Textile Industry was Depressed and Textile Enterprises were in a Dilemma (China)

According to the data announced by Chinese Customs Bureau, the total import and export value was 308.08 billion dollars in April, increased 2.7% year-on-year. Hereinto, the exports was 163.25 billion dollars against the imports of 144.83 billion dollars, up 4.9% and 0.3% separately. Trade surplus was 18.42 billion dollars accumulatively in April. After the adjustment by seasonal regulation, the year-on-year growth rate of total import and export, export as well as import was 6.1%、7.2% and 4.8% respectively. As for the export commodities, hereinto, some labor intensive products such as textiles, garments and shoes in the first four months of this year, the exports of apparel was about 39.97 billion dollars, climbed 1%; the exports of textile amounted to 28.85 billion dollars, fell 0.3% and the exports of footwear was about 12.4 billion dollars, increased 4.2%.

The foreign trade data of Chinese Customs Bureau indicated that the current trade situation of textile in our country was not good. Let’s see from the Apr. data announced by China-Keqiao Textile Index Formation Office (Picture 1), as for the trend of China-Keqiao Textile Index, China-Keqiao Total Prosperity Index, Total Production Prosperity Index had presented a downward trend since Feb.2010; China-Keqiao Total Market Prosperity Index, Foreign Trade Prosperity Index had also showed a downward trend since Jan. 2011. Therefore, this indicated that the market situation of textile industry in our country was not optimistic in the last two years and the market painted a depressed picture.

Currently, in the context of the sluggish textile industry in our country, the textiles and garments were badly in need of improvement from medium and low-end to high-end. In recent years, the trade surplus of textiles and garments escalated, which benefited from the rising export trades of textiles and garments. Due to the rising price of raw material and the increasing labor cost, the circulation expenses of textiles and garments went up. It was a very common phenomenon that the enterprises forced prices down to compete and the clothing factories faced difficulties in their business operation. So the brand apparel would be a development tendency in near future. However, our textile and garment industry would face many difficulties in the process of developing to the high-end direction.

Firstly, dyeing and finishing of the high-end products was very difficult. Dyeing and finishing was a very important link in garment industrial chain. The technical level of dyeing and finishing was higher in Zhejiang and Guangdong area and the foreign technology was advanced. Under the pressure of competition, some concentration zone of textile and garment industry began to upgrade the industrial technology, so they had to transport the semi-finished products to other far places where the technology of dyeing and finishing was advanced. The increasingly grim situation of foreign trade and the increasingly difficult foreign trade orders made the conventional products lose the competitive edge, and the creation of the renowned brand ran into the process bottleneck.

Secondly, the inventories of the textile enterprises were high. Because the orders began to wither and the inventories were hard to digest, the inventories of the textile enterprises were awfully high. The data showed that the total inventory of 85 listed companies in textile, garment and fur industry amounted to 73.172 billion Yuan in Q1 of this year, which increased 10.849 billion Yuan compared with the amount of 62.323 billion Yuan in Q1 of last year, climbed 17.4% year-on-year. In addition, the inventories in textile and garment industry increased year-on-year, but the digestion of the market was inferior to the same period of last year. This was showed that the weak downstream consumption, the increasing inventories and the decreasing sales made textile enterprises struggle. At present, the textile enterprises were all in the process of de-stocking. According to the survey of inventory in the textile enterprises conducted by China Cotton Information Net in Apr. it was showed that the cotton inventories of the textile enterprises reduced 109,700 ton to 761,200 ton compared with the quantity in last month, meanwhile, the inventory days of the textile yarn reduced 1.58 days to 10.09 days compared with last month.

Lastly, it was difficult for the textile enterprises to use cotton. The cotton price in China was high. Today, China cotton Index 328 grade was 19,313, which fell 4 Yuan/ton compared with yesterday, and the current cotton price reached to 3,000 Yuan/ton at home and abroad. China implemented the quota system policy to import cotton, so the domestic enterprises were hard to gain the cheap foreign cotton. This is the reason that the import volume of cotton yarn shot up. An official of NDRC expressed that they were cautious to grant a quota under the depressed background in Apr. and the enterprises have successively received the notification of granting a quota in early May. The cotton stakeholders such as cotton textile enterprises, traffickers all kept a watchful eye on the recent market. The issuance of the quota could drive down the costs of textile enterprises, so it was called“a timely rain”. However, it was not sure whether the timely rain could continue. It was reported that the quotas were issued 1 million this time, which made the follow-up quota be inadequate. So it was difficult to fundamentally handle the situation that the textile enterprises were hard to use cotton. In a word, the textile industry was depressed, and the textile enterprises were perhaps in a dilemma that“whether they operate or not, they will die.”