Textile economy slows down

“The slowdown in growth rate, structural adjustment, and innovation drive are the main features of the Chinese textile economy under the new normal.” On October 16, Xia Lingmin, Vice Chairman of the China National Textile and Apparel Council, was in the third session of the China Textile Industry Federation. At the 6th executive director's enlargement meeting, he briefed delegates on the operation of the industry economy this year.

Xia Lingmin, Vice President of the China Textile Industry Federation, summed up the main characteristics of the industry under the new normal at the 6th executive meeting of the China Textile Federation. He said that since the beginning of this year, the industry’s production, export, investment, domestic sales, and profit growth indicators have all slowed significantly compared with previous years. This is the basic feature of the new normal.

According to the new situation, the industry began to transform the service of industrial transformation from product manufacturing to R&D, design and sales at both ends of the industry, and provided customized services to the market to provide overall solutions. There are also new trends in the allocation of resources across borders. Going out and transferring production to regions with comparative advantages in factor resources, focusing on R&D design and marketing has gradually become a strategic choice for corporate development. The driving force for the development of the industry has changed from quantitative growth to technological innovation and brand promotion. The continuous development and application of new products, new technologies, and new technologies, and the rapid increase in labor productivity are the main characteristics of technological innovation. The brand's improvement is reflected in the enhancement of quality, design, and rapid response capabilities. The rapid development of e-commerce has accelerated the informatization and intelligence of the industry. The development of e-commerce has promoted the transformation and upgrading of industries, and it has adapted to the needs of small-batch, multi-category, individualized, and rapid response. E-commerce has become an important circulation channel for the textile industry, and at the same time it has stimulated the construction of enterprise information.

The growth of production, investment, and profit continued to fall. China's economic growth is in a “shift period,” and growth in the growth of the textile industry has also shown signs of slowing down. From the major domestic textile indices such as Shengze Silk Chemical Fiber, Keqiao Textile, Changshu Menswear, Dieshiqiao Home Textiles, and Dalang Mao Knitting, the upstream market sentiment index has declined rapidly since 2014, and the midstream fabric prosperity index has fluctuate adjusted. The men's boom index has always been low.

By the end of August 2014, the A-share mid-year report has been disclosed. From the data analysis of 105 textile and apparel listed companies, operating income increased by only 1.16% year-on-year. Excluding investment income, total profit decreased year-on-year.

From the perspective of investment, investment growth slowed down and new projects started to show negative growth year-on-year. From January to August, the industry investment increased by 13.86%, which was 2.21 percentage points lower than the same period of last year. The new projects started in the industry decreased by 0.98% year-on-year. The structural adjustment of the investment in the industry slowed down. The growth rate of investment in the eastern and central regions both slowed down. The proportion of investment in the eastern and central regions declined, and the proportion of investment in the western region increased.

The scale of profits of enterprises above designated size continued to expand, but the growth rate slowed down. From January to August, China's textile industry realized a total profit of 2011.51 billion yuan, an increase of 10.87% over the same period last year. From the perspective of each link of the industry chain, the profits of clothing, home textiles, and industrial textiles near the terminal have increased rapidly.

Judging from the indicators of quality and efficiency, the sales profit rate for January to August increased by 0.12 percentage points year-on-year, and the proportion of three fees increased by 0.05 percentage points year-on-year. It shows that the profitability of the industry continues to increase, but the management efficiency this year has decreased slightly compared to the same period of last year, and the operating costs have increased.

The market share of Europe, the United States and Japan showed a declining trend According to statistics, from January to September this year, China's textile and apparel exports amounted to 2.21899 billion US dollars, an increase of 5.95%, which was a drop of about 6 percentage points from the same period in 2013. Among them, the export price dropped by 0.51%, the export volume increased by 6.28%, and the quantity increased faster than the price. The United States, the European Union, Japan, and the Association of Southeast Asian Nations (ASEAN) are key markets for China's textile and apparel exports, accounting for 55.75% of China’s total exports to the world, an increase of 1.11 percentage points over 2013. The data shows that the US and European markets have recovered significantly.

It is worth noting that from January to August, the share of China's textile and apparel products in the United States decreased by 0.97 percentage point, and that of the EU market share from January to July also decreased by 0.68 percentage points, accounting for 3.9 percentage points of the Japanese market share from January to August.

As domestic retail e-commerce companies stand alone in domestic demand, the scale of domestic retail demand continues to expand, and apparel demand growth is lower than overall demand. From January to August this year, the total retail sales of consumer goods in China reached 16.61 trillion yuan, a year-on-year increase of 12.1%; the retail sales of consumer goods were limited to 8.3 trillion yuan, an increase of 9.7% year-on-year; the retail sales of apparel were limited to 541.55 billion yuan, a year-on-year increase of 10.4. %, lower than the domestic retail sales of consumer goods by 1.7 percentage points. Department store channel sales growth was slow. From January to August, China's key department stores retail sales increased only 1.78% year-on-year; apparel retail sales rose 2.61% year-on-year; retail sales fell 2.25% year-on-year.

What is striking is that the overall development of e-commerce in the industry is rapidly developing. From January to June, the transaction volume of textile and apparel e-commerce was 1.41 trillion yuan, an increase of 28.18% year-on-year, accounting for 24.91% of the national e-commerce transaction volume. Among them, the amount of transactions between textile and garment enterprises (B2B) was 1.1 trillion yuan, an increase of 22.22% year-on-year; total retail sales of apparel textiles network were 277 billion yuan, an increase of 39.20% year-on-year, accounting for 25.18% of the nation's total online retail sales. In the first eight months of this year, cargo throughput of major textile and apparel specialty markets also increased rapidly.

It is expected that it will still achieve steady growth throughout the year. Regarding the challenges faced by the industry in the new normal, Xia Lingmin believes that raw materials are the most important issue. The spreads between cotton at home and abroad are relatively large, and the domestic cotton situation is complex. The development of chemical fiber raw materials lags behind product development, and Raw materials have high dependence on foreign materials. Second, the overall cost has risen, and the labor cost has continued to rise. The increase has decreased compared with the same period of last year. In the first half of the year, the average monthly income of the migrant workforce has increased by 10.3%. Third, the pressure on energy saving and emission reduction has increased, and the impact on the printing and dyeing industry is particularly serious. Affected by the macroeconomic environment, consumer demand growth has slowed down, affecting domestic demand. The low cost of the integrated elements of the international competitor countries erode the market share, leading to increased international competition.

For the future domestic market, Xia Lingmin analyzed that with the increase of urbanization rate, it will bring new opportunities for the development of the industry. In terms of international demand, the international market hasn’t seen ups and downs. The U.S. economic growth momentum is strong, and Europe’s recovery in the third quarter has increased. Affected by the increase in consumption tax, Japan’s economy contracted sharply in the second quarter but remained on the track of recovery. Emerging economies have undergone internal differentiation. The economic growth of the five BRICS countries has been weak, and the economic trend of the “New Diamond” has been good.

It is estimated that the growth rate of main business income of enterprises above designated size in the textile industry will reach around 8% in 2014, and the growth rate of profits will be maintained at around 10%. The growth rate of exports is expected to rise back to around 7%. The whole industry will achieve relatively stable growth.