China : Langsha likely to say goodbye to Wal-mart

Since the export rebate rate on knitting products decreased by two percent, it is feared that Langsha Group, the biggest socks manufacturing company in China, may not lose on profits from its largest dealer Wal-mart.

Officials of Langsha Group say that it would be difficult for them to supply low cost products to Wal-mart, so in future they are likely to give up the manufacturing orders coming from the company.

In the past three years, Langsha Group received orders worth US $7.70 million from Wal-mart and by the end of July, Langsha Group had finished all Wal-mart orders.

To enter the American market, Langsha Group chose to cooperate with Wal-mart. However, the net profit of Langsha Group was just 2 to 5 percent.

Statistics reveal that, Wal-mart had purchased about $18 billion worth of Chinese products in 2006, including clothing, shoes and other products. The country has been one of the most important purchase bases of Wal-mart. However, because of some disadvantageous factors like RMB appreciation, Wal-mart is likely to shift its focus to other countries like Vietnam, India, Turkey and Pakistan.
 
Fibre2fashion News Desk - China