Textile companies are losing money, Shaoxing’s light textile industry is seeking nirvana
Editor’s note
The “cancer cells” of the financial crisis continue to spread to China’s real economy, making it even worse for small and medium-sized enterprises that rely heavily on foreign trade.
Provinces with developed private economies, such as Jiangsu, Zhejiang and Guangdong, have experienced varying degrees of decline in industrial growth. Private enterprises such as Hong Kong Hejun Toys and Jianglong Holdings have experienced frequent “sudden deaths” due to broken capital chains.
When small and medium-sized enterprises shrink, the consequences will be serious. Most of the small and medium-sized enterprises are in labor-intensive industries. A large number of bankruptcies of small and medium-sized enterprises will undoubtedly bring a large number of laborers who have been transferred from the agricultural population back to the countryside. It goes without saying that the impact will be profound.
Recently, the series “Small and Medium Enterprises Under the Storm” was launched, trying to truly present problems, analyze crises, and explore opportunities. Today, through the textile enterprises in Shaoxing, Zhejiang, we will have a glimpse of the “opportunities” in danger of the entire Chinese textile industry. The fate of small and medium-sized enterprises is the fate of China’s economy.
In the scenery, we watch together.
China’s textile and apparel industry seems to have never been so confused. After years of rapid expansion and growth, China’s “Hollywood” industry seems to be experiencing growing pains. While the “combination punch” of various unfavorable news such as the export tax rebate rate, RMB appreciation, and rising labor costs has not yet ended, the impact of US and European finance has hit us again. All aspects are concerned about the future of this industry.
Contradiction
“Two-thirds of China’s current textile and apparel companies are losing money or on the verge of losing money, and only one-third are making profits, with a profit margin of about 8%.” Faced with dozens of domestic and foreign media , Du Yuzhou, president of the China Textile Industry Association, spoke bluntly in Shaoxing last weekend.
In Du Yuzhou’s view, even if the external conditions do not deteriorate, the long-term accumulated conflicts will eventually break out due to deficiencies in technology research and development, brand promotion and marketing channels of textile and garment enterprises.
From January to August this year, domestic demand in the textile and apparel industry increased by 15%. The country has recently raised the export tax rebate rate for some products to 14% again. “Increasing the tax refund rate by one point is to increase the profit margin of the enterprise by one point, which is quite a lot. Many enterprises will have a much easier life because of this. Those enterprises that cause difficulties due to low efficiency are not the main body of this industry.” He said .
Statistical data from the National Bureau of Statistics and the Customs show that from January to August this year, the domestic textile and apparel industry created a profit of 73.9 billion yuan, and exports earned US$120 billion, with year-on-year growth of 3.2% and 9% respectively. Both are the lowest growth rates in recent years.
Statistics show that exports to the United States in the first three quarters were US$19.24 billion, a year-on-year increase of 1.4%, and the growth rate was 28 percentage points lower than the same period last year. Xia Lingmin, deputy secretary-general of the China Textile and Apparel Association, said, “In any case, we still have 73.9 billion yuan, and the profit is expected to be 120 billion yuan by the end of the year. We still have an export growth of about 9% for the whole year, which is expected to reach 190 billion U.S. dollars.”
“Whether it is export or domestic sales, such data is amazing.” Xu Xi, deputy director of the Market Operation Regulation Department of the Ministry of Commerce, affirmed the above view.
Shaoxing County Magistrate Feng Jianrong also said two words: “Shaoxing’s light textile industry is facing unprecedented difficulties, but this must be the pain of the phoenix’s rebirth.”
China’s textile and apparel industry seems to have never been so contradictory: on the one hand, it is frank about the unoptimistic data and industrial environment, but on the other hand, it has full confidence and expectations for the future.
A storm is coming?
Ma Yuefeng is the general manager of Shaoxing Yingli Fine Fiber Yarn Co., Ltd. The company’s marketing revenue last year reached 60 million yuan, but in the first three quarters of this year it was only 20 million yuan. Since May this year, orders from countries such as the United States and Europe have dropped. Some downstream garment factories that have long purchased goods from the company have seen their order volume drop from two to three tons per day to less than half a ton per day.
Feng Jianrong said that starting from the second half of this year, the order volume of local textile and garment companies has been declining at a rate of 20% to 30% every month. He predicts that next year’s exports and profits will definitely not be as good as this year’s. Last year, Shaoxing County’s GDP, supported by the textile and apparel industry, hit an astonishing growth rate of 39%. But he said that currently, except for Jianglong Holdings and Sanxin Textile, which have problems due to their own reasons, no other companies in Shaoxing County have gone bankrupt.
The change in situation is not only reflected in the number of orders.
Zhang Damin, vice president of the Henan Chamber of Commerce in China Textile City, said that his company’s current order volume has not changed much, but the previous situation where customers ordered 20 or 40 containers at a time is no longer the case. “Three or four containers at a time, the number of times increases, and the other party hopes to change the quantity at any time according to price changes. Consumer confidence is insufficient, and the single order volume has to be reduced.”
After years of rapid expansion, the total number of spindles of domestic textile enterprises has soared from 30 million spindles in 1997 to more than 100 million spindles this year. This is just adding insult to injury – the appetite is getting bigger and bigger, but the food is getting less and less. “Many companies have lost their judgment on the market by blindly following the trend.” said Sun Ruizhe, vice president of the China Textile Industry Association.
