Textile industry: hardest hit by weak external demand
As an export-oriented industry, the textile and garment industry has been in trouble before the national economy since 2007 due to factors such as the appreciation of the renminbi and rising factor prices. In 2019, the growth rate of my country’s textile and clothing exports slowed down significantly.
Starting from February 1, 2019, my country has increased the textile export tax rebate rate to 15%. However, customs data shows that in the first quarter of 2019, my country’s total exports of textiles and clothing were US$34.067 billion, which was significantly higher than the same period last year. down 6.52%. At the China Trade Fair held in Shanghai in early March, the textile and apparel category only recorded a transaction volume of US$1.245 billion, a decrease of 32.47% from the previous session. This also reflects the pressure faced by the export of the textile industry from one aspect.
Although statistics show that the added value of the textile industry above designated size in the first quarter of 2019 increased by 6.1% year-on-year, the growth rate has rebounded from the 5.5% low in December last year.
However, some experts in the industry believe that when the inventory level in the European and American markets reaches a low level, the inventory must be reset, and the rebound in orders brought about by the inventory reset may help March and even the future. The improvement in China’s exports within a few months is not the final rebound in demand. As for the rebound in exports in March, it is normal over the years, and the textile industry has not yet gone through the difficult period.
In addition, some media said that after the cancellation of quotas for China’s textile and apparel exports to the EU and the United States, all major export target countries have become more vigilant about China’s textile and apparel exports. It is reported that the number of Chinese textile and clothing products involved in the recall notices issued by the US Consumer Product Safety Commission (CPSC) from January to March increased by nearly 20% year-on-year; The number of notifications for fabrics and other products increased by 633% year-on-year.
What is even more worrying is that the trend of international trade protectionism triggered by the financial crisis has intensified.
It is reported that the US economic stimulus package will include textiles and clothing in the “Buy American” clause; the European Union has proposed new and higher requirements on the name of textile fibers, textile label content and other markings; Indonesia Force state civil servants to purchase domestic products; Ecuador imposes a specific tax of US$10 to US$12 per kilogram of imported textiles.
“In the past, the European market could produce more than 100,000 pieces. So far, it is only about two-tenths. In previous years, this market had at least about six-tenths.” Shaanxi Aide, who has been involved in the foreign trade industry for more than 20 years Sun Mingchi, general manager of Weiss Cashmere Products Co., Ltd., said in an interview with a reporter from China Economic News that in the field of foreign trade, the profits of the textile industry are too thin and there is not much room for price reduction.
After finally determining that the international market was not doing well, Sun Mingchi’s company began to turn to expanding the domestic demand market this year. “There is no other way now, but to push it out, such as promoting yourself on the Internet.”
Prospect prediction:
Relevant person in charge of the Foreign Trade Department of the Ministry of Commerce of China stated on April 23 that since last year, due to the impact of factors such as rising labor costs, appreciation of the renminbi, and weakening external consumer demand, the production and operation of Chinese textile enterprises have encountered greater difficulties. . Judging from the current economic development situation, the negative impact of the above factors will continue, and it is expected that China’s overall textile export growth will continue to slow down this year.
Fan Min, editor-in-chief of the Ministry of Commerce’s “Textile Business Weekly” predicts that European and American orders for Chinese textile and apparel may drop by more than 20% in 2019. Ping An Securities previously released an investment report stating that it maintains its judgment that the annual growth rate of the textile and apparel industry is -10%.
Wang Qianjin, editor-in-chief of Textile.com, believes that the biggest uncertainty in China’s textile exports lies in the external environment. For imports and exports to reverse, the prerequisite is for the economy to recover. Although developed economies such as the United States and Europe continue to introduce tax cuts and other stimulus measures, demand recovery currently seems out of reach.
Inflection point:
With his many years of foreign trade experience, Sun Mingchi believes that “the situation will definitely get better in the future, and it cannot continue like this.” But judging from the current international market situation, this time may be one or two years, so it is difficult to say.
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