China's textile and garment industry is struggling with high inventories this year due to lower-than-expected demand and rising production costs, industry experts said Monday. Meanwhile, some relevant products like fabric labels and printed labels tremendously hit as well for supply exceeds demand caused by the global economic crisis.

The total inventory of 51 mainland-listed textile and garment companies amounted to 29.6 billion yuan ($4.73 billion) by the end of June, a 2.1 percent year-on-year increase, data compiled by weekly newspaper Moneyweek showed Monday.

"Manufacturers' overestimation of external and domestic demand has resulted in high inventories," Wang Qianjin, an analyst at webtex.com, a Shanghai-based textile industry information website, told the Global Times Monday. Garments are not complete without fabric labels, but less demands for garments will inevitably affect labels sales volume.

Exports have been weakening this year. In the first three quarters of 2012, the value of China's textile and garment exports fell by 0.2 percent and 0.7 percent respectively from the same period a year earlier, data from Chinese customs showed. Against this backup, the grim situation will undoubtedly imperil export-oriented companies, especially those providing an assortment of fabric labels for overseas market, and force them to take action.

The country's textile and garment industry is facing the worst situation since 2010, Xia Lingmin, deputy director of the China National Textile and Apparel Council, said at an industry conference earlier this month.

Global economic woes, a slowdown in China's economy and fluctuations in cotton prices as well as increasing labor and energy costs have created challenges for domestic manufacturers, he said.

The high inventories of domestic textile and garment firms have led to a decrease in their net profits. The 51 mainland-listed companies' net profits totaled 2.5 billion yuan in the first half of 2012, down 45.7 percent from a year earlier, Moneyweek said.