China Garment Industry Prosperity Index Report

In the four quarter of 2011, the prosperity index of the clothing industry in China was 97.8 points, 0.4 points higher than the previous quarter, and the industry boom showed a slight upward trend; the apparel industry early warning index was 106.7 points, up 6.7 points from the previous quarter.

Judging from the production and operation of garment manufacturing industry, under the influence of multiple factors such as price increase and domestic and foreign demand weakening, the boom of the fourth quarter garment industry has picked up slightly, and sales revenue, total profit and total tax revenue have increased rapidly, profitability has increased, and the confidence of investment has not dropped. The overall performance of the garment manufacturing industry is better than expected.

However, we should also see that the clothing industry is still facing problems such as continued cold production, weak export growth, high inventory and loss making enterprises.

At home and abroad, the overall demand is weak.

In order to ensure the healthy operation and good development of the garment manufacturing industry, it is suggested that the relevant departments should grasp the timing and intensity of the policy, stabilize the policy expectation, and create a good business environment for the enterprises.

At the same time, the preferential policies to support the development of small and medium-sized enterprises are put into practice.

Garment enterprises should conscientiously promote the strategic adjustment of industrial structure, make good progress in science and technology, cultivate their own brands and enhance their international competitiveness in accordance with the requirements of the 12th Five-Year plan.

In addition, we should do a good job in enterprise management innovation, increase total factor productivity and increase added value of products.

Boom: rebound

In the fourth quarter of 2011, the prosperity index of China's clothing industry was 97.8 points (=100 in 2005), up 0.4 points from the previous quarter. After experiencing a rapid decline in two quarters, the prosperity index of garment industry has picked up slightly this quarter.

Compared with the previous quarter, the 6 indicators of the clothing industry's prosperity index (excluding seasonal factors and retaining random factors) were accelerated compared with the previous quarter, and the sales revenue, gross profit and employment quota of garment manufacturing industry increased year by year. Sales revenue and profit growth were more obvious, while export, investment and tax growth slowed slightly.

After further eliminating the random factors, the prosperity index of the clothing industry in the fourth quarter of 2011 was 95.5 points (see the blue curve in the apparel industry prosperity index chart), which was 2.3 points lower than the index index (see red curve) which did not exclude random factors. It continued the downward trend since the two quarter, and the trend of decline is more obvious.

The above data show that the growth momentum from the garment manufacturing industry continues to weaken, the impact of market factors is still downward trend, the apparel manufacturing industry in the fourth quarter has been declining and rebounded slightly, supported by the state's support for the development of small and micro enterprises, such as financial, fiscal and tax policies and measures.

Warning: maintain "green light"

In the four quarter of 2011, the early-warning index of the apparel industry was 106.7 points, up 6.7 points from the previous quarter, and moved from the center of green light district to the "green light district".

Judging from the change of lights, compared with the three quarter, the 2 indicators rose, that is, the total profit of garment manufacturing increased from "green light" to "yellow light". The sales revenue of clothing manufacturing industry jumped from "blue light" to "green light"; the 1 indicator lights dropped, that is, clothing exports from "yellow light" to "green light".

The remaining 7 indicators remain unchanged.

Production: continue to turn cold

After preliminary seasonal adjustment, China's clothing output in the fourth quarter of 2011 was 6 billion 960 million, down 13.4% from the same period last year, a 5.8 percentage point increase over the previous quarter, a 4.2% increase over the previous quarter, a rapid drop of 51.1 percentage points over the previous quarter.

Sales: faster recovery

After preliminary seasonal adjustment, the sales revenue of garment manufacturing industry in the fourth quarter of 2011 was 523 billion 20 million yuan, an increase of 48.8% over the same period last year, compared with a year-on-year decline of 29% over the same period last year.

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Inventory: high operation

By the end of the fourth quarter of 2011, after the initial seasonal adjustment, the expenditure of finished products in clothing manufacturing industry was 66 billion 690 million yuan, an increase of 32.9% over the previous year, 3.8 percentage points faster than the previous quarter, a year-on-year increase of 0.2 percentage points higher than the two quarter of last year (32.7%).

Clothing inventory continues to run high.

Rising prices and weakening demand are the main reasons for the rising capital expenditure of apparel manufacturing.

