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Development Trend Of Cotton Processing And Circulation Industry In China

2011/4/3 9:44:00 113

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Cotton Processing And Circulation Industry

After entering the 2010 cotton year, under the influence of many factors, such as the reduction of Climatic Causes and the continuing shortfall in cotton demand, domestic cotton prices can be described with flying colors. Taking the Chinese cotton price index 328 as an example, it began to rise from 18231 yuan / ton in September 13th and reached 31302 yuan / ton in November 11th. After that, although it fell back, it has been maintained at 25000 yuan / ton, and the price index has been steadily above 30000 yuan / ton since the beginning of 2 this year (see below).

The high price of cotton is a mixed blessing for cotton circulation enterprises. The relatively low initial price of the seed cotton has brought a larger profit margin to those enterprises that own cotton processing and purchasing capacity; and for those pure cotton trading enterprises that are fully dependent on the sale of lint to make the price difference, the lint price of soaring cotton prices has also caused a sharp rise in the cost of procurement. Without sufficient financial support, the trade enterprises will not be able to get the benefits brought by the rise in cotton prices, but they will lose competitiveness because of the limited resources.

From the perspective of cotton demand and cotton output in China's textile industry, China's cotton supply and demand gap will always exist in the coming period, that is to say, the cotton circulation enterprises will still compete in the market. The shortage of cotton resources and the increase of cotton prices and the accession of international cotton producers will bring impact to the traditional industry of cotton processing and circulation, and also urge all cotton enterprises to deal with the new market environment and fierce market competition through innovative management mode. {page_break}

　　 Development status and distribution of cotton processing and circulation industry

Cotton production and consumption in China have been on the rise since 2000/01. Although consumption has declined slightly from the impact of the financial crisis in 2008, it has picked up again in recent years. Output has declined slightly in recent years due to the decrease in cotton planting area. Overall, the total output of cotton in China is less than the total consumption, and the gap has been widening in recent years.

Cotton production and consumption in China in 2000/01-2010/11

Unit: 10000 tons

In recent years, with the rapid development of cotton textile industry, the market demand for cotton has been increasing. Although the original small cotton ginning mill is being eliminated, the number of cotton processing enterprises is still large. According to statistics, there are only more than 1600 enterprises that have only 400 cotton processing plants in China, but most of them are small in scale and relatively dispersed in capacity. These cotton processing and circulation enterprises are mainly distributed in several large cotton producing areas such as Xinjiang, Shandong, Hebei and Hubei.

Distribution map of cotton processing and circulation enterprises in 2010

Unit: Home

Note: the above figure only takes the cotton processing and circulation enterprises with 400 type processing factories as the statistical objects. {page_break}

　　 Two. Prediction of the overall scale of cotton processing and circulation industry

China is the largest cotton producer and consumer in the world, and the cotton industry plays an important role in our national economic system. After the financial crisis, the domestic textile enterprises gradually improved, and the demand for cotton increased. The cotton processing and circulation industry maintained a steady development trend. It is estimated that cotton prices will continue to run at a high level in the next few years, and domestic cotton will remain in a state of insufficient production for a long time. The scale of the entire cotton processing and circulation market will remain relatively stable on 2010, with little growth.

2007/08 - 2013/14 sales and forecast of cotton processing and circulation industry in China

Unit: 100 million yuan {page_break}

　　 Three, cotton circulation industry development trend

Under the influence of many factors such as fluctuating cotton prices, long market gaps and importing cotton traders entering the domestic market, all cotton circulation enterprises should adjust their business philosophy to actively cope with the challenges. Combined with China's national conditions, we should give full play to the advantages of localization and walk out of the industrialization development path of "Chinese cotton merchants".

　　 1. Control cotton resources with cooperative mode.

More and more cotton processing and circulation enterprises are aware of the importance of controlling the upstream cotton resources. However, how to protect the interests of enterprises and cotton farmers under the fluctuating market environment has always been one of the problems that cotton enterprises are constantly exploring. The mode of "professional Cotton Cooperative", which is led by cotton enterprises to participate in cooperatives, provides a brand new way for achieving win-win situation between cotton processing and circulation enterprises and cotton growers. The main feature of the model is to increase the participation of cotton rural cooperative economic organizations in the traditional cotton production and acquisition links, organize farmers scattered by cooperatives, guarantee the cotton planting area and cotton farmers' income through the "order agriculture" and "bottom purchase price", and then strengthen the cotton farmers' trust and dependence on the cooperatives through the "two rebates" after the cotton processing and circulation, so as to ensure the enterprises to obtain stable cotton resources (see below).

