Chinese investment in Uzbek textile sector under threat
25/03/2011
At the start of this year, companies that have already invested in the cotton industry in Uzbekistan were surprised to learn that the government had cancelled a 20% export tax rebate and all but removed a 15% discount for textile companies buying local cotton.
As a result, some Chinese companies have threatened to stop investing and withdraw from the country.
Shandong Yuncheng Hengshi Textile Company is reported to have invested more than $1 million already in a cotton mill in Uzbekistan, attracted by low labour costs and by the quality of the cotton that Uzbekistan, with its dry climate, can produce. It produced the sixth-biggest cotton crop in the world in 2009, with 4.4 million bales.
The company says it wants to wait and see how the situation develops before deciding whether to continue investing in Uzbekistan.
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