China Textile City Returns To State

Many people in the industry believe that this move has a certain sample significance for the development of large specialized markets.

In late November, the China Light Textile City of the listed company announced: the original controlling shareholder Jinggong holding has pferred the 96 million 800 thousand shares held at the price of 3.6 yuan per share to the wholly state-owned company, China Light Textile City Development and Operation Co., Ltd. (hereinafter referred to as the development company), with the total price of RMB 348 million yuan, and the development company will become the largest shareholder of the company.

6 years ago, the state-owned light textile city of China completed the restructuring, allowing private enterprises to become the largest circulation shareholders. This made the textile city become the first joint-stock enterprise that was restructured in a large professional market in China.

But after several years of operation, an unavoidable problem surfaced: who should dominate the development of large scale professional market?

According to many operators, in the past few years, the "fried stalls" have become a common phenomenon in the textile city. Some people rent the stalls not for business purposes, but for resale or subleasing, making profits from them, and the market operation order is difficult to guarantee.

"How can markets flourish if the market turns around these speculators?"

A leader of Shaoxing County said in an interview with reporters.

At the same time, China Textile City itself is also facing enormous competition pressure.

Two years ago, Feng Jianrong, the county magistrate of Shaoxing, had a sense of urgency when interviewed by our newspaper reporter.

After nearly 20 years of development, China Light Textile City has become the second major market in China and the largest textile trading center in Asia. But before 2005, the "city building movement" in the Yangtze River Delta's textile city has made China Textile City face a similar challenge from the similar market.

The rapid development of Yiwu's Small Commodity City, which was once quite large, has given Shaoxing a great inspiration. Yiwu commodity city is entirely dominated by the government.

In 2006, Shaoxing county decided to take the government's leading role as the first principle to enhance the development of light textile city, and invested heavily in the expansion of China Light Textile City, so that the business area of the market increased from 600 thousand square meters to 1 million 600 thousand square meters.

But there are two major management systems in the same Textile City: the old market is managed by Jinggong group, and the new market is controlled and managed by state-owned enterprises.

The negative effect of "one city, two systems" is the imbalance of public resources allocation and the imbalance of market operation cost.

The government solved the problem with the "visible hand" to promote equity repurchase.

As far as Jinggong group is concerned, when the manufacturing industry is facing a "cold current", the 300 million yuan cash in the equity swap of textile city is undoubtedly a warm "cotton padded jacket".

The Jinggong group, which specializes in manufacturing and capital operation, is not smooth in market operation and management, with large investment and small output, which hindered the development of the whole enterprise.

Today, the government's offer is a relief to the best practices. In the view of the operators, the state-owned shares regain control of the market is a return to the order; for the government, the share repurchase of the light textile city is regained the dominant power.

This will not only greatly reduce the operator's market business costs, enhance market attractiveness, but also help to integrate operation, forming textile products and related market clusters from upstream textile raw materials, chemical auxiliaries, downstream clothing and apparel, home textiles, industrial cloth and so on. China Textile City's evolution process from traditional professional market to modern professional market, single market to comprehensive market will be greatly accelerated.