The silk industry is in crisis. Production companies in five places jointly seek help from the Ministry of Commerce.

The silk industry is in crisis, and production companies in five places jointly seek help from the Ministry of Commerce

Silk is a business card of China. However, this halo is being severely eroded by the impact of the U.S. financial crisis, and it has begun to be associated with high-risk words such as “loss, production suspension, and precarious”. “If the government does not rescue the market, a major earthquake will occur in the silk industry.” In desperation, leading enterprises in Sichuan, Zhejiang, Jiangsu, Guangxi and Chongqing and other provinces and cities jointly submitted a letter to the Ministry of Commerce for help!

In recent days, Ren Jiawei, general manager of Sichuan Nanchong Jiawei Silk Company, has often felt anxious – the plummeting domestic silk market in the past half month has made him extremely anxious. As worried as Ren Jiawei is a person in charge of the Sichuan Silk Import and Export Chamber of Commerce, as well as a large number of companies, employees and sericulture farmers in the silk industry.

Silk is a business card of China. However, this halo is being severely eroded by the impact of the U.S. financial crisis, and it has begun to be associated with high-risk words such as “loss, production suspension, and precarious”.

According to the “Daily Economic News” investigation, affected by the financial crisis, since October, the prices of cocoons and raw silk in the main domestic silk trading markets (Jiaxing, Zhejiang and Guangxi) have continued to plummet, and transactions have almost stagnated, which has subsequently triggered a sharp drop in orders, Factory shutdowns and other chain reactions…

“If the government does not rescue the market, a major earthquake will occur in the silk industry.” In desperation, leading enterprises in Sichuan, Zhejiang, Jiangsu, Guangxi and Chongqing and other provinces (cities and districts) jointly submitted a letter to the Ministry of Commerce for help!

　[Falling and falling]

Severe market conditions in the past 10 years

“I have never fallen so hard.” When seeing reporters, Ren Jiawei looked depressed.

Since October 6, the prices of cocoons and raw silk in the two major domestic silk trading markets of Zhejiang Jiaxing and Guangxi have continued to plummet: On October 28, the price of Class B raw silk for delivery in November has dropped to 138,600 yuan/ton. , before the National Day, the price was still above 180,000 yuan/ton; the price of silkworm cocoons has dropped to 36,500 yuan/ton, a decrease of at least 13,500 yuan per ton compared with 20 days ago.

What is even more serious is that some smaller silk companies have been forced to suspend production, and some large companies are also on the verge of suspending production.

From October to November, Du Qinhuai, marketing manager of Nanchong Liuhe (Group) Co., Ltd., and the company’s CEO conducted personal inspections from manufacturers to market sales terminals in Shandong, Zhejiang, Jiangsu, Shanghai and Shenzhen. Two veterans of the silk industry discovered that what the silk industry is currently experiencing is “the most severe market situation in the past 10 years.” Du Qinhuai said that compared with the same period last year, sales of enterprises in these provinces dropped by 70%, and many small factories closed early.

The situation in Nanchong is equally severe. Statistics from the Nanchong City Cocoon and Silk Coordination Office show that as of the end of last year, there were 45 silk companies above designated size in Nanchong City. According to Du Qinhuai, there are more than 10 manufacturers in the city engaged in the “burning” process of silk production, but more than 50% have closed down, and dozens of silk factories in Xichong County are also “basically closed.” “At present, Nanchong City Only we are producing normally.”

The owners of many silk factories in Nanchong confirmed the above statement. “Large state-owned enterprises cannot stop production casually, but private enterprises cannot continue to lose money.” A person in charge of a silk enterprise in Nanchong City who did not want to be named said that in October this year, a large-scale factory in the city suddenly closed. “The factory has It was demolished and is now undergoing real estate development.”

Seeing his peers suspending production one by one, Du Qinhuai said dejectedly: “We can’t see the light of day yet!”

[Silk City is in urgent need]

The more you produce, the more you lose

On November 11, Nanchong, Sichuan, was shrouded in clouds and very cold. It is one of the four major cocoon and silk production and export bases in the country and the largest silk industry center in Sichuan. It is known as the “Silk Capital of China”. Walking on the streets, you can see silk product stores from time to time, but there are only a few customers. When it comes to silk, Nanchong people are quite proud – there are more than 3,000 years of sericulture history, millions of sericulture farmers, and an export volume of silk products of nearly 10 million US dollars. Among the 12 industrial concentrated parks planned at the county level in Nanchong City, 10 are silk production bases, which shows the status of the silk industry in Nanchong.

The factory has become a burden

At 4 p.m., Ren Jiawei was chatting with employees in the general office. The “weird” market situation in the past half month made him extremely anxious.

The decline was so severe that Ren Jiawei, who spent his own money to build the factory, “lost all his money.” Jiawei Silk was completed and put into production in 2007. It has 400 employees, covers an area of ​​32 acres, and has total assets of 36 million yuan. Most of the silk produced is exported, with an annual export volume of about 200 tons.

The factory that originally expected to make a lot of money has now become a burden to Ren Jiawei, making him breathless. From August to September, he purchased 100 tons of dried cocoons at a price of 43,000 to 45,000 yuan per ton (the primary product of fresh cocoons is processed into raw silk. 100 tons of dried cocoons can make 25 tons of raw silk) .

