PE Interview With Textile Industry: Innovative Technology And Brand

Under the influence of a series of factors, such as RMB appreciation, raw material price increase, labor cost rising and monetary policy tightening, most textile enterprises have been in the "zero profit" state, and even some enterprises have been able to survive by selling factories or machines.

Textile enterprises are facing a cold winter.

Now, how do textile enterprises spend the "winter"?

How can we get out of the predicament?

From the investor's point of view, does the textile industry still have investment value?

Moderator: in this program, we are mainly concerned about whether the textile industry is really a sunset industry.

Today we have the honor to invite two guests, one of whom is Mr. Sun Huaibin, director of the China Textile Economic Research Center.

Another is Mr. song sung, CEO of the Albert capital of China.

Moderator: Mr. Sun Huaibin is the editor in chief of China Textile journal, editor in chief of China textile industry development report. He has also been a graduate tutor of many universities and has been engaged in the research of textile economics and trade for a long time.

Song has more than 10 years of investment banking experience, responsible for 4 companies A shares listed, 2 enterprises listed in Hongkong, the textile industry has in-depth research.

Before this topic today, I would like to clarify with you that the definition of the textile industry we are talking about today is broad, rather than narrow in terms of fabric or clothing.

First of all, Mr. Sun, according to media reports, the average sales profit rate of the textile industry in the first 11 months of last year was 3.97%. In 2008, the textile industry accounted for only 1/3 of the total sales profit margin of more than 3.97%.

This means that 2/3 of enterprises are at a loss or a slight profit this year.

I want to ask, is this reality true?

Sun Huaibin: the situation mentioned by the host just now reflects our current business situation.

But I need a clarification in this area. The temporary management difficulties of an industry can not be easily judged as a sunset industry, because I have different views on this view.

You said that the theme of our communication is like the "sunset industry".

First of all, I want to explain some of my points.

China's textile industry should be a very basic industry in China, not only for a long time, but also after the reform and opening up, this industry can be described as a stage of vigorous development.

Now, in terms of scale, we are the largest textile industry in the world, whether it is production, export or consumption.

If we talk about its market drive, we are an industry driven by domestic demand in the domestic market.

China has a population of 1 billion 300 million, the industry is in the rapid growth of the national economy, the per capita GDP level is constantly improving, the level of per capita fiber consumption is also rising, and the industry that is mainly driven by domestic demand, this industry should continue to develop with the development of our economy and society.

Therefore, it is impossible to make it easily become a sunset industry.

Host: but the status quo is like this. How do you explain this situation?

Sun Huaibin: what is the main reason for this situation?

Since the second half of last year, our industry has faced enormous pressure from the external environment, whether it is the international economy or the domestic economy, including policies.

From the point of view of the international economy, this year is particularly prominent, slowing down the whole world economy and weakening demand. Especially in some major economies, the recession will directly affect our exports to them.

In this way, because the proportion of our exports is relatively high, this makes some export enterprises, plus the factors of the RMB exchange rate, cause a large number of domestic market to be sold back, so the domestic market is more crowded.

At the same time, from the domestic point of view, we can see that our national economy is growing at a high speed. This is a good thing, because this year, under the general depression of the global economy, China's economy still has such a high growth. This is very rare. This will ensure our domestic demand is more vigorous.

But where is the problem?

Now we are facing a series of policy factors, including some of our own production data, such as coal, electricity, oil, pportation, labor costs, policy factors and factor factors, which bring enormous cost pressure to us, including policy cost, including factor cost, which makes our ability to resist risks in the past few years through adjustment and upgrading, or the ability to bear these costs.

It is not that we ourselves, because such a concentration is so great pressure, some of our enterprises are really unable to bear it, so this creates some temporary difficulties.

Moderator: as far as you know, most enterprises are in what situation?

Sun Huaibin: now 2/3 of our enterprises above scale are really more difficult.

Host: to what extent?

Sun Huaibin: this kind of difficulty is basically wandering around such a side of profit and loss.

This is mainly because of the huge cost pressure that caused them. So now we hope that some aspects can be loosened or loosened, so that they can still come.

Moderator: I would like to ask Mr. Song, when you did some business economic investigation in Zhejiang, what kind of current situation are these enterprises found?

Song Xiangqian: indeed, we did a strategic alliance with the China Textile Association a few years ago and visited China's relatively concentrated areas of textile industry, such as Zhejiang, Jiangsu and Shandong. This is the concentration area of several textile industries and chemical fiber industries in China. Indeed, through this period of research, we have visited more than 20 enterprises for a month and more. Indeed, the situation is not very good at present. With the price of raw materials rising, oil prices rising and labor costs rising, most textile enterprises are facing some bad business situations, and some even have suffered losses.