In addition, because the garment production cycle is generally one or two quarters ahead, the accumulation of pre high priced stock also keeps increasing the number of clothing inventories.

The seasonality and popularity of clothing consumption also boosted clothing inventory.

Export: sluggish growth

After preliminary seasonal adjustment, the export volume of clothing in the fourth quarter of 2011 was $39 billion 580 million, an increase of 8% over the same period last year. The year-on-year growth rate dropped 18.6 percentage points faster than the three quarter, a decrease of 19.1% compared with the previous quarter, while the growth rate of the last quarter was 55.3%.

Since the beginning of 2011, the main export situation of garment manufacturing industry in China has been the rise in price and the increase in volume. The rising price of export products has become the main reason for the year-on-year increase in the export volume of garment manufacturing industry, which means that the export volume of many products has stagnated or even declined compared with the previous year.

Product prices: the rally is still slowing down.

In the four quarter of 2011, the producer price of garment manufacturers increased by 3.1% over the same period last year, or 0.7 percentage points from the previous quarter.

However, from historical level, the producer price increase of garment manufacturers is still at high level, and has remained in the red light area for 5 consecutive quarters.

Looking at the price trend in 2011, the producer prices of garment producers have maintained a relatively high growth rate, especially in the first quarter, up 4% over the same period last year.

The increasing pressure on labor cost and capital cost has been supporting the rise of garment factory prices, and the fall in cotton prices has also been destroyed by the increase in labor costs and the surge in financial costs.

But at the same time, we should also see that the continuous decline of raw material prices, especially cotton prices, not only affects the material cost of enterprises, but also strengthens the expectation of downstream customers on the price reduction of clothing products, so that the order is reduced.

Coupled with the impact of the overall lack of demand, it is expected that the producer price will continue to fall.

Earnings: significant growth

After a preliminary seasonal adjustment, the total profit of garment manufacturing in the fourth quarter of 2011 was 31 billion 200 million yuan, up 54.3% over the same period last year, faster than the same period

The profit growth of garment manufacturing is mainly attributable to the increase of product prices, rather than the pull of demand, that is, the increase of sales volume.

Enterprises with certain market bargaining power and excellent management ability can promote profit growth faster than sales revenue by raising gross margin or controlling cost and expense.

From the level of sales profit margin, the fourth quarter garment manufacturing sales profit margin (gross profit / product sales revenue) was 6%, slightly lower than the total industrial sales profit margin (6.3%) level, but from the historical data of garment manufacturing sales profit rate, after the rapid fall in the two quarter, the three quarter turned upward, and the fourth quarter garment manufacturing industry sales profit rate reached a record high, showing profitability continued to present a good trend.

Loss: total aggravation

After a preliminary seasonal adjustment, the loss of garment manufacturing in the fourth quarter of 2011 was 11.2%, narrowing by 1.6 percentage points from the previous quarter, continuing the trend of narrowing of the deficit in the past three years, which is equivalent to 11.2% of all industrial losses.

From the total loss, the total loss of garment manufacturing enterprises in the fourth quarter was 1 billion 10 million yuan, while that in the three quarter was 160 million yuan. The total loss in the fourth quarter was several times higher than that in the previous quarter, and the losses in the loss making enterprises increased sharply.

Employment: growth rate continues to fall

After preliminary seasonal adjustment, the number of garment manufacturing workers in the fourth quarter of 2011 was 3 million 543 thousand, an increase of 6.6% over the previous year, down 0.9 percentage points from the previous quarter, and the growth rate of garment manufacturing industry continued to decline.

Investment: rapid growth

After initial seasonal adjustment, the total investment in fixed assets of garment manufacturing industry in the fourth quarter of 2011 was 65 billion 770 million yuan, up 59.8% from the same period last year, a slight increase of 0.6 percentage points over the three quarter, and still maintained rapid growth.

Driven by the upgrading of domestic consumption structure, garment manufacturing industry has developed rapidly in recent years, and fixed asset investment is showing a rapid growth momentum.

According to statistics, from 2011 to November, the total investment in fixed assets of garment manufacturing increased by 41.8% over the same period last year, which is 17.3 percentage points higher than the growth rate of fixed assets investment (excluding farmers) in the whole society (24.5%), which is also higher than the 10.3 percentage point of the 31.5% increase in fixed assets investment in manufacturing industry. 1.