Early winter or cold winter
From the upstream raw material merchants and manufacturers to the midstream traders, and then to the downstream sales terminals, in the textile industry”International Textile Expo”, China Textile News also held activities such as the “China Textile and Apparel Influence Award” at the same place. Almost all the activities over the past few days were labeled “upgrade” and “brand”. Congtian’s creativity Design forum, textile industry transformation and upgrading seminar, to the China Textile and Apparel Brand Summit Forum on the second day and the theme “New Model of Brand Competitiveness during Industrial Transformation”, as one of the most powerful industry associations in China, the Textile Industry Association released The message couldn’t be more obvious.
Despite this, the Textile Industry Association does not consider itself to be the core force leading the industry out of trouble. Sun Ruizhe believes that the backbone of getting out of the current predicament consists of the government, associations and enterprises, but the rise of the enterprises themselves must be the key factor. Xia Lingmin also said: “In the end, it depends on the enterprise itself, and the government’s macro-control is indispensable.”
However, most business representatives do not believe that difficulties such as RMB appreciation, increased labor costs, and reduced overseas orders can be solved by the companies themselves. They hope to receive more support from the government and industry associations.
Shaoxing County Magistrate Feng Jianrong said that the government should carry the banner of the march. He revealed that several companies, including Zhejiang Far East Chemical Fiber Group, have basically completed the takeover of Jianglong Holdings and Sanxin Textile through the leadership of the government. 20 days after Hualian Sanxin stopped production, Hualian Holdings, which has a tight capital chain, announced the news of asset restructuring for the first time on October 21. The announcement stated that an investment company affiliated with the Shaoxing County Government will participate in the reorganization of Hualian Sanxin as one of the new shareholders and strive to resume normal production of Hualian Sanxin in the near future.
There are different opinions and no consensus.
“Everyone must have full confidence in this industry.” Du Yuzhou finally said what everyone was thinking. Nearly everyone interviewed agreed that confidence in the industry is crucial in dealing with this crisis. “We must have the confidence to do well in this industry, which is not just a few figures on GDP, but also the jobs of so many people.” Xu Xihe said.
It is difficult to lift one percentage point of foreign trade with the elimination of quotas. Anti-dumping is the biggest barrier to textile exports
Morning Post reporter Zhou Hao
The Ministry of Commerce recently announced that starting from January 1, 2019, the quantity and license management of textile exports to the United States and the management of textile export licenses to Europe will no longer be implemented. This also means that from next year, China’s textile exports will no longer be subject to quota restrictions.
Vicious competition should be avoided
In 2005, according to the WTO accession agreement, China’s textile exports were no longer subject to quota restrictions, and a large number of textile products were cleared in the first half of that year. In order to effectively regulate the market, China signed two-year and three-year bilateral agreements with the EU and the United States respectively. At the beginning of this year, the agreement with the EU expired. In order to avoid another conflict, the two sides began to implement “bilateral monitoring and data exchange.” China is responsible for issuing export qualification management certificates to domestic textile and garment enterprises. Only enterprises within the agreement that meet certain conditions can produce and export eight types of sensitive commodities, including shirts and trousers. At the same time, China issues export licenses with no quantitative restrictions. Enterprises can receive unlimited amounts, but the amount must be used up, otherwise they will be punished. After completing the domestic procedures, the textile and garment enterprise will send the English license issued domestically to the foreign merchant, who will then go to the customs to exchange for the import license and then clear the customs.
Luo Zhisong, deputy director of the Trade Regulations Division of the Shanghai Foreign Economic and Trade Commission, said that if qualification management is cancelled, many factories that were forced to close may resume production. “This requires self-discipline in the industry, otherwise it will definitely cause vicious competition in the industry and drag down the industry.” Low profit margins”.
“Blowout” is difficult to reproduce
Experts said that although all quotas for Europe and the United States are canceled at the end of the year, there will not be the “blowout” situation that was previously expected, and the impact on exports will not be too great. Experts believe that European and American orders for Chinese textile and apparel may drop by 20% next year. Domestic production costs are currently rising sharply, and this year’s textile quotas have increased significantly compared with 2005. “At present, the country should pay more attention to the export of textiles and clothing, otherwise the cancellation of quotas may not be able to increase the foreign trade volume by one percentage point.”
Zhang Bin, a textile industry analyst at Sinolink Securities, believes that factors such as whether quotas are cancelled, and how high the export tax rebate rate is may have been very important before this year. However, due to the impact of the financial crisis, demand in Europe and the United States continues to decline, which has become a current issue. Factors that have a great impact on the textile industry. According to Reuters, U.S. Trade Representative Schwab said on Friday that the United States has urged China to cancel certain government subsidies to the textile industry, otherwise the United States may file a lawsuit with the Trade Organization (WTO).
Industry insiders believe that even if Europe and the United States no longer impose restrictions on Chinese textiles in 2019, various trade protection measures such as various non-tariff barriers, anti-dumping, and regional trade alliance systems in developed countries such as Europe and the United States and some developing countries will It still hinders the normal development and export of my country’s textile industry.
With the expiration of the Sino-US textile agreement at the end of 2019, my country’s textile exports may once again cause a chaotic situation of increasing volume and decreasing prices, thus providing excuses for Europe and the United States to use special safeguards, anti-dumping and other means to impose restrictions on my country. “In the next few years, anti-dumping will become a major trade barrier that my country’s textiles need to face.”
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Disclaimer:
Disclaimer: Some of the texts, pictures, audios, and videos of some articles published on this site are from the Internet and do not represent the views of this site. The copyrights belong to the original authors. If you find that the information reproduced on this website infringes upon your rights, please contact us and we will change or delete it as soon as possible.
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