“Jiaxing Index” controls the pricing power of international raw silk. “One silk” connects the industrial chain of enriching the people
This is an economic miracle “made out of nothing”. There is no forest, but a wood industry market with the largest operating scale in the country has been built; there is no developed animal husbandry, but there is the largest leather market in the country; there is no rich With abundant cotton resources, the “Chinese Sweater Capital” was born. Since the reform and opening up, Jiaxing has continuously promoted the mutual dependence and common development of professional markets and block industries. Based on the block industry, it has spawned Pinghu Clothing, Haining Leather, Xucun Home Textiles, Chongfu Fur, Puyuan and Honghe Sweaters. The professional market represented by such companies has laid a good economic and industrial foundation for realizing common prosperity.
China’s cocoonsilk trading market is one of the best. The “Jiaxing Index” created by the market has led the international cocoon and silk industry’s pricing “discourse” and is driving the industry to a high level. It has played an active role in quality development, promoting employment, enriching people and increasing income, etc., and has helped Jiaxing City build connectivity in the core area of the Yangtze River Delta It is a golden node for domestic and international dual circulation, actively connecting with the Yangtze River Delta and the small circulation of the Shanghai metropolitan area, and playing an important hub role in the professional market.
“Exponential power” defines the right to speak in the industry
In one corner of the world, whether in India or the United States, when two companies want to negotiate about silk fabrics or clothing, they must refer to the transaction price of China’s cocoon silk market, which is the “Jiaxing Index.”
However, 20 years ago, China did not have a say in the cocoon and silk trade. In the 1990s, the international raw silk pricing power had been in the hands of Japan for a long time. The Yokohama Raw Silk Exchange and Maebashidried cocoon font>The exchange’s raw silk dominates the world’s raw silk market. “China is the world’s largest silk producer, accounting for about 80% of the world’s output. In the past, 70% of silk products were exported.” China’s Cocoon Silk Trading Market Manager Liu Zhuoming said that in foreign trade negotiations, China’s cocoon and silk industry is basically in a weak position because it has no pricing power, which means that foreign customers have the final say on prices.
“In the past, after receiving orders from foreign companies, we had to go to Guangxi, Yunnan and other places to visit suppliers one by one if we wanted to purchase raw materials. Because information was not flowing smoothly, we did not know each other’s quotations, and we often lowered prices in cycles. In the end, the entire price was continuously lowered, which also resulted in being very passive when negotiating with foreign businessmen.” The person in charge of Tongxiang Silk Enterprise introduced.
In order to regain the pricing power of cocoon silk, the state established the China Cocoon Silk Trading Market in Jiaxing, an important producing area of cocoon silk at that time. Starting in 2000, the China Cocoon Silk Trading Market began to compile and publish the “Jiaxing Index”. As consumers’ demand for high-quality silk products increases, in 2019, the market compiled a high-quality raw silk index based on the original Jiaxing Index. The influence of the “Jiaxing Index” is even more prominent. Now it has become a reference standard for foreign merchants to negotiate prices with domestic manufacturers, greatly reducing the situation of foreign merchants deliberately lowering prices.
The Jiaxing headquarters has now become the largest raw silk export transfer base in the silk industry. In 2020, more than 2,000 tons of raw silk were exported through market transfer, accounting for 1/3 of the industry’s total annual export volume.
The platform intervenes to solve the problem of “IOU”
Zhang Yu of the Song Dynasty once recorded in “The Silkworm Woman”: “Those who are covered with silkworms are not sericulture people.” This describes the hardships of sericulture people. What troubles many sericulture farmers even more is the phenomenon of “paying for free”. Because some acquiring companies cannot turn around their funds and have insufficient liquidity, they use the method of “paying for free” in acquisitions. This also leads to many silkworm farmers not having sufficient funds to purchase production raw materials. In turn, it has become an important restricting factor affecting the development of the industrial chain.
In 2006, my country began to implement the “Eastern Mulberry Movement to the West”, and the silkworm cocoon production area moved from the original Yangtze River Delta to the western region. According to Liu Zhuoming, general manager of China Cocoon Silk Market, the “east-to-west migration” has separated the deep processing base in the east from the raw material base in the central and western parts, causing problems in the connection between upstream and downstream production and marketing. In 2019, Yizhou Cocoon Supermarket, China’s cocoon and silk trading market, was officially launched to provide in-depth services and transformation of the cocoon and silk supply chain.
Liu Zhuoming introduced that China’s cocoon and silk trading market has intervened as an industry platform and implemented a cash settlement and clearing of money and goods model, which has solved the “white slip” problem that has troubled silkworm farmers for many years, and has troubled raw silk factories, silk factories, and silkworm farmers. The “triangular debt” was finally resolved.
In the past five years, the market has helped more than 400 cocoon and silk companies across the country obtain financing of more than 9 billion yuan, helped companies purchase more than 3 million tons of silkworm cocoons in a timely manner, put an end to the phenomenon of “IOUs”, and allowed more than 200,000 people in the central and western regions to Household silkworm farmers benefited. With the expansion of breeding scale, the income of local sericulture farmers has increased year by year. In the past, people in the village raised sericulture just to supplement their household income. Now it has become the main source of income for the villagers. Sericulture has brought gratifying income to the local villagers.
Working with upstream and downstream enterprises to overcome the difficulties of the epidemic
Since the beginning of 2020, the new coronavirus pneumonia epidemic has spread throughout the country.As the epidemic spreads around the world, changes in the international epidemic situation have led to reductions, delays, and cancellations of foreign orders. Various problems have arisen, and the silk industry is facing severe challenges. Zhao Xiaojun, the person in charge of Jiaxing Haiding Silk Co., Ltd., still remembers that the spot price of raw silk fell from nearly 400,000 yuan per ton in early 2020 to 250,000 yuan per ton.
Anxiety spreads throughout the entire industrial chain about silkworm cocoon-cocoon drying-reeling-twisting silk-textile-silk product production. Zhao Xiaojun urgently feels the importance of boosting confidence in the industry. “If the purchase price is too low, This will dampen the enthusiasm of farmers to raise silkworms and eventually lead to a shrinking of the scale of breeding. If enterprises have difficulty in operating and suspend production, it will increase the employment pressure in society.”
During that time, Zhao Xiaojun would often stare at the changing numbers on the computer, which was the Jiaxing Cocoon Silk Price Index. “Through index analysis, we can feel that the price at that time seriously deviated from the normal market price.” With the help of index trading , the market helps industry practitioners such as Haiding Silk to better analyze market changes, rationally allocate resources, and thereby guide product pricing through indexes. At the same time, local governments and associations have taken active measures and adopted necessary control measures in a timely manner. The purchase price has continued to rise, which not only protects the reasonable interests of sericulture farmers, but also stabilizes corporate and market expectations.
Nowadays, the cocoon and silk trading market has become the link of industry development, connecting upstream and downstream, central and western regions and eastern regions, terminal processing and export. During the epidemic last year, it helped more than 100 cocoon and silk companies across the country obtain financing of more than 1.5 billion yuan, and helped companies purchase more than 600,000 tons of silkworm cocoons in a timely manner, benefiting more than 100,000 silkworm farmers in the central and western regions. Although affected by the epidemic, the transaction volume of China’s cocoon and silk trading market has bucked the trend in 2020, with the transaction volume expected to be 5.5 billion yuan, a year-on-year increase of 9%. More and more companies are joining this market, working together to promote high-quality development of the silk industry.
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