China Garment Industry Second Quarter Prosperity Index Report

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The overall operation of the industry is stable and the profit margin needs to be improved.

The report on the prosperity index of the apparel industry shows that in the two quarter of 2011, the prosperity index of the apparel industry was 99.7 points (=100 growth rate in 2005), a slight increase of 0.3 points over the previous quarter, and the warning index of the clothing industry was 100 points, down 20 points from the previous quarter.

In the two quarter of 2011, under the combined influence of many favorable factors such as the temporary cotton purchase and storage system and the continuous decline of cotton prices and the adverse factors such as the high cost of domestic labor and the financing difficulties of small and medium-sized enterprises, the operation of China's clothing industry has undergone complicated changes: the index of prosperity has risen slightly, the early-warning index has returned to normal; the growth rate of exports, employment, investment and other indicators has been speeded up to different degrees, the output has decreased, sales revenue and profit have slowed down compared with the same period last year, and the profit margin of sales has also dropped from a record high.

Despite many difficulties, garment manufacturing enterprises are running normally, and the prosperity index of garment manufacturing industry has increased by 8.7 points in the two quarter.

To a certain extent, this reflects the positive role of many favorable factors in the future operation of the garment manufacturing industry.

In the three quarter, the situation of China's garment manufacturing industry is becoming more and more complicated.

favourable

The operation of the industry tends to be normal.

Prosperity: a slight increase

In the two quarter of 2011, the prosperity index of the Chinese clothing industry was 99.7 points (the growth rate of =100 in 2005), a slight increase of 0.3 points over the previous quarter.

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After further eliminating the random factors, the prosperity index of the clothing industry in China is 99.2 points (see the blue curve of the garment industry prosperity chart), which is lower than the business climate index (red curve) which is not excluded from the random factors, and is contrary to the operational index of the business climate index which does not exclude random factors.

As shown in the figure, the business climate index, which exclude random factors, has experienced a downward trend since the three quarter of 2009. It moved downwards in the two quarter of this year, and widened the gap between the prosperity index curve which did not exclude random factors.

This shows that in the two quarter of 2011, under the positive influence of a number of macroeconomic policies, such as the pre harvest cotton reserve, the temporary cotton storage and storage system and the stable export tax rebate, the pulling effect of favorable policies has appeared, but its endogenous growth momentum is not strong, and even has a downward trend.

Early warning: down to normal range

In the two quarter of 2011, the apparel industry early warning index was 100 points, down 20 points from the previous quarter.

Lights: from "yellow" to "green"

In the two quarter of 2011, the warning signal of the garment industry was changed from "yellow" to "green".

Among the 10 indicators of clothing industry early-warning index (excluding seasonal factors and reservations of random factors), there are 2 indicators in the "blue light district", namely, clothing production and the capital occupation of finished products in garment manufacturing industry (reverse); there are 2 indicators in the "light blue light" area, namely, the sales revenue and total tax amount of clothing manufacturing industry; there are 3 indicators in the "green light district", that is, clothing export, the number of employees in garment manufacturing industry and the total profit of garment manufacturing industry; there are 3 indicators in the "red light district", that is, producer price index of clothing manufacturing industry,

From the change of lights, compared with the first quarter of 2011, there were 7 indicators in the two quarter, such as clothing export volume, producer price index of garment manufacturing industry, number of employees, occupied capital (reverse), total tax, total investment in fixed assets and accounts receivable (reversal).

There are 3 indicators of lights change, of which clothing production indicators from "red light" to "blue light", clothing manufacturing profits from "yellow light" to "green light".

Output cut prices and investment returns to new heights

Production: year-on-year decline.

After preliminary seasonal adjustment, China's clothing output in the two quarter of 2011 was 4 billion 300 million, down 37.2% from the same period last year, and the ring ratio decreased by 51.2%.

Price: year-on-year fall

In the two quarter of 2011, garment manufacturers came out of the factory.

Since the three quarter of last year, prices of raw materials such as cotton, chemical fiber and other raw materials have risen, and labor costs have risen, boosting the cost. This indicates that China's garment manufacturing industry has entered a period of high cost.

Since the two quarter of 2011, although the price of cotton has continued to fall, the impact on the cost of garment manufacturing enterprises is relatively limited, and the cost is still at a high level compared with the same period last year.