As soon as 100 tons of dried cocoons were put into the warehouse, the prices of dried cocoons and raw silk began to plummet. “It used to be 180,000 yuan/ton, but now it is only about 130,000 yuan/ton.” Ren Jiawei said that even if 25 tons of raw silk can be produced, He has also lost more than 3 million yuan.

“Loss of more than 3 million” has become a lingering haze in Ren Jiawei’s heart. He has been in this business for more than 20 years and has never…The document “Recommendations on the Industrial Crisis” reads: “The entire silk industry is in pessimism and fear.” According to reports, this “letter for help” was jointly drafted by leading companies in Sichuan, Chongqing, Jiangsu, Guangxi and Zhejiang. .

“The purchase price of fresh cocoons has fallen below 10 yuan per kilogram in some places. The price protection agreement signed by some leading enterprises and the Sericulture Farmers’ Cooperative Organization has been unable to be implemented due to huge losses and financial difficulties of the enterprises. It has been in some areas. Cause social conflicts.” The above-mentioned person who participated in the drafting said that if this continues, “a large-scale wave of destruction of mulberry trees may break out this winter and next spring…”.

The above-mentioned person said that the reason why cocoon and raw silk prices plummeted was indeed related to the impact of the financial crisis, but “more importantly, the industry as a whole was unsure of the situation in the international silk market and lacked confidence, coupled with the fact that some speculators Adding fuel to the flames has pushed the entire industry into the current crisis state.”

“More than 70% of the world’s silk products are produced in China, but we don’t have the slightest pricing power,” Ren Jiawei said helplessly. There are too many domestic silk companies and they are expanding like crazy. Production, lack of reasonable planning, resulting in overcapacity, resulting in price competition. After the financial crisis broke out, speculators took advantage of the situation and the entire industry was crumbling.

　[Government Action]

The Ministry of Commerce requires close attention

The reporter learned from the industry that at the end of October, the Ministry of Commerce had sent personnel to Fuzhou for investigation. The main purpose was to find out the current situation of the cocoon and silk industry.

On November 4, the National Cocoon and Silk Coordination Office issued a “Letter on Please Do a Good Job in the Cocoon and Silk Trading Market”, clearly stating that after the “National Day”, the financial turmoil caused by the deepening of the U.S. subprime mortgage crisis has further intensified. Affected by factors such as other factors, the price of domestic cocoon silk has fluctuated greatly, and the price has dropped sharply in recent times. The price of 3A grade raw silk in the cocoon silk trading market fell by nearly 20% in 20 trading days, falling below 140,000 yuan/ton. , triggering dramatic fluctuations in industry production.

The letter requires, “… pay close attention to the changes in transaction prices in the cocoon silk market, increase market supervision, correctly guide and standardize trading behavior, and take necessary measures to prevent artificially low transaction prices and excessive speculation from causing adverse effects on the industry. Influence…”

“After the issuance of the above notice, the market situation has stabilized,” the person involved in the drafting said. They hope that the National Cocoon and Silk Office will clearly declare that it will launch the national raw silk reserve in due course, and at the same time start short selling at the lower limit in Jiaxing, Guangxi and other silk trading markets. According to the mechanism, B silk cannot be sold short below 150,000 to 160,000 yuan… In this way, the use of national administrative resources can protect Chinese silk from the current difficulties.

As of press time, silk entrepreneurs are still waiting for details of the rescue.

New statistics from the General Administration of Customs show that in October this year, China’s raw silk export volume was 763 tons, a month-on-month decrease of 21.34% and a year-on-year decrease of 20.02%.

Analysis

The increase in the export tax rebate rate will not solve the problem of the decline of raw silk

The adjustments to foreign trade policies at the National Economic Work Conference on October 17 were quickly implemented, and the export tax rebate rate for textile and apparel products was increased to 14% from November 1. However, this 1% increase as a life-saving straw seems a bit thin for the rapidly falling raw silk prices.

For more than ten years, 我 the trading price of domestic silk has not been completely consistent with the changes in the export tax rebate policy: in the three years after the Southeast Asian economic crisis in 1997, the price of silk was at 200,000 yuan. In 2001, the economic growth was slow, the demand for silk in the international market was weak, and the price of raw silk fell into a low cycle of 2 to 3 years; from 2005 to 2006, with the participation of speculation factors, the price of raw silk experienced a roller coaster ride. Thrilling journey.

For raw silk, which is highly dependent on foreign trade, why does every adjustment to the export tax rebate rate seem to have no direct effect, or the effect is very small? The reason is that raw silk is an intermediate product of silk and is in the middle of the value-added chain. The bargaining and pricing power of exports is quite weak. The actual benefits generated by each increase in tax rebates are mostly taken away by foreign businessmen, especially Our country faces India, a large importing country. The depreciation of its local currency rupee has made importers more eager to lower prices. Under such supply and demand relations and exchange rate changes, this time the export tax rebate rate is only 1%. The increase will not play a big role in alleviating the losses of silk enterprises. The heat generated by a straw is not enough to warm up the entire raw silk business and circulation environment.