Hubei Yinfeng cotton Limited by Share Ltd introduced the cooperative mode of "enterprise + cooperative + cotton farmers" earlier. After continuous exploration and development, the "Yin Feng mode" that enjoys a certain reputation in the industry has been formed. Hubei Yinfeng cotton Limited by Share Ltd has founded and handled more than 20 cotton professional cooperatives in the main cotton producing areas of Hubei province. The area of radiation cotton planting is 580 thousand mu, which drives more than 5.3 households of farmers. The cotton purchased by farmers every year is nearly 100 thousand tons. {page_break}

　　 2, use financial market tools to avoid market risks.

Foreign cotton traders are familiar with the international cotton futures market, and have a high degree of recognition of futures hedging. They can skillfully use futures tools to control risks and lock in profits. Cotton futures in China were listed on the Zhengzhou Mercantile Exchange only in June 2004. It has just entered the seventh year, and the market participants are mainly arbitrage. Most cotton enterprises have not yet learned to use futures market tools to avoid risks. With the increase of the price fluctuation of cotton, the cotton processing and circulation enterprises are facing more and more risks in the acquisition and sale of cotton. Therefore, the introduction of futures hedging tools will be a necessary guarantee for the steady development of cotton processing and circulation enterprises in China and the transformation from "cotton traders" to "cotton merchants". After the opening of cotton futures in 2004, Hubei Yinfeng cotton Limited by Share Ltd began to use futures market hedging, successfully evaded the risk of cotton price fluctuations, and ensured the stable economic benefits of enterprises. Hubei Yinfeng cotton Limited by Share Ltd's "order + futures" mode has been highly affirmed by the Hubei Securities Regulatory Commission and the Zhengzhou commodity exchange, and has been promoted by the Zhengzhou commodity exchange as a futures demonstration unit nationwide.

　　 3, improve the industrial chain to enhance the overall profitability of enterprises.

From the most upstream cotton farmers to the most downstream cotton mills, the whole cotton processing and circulation process includes acquisition, processing, procurement, warehousing, logistics, and transaction. Due to institutional and financial constraints, all cotton enterprises have relatively independent business division. The main business of the traditional cotton circulation industry is to extend the industrial chain in the aspect of procurement and sales. The advantages of the industrial chain are mainly embodied in three aspects: 1, reduce the cost of each link through the extension of the industrial chain; 2, the integrity of the industrial chain ensures that the company can directly control more resources; 3, the profit level of different links can be obtained through the industrial chain. Such as Sichuan cotton and hemp Group Co., Ltd. has formed five major business sectors, such as cotton industry, polyester staple fiber, textile processing, warehousing and logistics, foreign trade import and export, etc., because the industrial chain is relatively complete, the overall profit level is further enhanced.

　　 4, its own cotton warehousing and logistics capabilities will effectively enhance the competitiveness of enterprises.

Because cotton has the characteristics of "seasonal acquisition, centralized processing and full year sales", after the acquisition of cotton from cotton farmers in the cotton purchasing season, it needs to be stored in the warehouse. Insufficient storage capacity will restrict the capacity of cotton purchasing, processing and purchasing of the circulation enterprises, and directly affect the scale of operation of the enterprises. Therefore, large cotton processing and circulation enterprises have built or expanded warehouses to build a professional cotton warehousing and logistics base. Such as Hunan Yinhua cotton and Hemp Industry Group Co., Ltd. in September 2009, built 100 thousand tons of cotton logistics center with the functions of "electronic commerce delivery, online supermarket, circulation base, supervision and distribution". It is one of the most modern and large scale cotton logistics bases in Hunan and even the whole country. The professional cotton storage and logistics has further enhanced the core competitiveness of the company.

Therefore, it is foreseeable that through professional co-operative control of cotton resources, giving full play to the hedging function of financial instruments, and constantly improving the industrial chain, and improving its own capacity of cotton warehousing and logistics will be the development trend of China's cotton processing and circulation enterprises in the future.