At the same time, the sharp increase in labour costs, the increase in the price of refined oil, and the increase in prices of chemical fiber raw materials provided conditions for the further rise of clothing prices in the two quarter.

But at the same time, the price of clothing will be subject to certain restrictions if cotton prices continue to fall and the State implements temporary cotton purchase and storage system and market demand.

Exports: the year-on-year growth rate has accelerated, and the decline in the chain has continued to expand.

After preliminary seasonal adjustment, the export volume of clothing in the two quarter of 2011 was 31 billion 490 million US dollars, up 33.6% from the same period last year. The year-on-year growth rate was 24.2 percentage points faster than that of the previous quarter, a decrease of 9.1%, a 3.6 percentage point increase over the previous quarter.

In the two quarter of 2011, the acceleration of garment export growth was mainly due to the large increase in the price of clothing exports in the early stage. The export volume has been greatly improved in the case of the decrease in the number of garment exports.

Compared with the first quarter, the number of orders is small and the delivery time is shorter.

Domestic enterprises to export

Sales: year-on-year slowdown, near historical lows

After preliminary seasonal adjustment, the sales revenue of clothing manufacturing industry in the two quarter of 2011 was 300 billion 360 million yuan, up 13.3% from the same period last year, up 3.5 percentage points from the previous quarter, and the growth rate was 5.8%.

Profit: decline in sales profit margin

After preliminary seasonal adjustment, the total profit of garment manufacturing in the two quarter of 2011 was 15 billion 290 million yuan, an increase of 25.3% over the same period last year. The growth rate dropped by 16.7 percentage points from the previous quarter, and the rate of decline was accelerated. The rate of decline was 13.4%, a 0.6 percentage point increase from the previous quarter.

In addition to the continuous high cost of raw materials and labor costs, the garment manufacturing industry is also facing the pressure of RMB appreciation and financing difficulties and high financing costs. Garment manufacturing enterprises, especially small and medium-sized enterprises, have been operating in a small profit and the ability to pass on the impact of rising costs is not strong. At present, they compete for the production of orders and guarantee production at no cost of export. Therefore, the profits of enterprises have dropped significantly. The total profit of garment manufacturing in the two quarter has increased further than the previous quarter.

From the level of sales profit margin, the sales profit margin (gross profit / product sales revenue) of garment manufacturing industry in the two quarter was 5.1%, 1.1 percentage points lower than that of the previous quarter, and also lower than that of all industrial sales margins (6.2%).

But compared with the historical level, 5.1% of the sales profit margin is still at a relatively high level.

Tax: the year-on-year growth rate has accelerated, narrowing narrower than the decline.

In the two quarter of 2011, the total tax revenue of the garment manufacturing industry was 8 billion 460 million yuan, up 16.5% from the same period last year. The year-on-year growth rate was 4.4 percentage points faster than that of the previous quarter, while the decrease was 12.9%.

Accounts receivable: the refund has been accelerated.

In the two quarter of 2011, the accounts receivable of garment manufacturing industry was 77 billion 250 million yuan, up 17.6% from the same period last year, slowing down 4.2 percentage points from the previous quarter.

According to the calculation, the receivables turnover days of garment manufacturing industry in the two quarter (90* average receivables / quarterly sales revenue) decreased from 26.7 days in the previous quarter to 22.4 days in the current quarter, indicating that the speed of cash withdrawal in garment manufacturing industry has accelerated.

Finished product capital occupation: inventory growth rate slightly slowed down

By the end of the two quarter of 2011, the expenditure of finished products in garment manufacturing industry was 60 billion 140 million yuan, up 31.9% from the same period last year, a slight decrease of 0.9 percentage points over the previous quarter.

Investment in fixed assets: total historical high, sharp increase year on year

After initial seasonal adjustment, the total investment in fixed assets of garment manufacturing industry in the two quarter of 2011 was 59 billion 80 million yuan, a record high, an increase of 87.4% over the same period last year, a 16.5 percentage point increase over the previous quarter.

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Employees: continuous growth

In the two quarter of 2011, the number of employees in garment manufacturing industry was 4 million 375 thousand, an increase of 8.7% over the same period last year, and the growth rate was 1.2 percentage points faster than that of the previous quarter.

