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In 2010, cotton prices hit an all-time high, and many well-known clothing brands announced price hikes. But was the increase really due to rising cotton costs, or were there other factors at play?
Many shoppers noticed that the same basic clothes in ZARA stores cost significantly more compared to the previous year. Meanwhile, brands like Caizi, which had not raised prices for years, finally introduced their first-ever price increase. Anta, a major sportswear brand, openly stated that it had increased its wholesale prices by 7.1% in the first half of 2010. Analysts attributed this to rising raw material costs, particularly cotton.
However, the reality might be more complex. The wholesale price of branded apparel typically accounts for only 30% to 40% of the final retail price. For Anta, the cost of materials made up less than 12% of total expenses. Other factors, such as store expansion and operational costs, played a bigger role. According to JPMorgan, Anta’s net profit margin was expected to reach 19% to 20% between 2010 and 2012. This suggests that while cotton prices did rise, they weren’t the primary driver behind the price increases.
Indeed, the impact of cotton price surges didn’t directly translate to higher clothing prices. While cotton yarn and fabric prices rose by about 10%, and cotton purchases in the upstream mills increased by around 60%, the final consumer price wasn't affected as much. The gap between raw material costs and finished products became evident when looking at how these costs were absorbed across different stages of production.
Farmers like Gao Baoyun from Nangong City in Hebei Province saw cotton prices soar. Once a modest crop, cotton now required more labor, higher fertilizer and pesticide costs, and lower yields. Despite higher prices, farmers were hesitant to sell, fearing further price spikes. Traders like Lu Xiuguang also faced challenges, struggling to secure cotton at stable prices.
Meanwhile, textile companies like Ningfang Textile bore the brunt of rising costs. Cotton accounted for nearly 75% of their total expenses, but they could only pass on a fraction of the price increases to downstream apparel companies. As a result, the burden fell heavily on manufacturers rather than retailers.
For branded clothing companies, the situation was different. Many had already purchased cotton before the price surge, allowing them to maintain stable pricing. Fast fashion brands like ZARA, however, struggled more due to shorter production cycles. Still, ZARA’s spokesperson claimed that the recent price changes were more related to exchange rates and general inflation rather than cotton costs.
Even small online brands, such as Taobao sellers, felt the pressure. Some had to raise prices by 5% or more, citing higher labor and material costs. Yet, many found that increasing prices by 10% still led to good sales, especially when big mall brands raised their prices even more.
In the end, while cotton prices soared, the ripple effect through the clothing industry was uneven. Some sectors absorbed the costs, while others passed them on. The real question remains: who truly benefits from the rise—and who ends up paying the most?
September 06, 2025