lower, about 10%.

In terms of Taxation, the overall tax and fee of the Kampuchea plant is about 20% lower than that of China, but there is basically no difference between the two countries.

"Kampuchea's value added tax is 10%, and the Phnom Penh of the capital can be duty-free for foreign enterprises for 3 years, and it can also be applied for 2 years' extension.

China's value-added tax is 17%, but export products can enjoy China's export tax rebate policy.

So although the value added tax of the two countries is different on the surface, it is virtually zero for garment factories.

Meng Zhuo said.

China resident

The official website of the economic and Commercial Counsellor's office of the embassy shows that Kampuchea's main taxes and tax rates on private investment enterprises are: profit tax 9%, value added tax 10%, business tax 2%.

In addition to value-added tax, there is also a corporate tax, which is equivalent to Kampuchea's profit tax.

The rate of enterprise income tax is 25%, and the small and small profit enterprises that meet the requirements are charged at a rate of 20%. The high and new technology enterprises that need key support by the State shall be reduced by 15%.

In addition, the value-added tax stipulated in China is 17%.

China's export tax rebate policy stipulates that the goods exported by enterprises with export business right can be sent to the tax authorities on a monthly basis with the relevant vouchers to approve the return or exemption from the value-added tax and the consumption tax on the basis of the relevant vouchers after the export of the export business and the sale of the export.

According to the regulations and policies of Kampuchea's foreign trade, as the least developed countries, 28 countries and regions, including the European Union, the United States and Japan, have been granted the GSP treatment in Kampuchea.

The United States has given Kampuchea more relaxed quotas and import tariffs. The EU has given zero tariff treatment to almost every product except arms in Kampuchea under the "all arms initiative except arms".

Kampuchea also enjoys zero tariff treatment for Japan's exports. Compared with the direct export to China from Japan, it is necessary to pay about 10% of the tariffs. The products produced in Kampuchea are obviously more competitive in price.

Combined with the entire operation cost, the Kampuchea factory can only save 5%~10% than the Chinese factories, but 10% tariff reduction is undoubtedly a great temptation to the labor-intensive enterprises with a very thin profit margin.

As a labor-intensive enterprise, where Meng Zhuo is located

What is most needed is manpower, not technology or equipment. Therefore, unlike the chairman of Cao Dewang, chairman of Fuyao Glass Co., Ltd., who chose to go to the United States to set up factories, Meng Zhuo believes that clothing factories must go to many places to find stable employees to solve the needs of production.

"Labor-intensive industries like clothing will continue to move to Southeast Asia, or to countries like India and Mexico, but will not be pferred to developed countries such as the United States, Japan and Germany."

Meng Zhuo is pretty sure.

For more information, please pay attention to the world clothing shoes and hats net report.