Since the beginning of this year, the garment manufacturing industry in China has been faced with the situation of difficulty in employment, rapid increase in labor costs and a large increase in the rate of attrition. Garment manufacturing enterprises are considering the demand for employment and the steady growth of employment as a result of the completion of orders and the loss of employees.

Losses: losses and total losses have declined.

In the two quarter of 2011, the loss of garment manufacturing industry was 14.7%.

Business boom: rapid rise

In the two quarter of 2011, the prosperity index of garment manufacturing enterprises was 139.8 points, an increase of 8.7 points over the previous quarter.

Despite many difficulties, garment manufacturing enterprises are running normally, especially export, profit and sales profit margins, taxes and so on.

The business climate index is used to comprehensively reflect the production and operation of enterprises. In the two quarter, the prosperity index of garment manufacturing enterprises rose. To a certain extent, it reflects the positive role of many favorable factors in the future operation of the garment manufacturing enterprises in the future.

Industry expectations and recommendations

Looking forward to the three quarter of 2011, under the influence of many factors, such as the weakening of the international market demand, the higher demand for clothing environmental labels and exports, and the peak summer of domestic power supply, China's garment manufacturing industry is experiencing prosperity or downtrend.

However, garment manufacturing enterprises are mostly labor-intensive enterprises, which play an important role in attracting employment and maintaining social stability. It is of great significance to ensure the healthy operation and good development of the whole industry.

For this reason:

First, accelerate the pformation of the mode of economic development as the main line, and promote the structural adjustment, pformation and upgrading of the garment manufacturing industry and enhance the overall competitiveness.

Since last year, the rapid increase of cost and the acceleration of RMB appreciation have further highlighted the fact that the competitiveness of China's garment manufacturing enterprises is not strong enough and the level of profitability is low.

For a long time, most enterprises in China's garment manufacturing industry, especially small and medium-sized enterprises, are at the low end of the industrial chain, mainly due to OEM production, lack of innovation capability, low value-added products, few independent brands, extensive growth mode and weak international competitiveness, which seriously affect the sustainable development of garment manufacturing industry.

Faced with the increasing pressure of trade protection and increasing energy saving and emission reduction, the garment manufacturing industry should seize the opportunity of the "12th Five-Year plan" of textile industry to accelerate the pformation of development mode as the main line, intensify research efforts, speed up the elimination of backward technology, technology and equipment, improve the overall quality of the industry through technological innovation and management innovation, and accelerate the pace of industrial restructuring, from the production of low-end and OEM products to the production of high-end products and independent brand products, so as to enhance the added value and brand influence of the products, so as to achieve the pformation and upgrading of the garment manufacturing industry and adjust the industrial structure so as to enhance the overall competitiveness.

Two, the steady appreciation of RMB brings obvious pressure to garment manufacturing export enterprises.

On the one hand, the appreciation of the renminbi has weakened the price advantage of China's clothing export products, causing some orders to be pferred to others.

Three, adjust the export tax rebate policy appropriately, and urge garment manufacturing enterprises to accelerate pformation and upgrading.

Export tax rebate policy to a large extent helps export enterprises win market share, and also ensures that enterprises maintain a certain level of profits, but it also makes quite a lot of enterprises become content with the status quo, and has no incentive to improve their profitability and product competitiveness.

Therefore, we should appropriately adjust and gradually abolish the export tax rebate policy, create a competitive environment for the survival of the fittest, urge enterprises to accelerate innovation and enhance international competitiveness, and help our garment manufacturing industry to speed up eliminating backward production capacity and upgrading pformation.

Four, earnestly formulate and implement support policies for small and medium-sized enterprises.

Small and medium-sized enterprises have difficulty in financing and high financing costs.

In the evening of July 6th, the central bank announced the third increase in interest rates this year. Under the tightening monetary policy, many SMEs have turned to private lending because they can not get enough loans from banks. The high cost of capital has undoubtedly increased the risk coefficient of small and medium-sized enterprises.

Therefore, we should further study and formulate support policies for small and medium-sized enterprises, support the projects with good market prospects and clear employment through special funds and financial institutions credit, and enhance the confidence of small and medium-sized enterprises in production, operation and investment development.