Production And Sales Decline, Textile Machinery Enterprises Increase Pressure

Gao Yong, vice president of China Textile Industry Association, recently revealed that the output and sales volume of domestic textile machinery had dropped by about 20% from the first half of the year.

Gao Yong believes that the main problem of market demand is the tightening of loans. Textile enterprises are short of funds and have no strength to buy new equipment. Some of them have been postponed to take delivery of goods.

Chen Youquan, deputy general manager of Qingdao textile machinery and Limited by Share Ltd of China Textile Machinery Group, said that the sale of the company in the first half of the year was also down by about 20%, and the domestic market was more influential.

Jiangsu Chen Yang Textile Machinery Co., Ltd. now only a small number of orders, the second half of the order is basically not.

In view of the saturation situation of the domestic spinning machine market, the development of the international market was once regarded as one of the way out for the development of China's textile machinery industry.

China's textile machinery exports amounted to US $1 billion 200 million the year before, and this figure increased to US $1 billion 500 million last year.

But this growth rate has not been extended to this year.

Textile machinery production and delivery cycle takes six months. According to convention, 6 and July are the main time for overseas orders in second years.

However, from the current situation of the two major textile machinery trading companies in the north and south, textile machinery exports also encountered cold currents as well as the domestic textile machinery market.

Analysis of the UnionPay letter:

Analysts at UnionPay believe that the decline in production and sales of textile machinery enterprises is mainly caused by the drag on the textile industry.

Influenced by many unfavorable factors such as export tax rate rise, appreciation of RMB and price rise of raw materials, the development speed of China's textile industry has obviously slowed down, and many small and medium-sized textile enterprises have been closed down due to the extrusion from upstream and downstream.

In the first half of 2008, the added value of China's textile industry increased by 12.3% over the same period last year, an increase of 5 percentage points year-on-year, and an export delivery value of 365 billion yuan, an increase of 8.5%, down 7.5 percentage points.

In the first five months, the textile industry realized a profit of 41 billion 900 million yuan, an increase of 9.2%.

Among them, the profit of textile industry and garment industry increased by 15.1% and 13.9% respectively, and the profit of chemical fiber industry decreased by 26.8%.

China Textile Industry Association statistics, in the first 6 months of this year, China's textile industry more than 5 million yuan fixed assets investment projects totaled investment of 126 billion 729 million 60 thousand yuan, an increase of 14.24% over the same period, and the growth rate was 11.50% lower than the 2007 level.

The reduction of demand and the increase of cost aggravate the pressure of China's textile machinery enterprises.

China Textile Machinery Group Qingdao textile machinery Limited by Share Ltd sales fell in the first half of 20%, and now only a small number of orders, the second half of the order is basically not.

As product price increases lag behind the rise of cost and price, enterprises are now in the capital preservation business, with few profits.

Under the influence of the US subprime crisis, the economic operation of the whole world is in a state of depression, resulting in a weakening demand for the textile machinery industry.

In addition, because of the soaring price of crude oil and other resources, the price of cotton and other crops has risen sharply, making most of the international textile enterprises face enormous pressure.

Take Pakistan, the world's third largest cotton producer, for example, 20% of Pakistan's cotton mills were forced to close. Pakistan was once a major importer of China's textile machinery. However, demand has declined all these years.

The reduction of international demand also has a great impact on China's textile machinery enterprises.

In addition, the appreciation of the people is affecting the textile machinery industry.

In recent years, the renminbi has appreciated sharply against the US dollar, which has a great impact on the textile machinery export industry dominated by US dollar settlement.

At the same time, the high price of steel will impact the profits of the textile machinery industry.

Under the dual pressure of exchange rate and steel cost, some textile machinery export enterprises have chosen to raise prices this year, but the number of enterprises has been significantly reduced. Others have kept the order volume this year by lowering the price increase, but the profit is very small, which will be very unfavorable for the future development of enterprises.

Generally speaking, under the condition of market downturn, most textile machinery enterprises will be in a predicament, but some textile enterprises will increase profit margins through technological innovation, brand upgrading and value-added products.

For example, the Sino Italian joint venture is one of the major domestic textile machinery exporters. After introducing the technology, the company has made two innovations. At present, it has more than 300 patents and some export products are used in Euro settlement, which can better avoid the risk caused by exchange rate changes.

It is recommended that banks focus on such enterprises.