But we also see that the leading enterprises in Zhejiang Xiaoshan area, similar to Longsheng, in the industrial cluster, still have strong industrial competitiveness and product competitiveness. This also reflects another direction of development of China's textile industry. The industry is more concentrated and more clustered, and it wins through industrial differentiation. Improving the added value of products is not simply sacrificing the environment, but simply relying on the low cost competition of production factors. Instead, it relies on the cost advantage, the technological progress of products, and the differential rate of products. In Zhejiang Xiaoshan area, we see this development status in Longsheng.

In addition, we have done some research and research. Why do many organizations and investors think of the textile industry as a sunset industry, and the textile industry listed companies for so many years? From 90 years, the textile industry may be a relatively large industry. Indeed, the listed companies in the textile industry do not bring good returns to the market investors, especially the chemical fiber industry is more concentrated. Now entering the era of global high inflation, the chemical fiber mainly comes from the downstream products of the oil. Because the competition degree of the chemical fiber industry is not too high, due to the influence of the operation mode of the traditional state-owned enterprises in the past, and the large increase in the cost of raw materials in the upstream of the oil price, many of the chemical fiber industry's performance is not good.

Therefore, the market will also have certain views on the chemical fiber industry and the textile industry.

But we also see the gratifying changes in recent years. In particular, just like the listed companies are represented by technological progress in the industry, represented by product differentiation. The textile industry, which relies on technological progress, product progress, relying on high value-added products, low input, low emission and high competitiveness, represents a new business model, and has also achieved a good performance in the capital market.

Therefore, I do not fully agree that the textile industry is a sunset industry.

Judging from the layout of international textile industry, the textile industry is an ancient industry, but it is also alive today.

In the past, the traditional organization of production factors, the production mode, the traditional low value-added products rely on the low cost competition of production factors, but they are not competitive in the textile industry. But the companies like spandex like Yantai represent the direction of technological progress.

Sun Huaibin: our textile industry actually represents the main direction of development. In fact, one is technology. Just now, Song said, one is the brand, the two. If our enterprises and companies have relatively strong competitiveness, their survival and development should still be good, and they have great prospects for development.

Just now, several listed companies of song general are actually high tech and differentiated market share.

Now the listed companies like clothing and spinning have a very high profit margin, which is absolutely higher than the average profit rate. Why?

Because it has the brand and the added value of the brand.

So nowadays, good companies and advantageous enterprises often have advantages in technology and brand.

What problems do we face in the face of difficulties?

We need to increase structural adjustment. The direction of this adjustment is actually very clear.

However, we feel that textile industry is directly related to employment and people's livelihood, but the adjustment should be steady.

Moderator: I see many netizens leave messages to us. He may also be a textile enterprise. I hope the local government can set up some supportive small and medium-sized funds to help them do research and development.

Because the scale of the enterprise is very small, the profit has already been very thin. Where can we make R & D?

This is a problem.

Another problem is tax.

Can tax help and make some adjustments?

Because taxation is also a great pressure on many enterprises nowadays.

In addition, it is a labor-intensive enterprise. Now, the promulgation of the labor law may have been unable to lower profits for such enterprises. If the labor cost is rising again, many enterprises will be close to zero profits.

Sun Huaibin: we are all concerned about these three questions.

One is the technological pformation of small and medium-sized enterprises, because its self serving ability and upgrading ability are relatively weak.

Now the China Textile Industry Association is also very concerned about this problem. We are in many industrial clusters, because these are small and medium-sized enterprises intensive areas, textile and clothing intensive areas.

Together with the local government, we have set up an intermediary service platform for small and medium-sized enterprises to upgrade their technology and technology, so that there is a social service organization to help them upgrade.

This is a problem.

The second question is that you have just talked about the problem of labor intensive industries. Now the new labor contract law is indeed stricter. If we carry out strictly, some of our enterprises will have a substantial increase in the cost of labor. The profit will be very thin, because labor cost itself is an upward trend, and if we strictly enforce overtime pay and social security, such enterprises will surely be unbearable.

Host: are you saying that there is a change in the employment law of the textile industry?

Sun Huaibin: This is a good suggestion. It is hard to say whether certain rules can be worked out according to the specific circumstances of special industries.

Song Qian: our views may not be the same. Although the textile industry is a relatively traditional and ancient industry, the competition of our textile industry in the past is mainly dependent on the competition of low cost production factors. The so-called environmental factor is relatively low, the cost of labor cost is relatively low, and the cost of raw materials is relatively low, which is a labor-intensive or capital intensive traditional industry.

Today, all of this has changed. With the increase of raw material costs, labor costs have also risen due to the promulgation of labor laws, and the cost of environmental protection has also increased. This means that the textile industry in China and the world is facing the barrier of industrial upgrading.

Should we protect our backwardness or promote the upgrading of our industrial structure and technological progress? Whether it is the role of Taxation or the guidance of law, we should say that we should promote the upgrading of industrial structure, promote our scientific and technological progress, and promote the high value-added, low emission, low cost and low pollution of our textile industry.