Four Factors Leading To Sluggish Growth Of The Textile Industry

A few days ago, the Ministry of Industry and Information Technology of the People's Republic of China analyzed the operation situation of China's textile industry in the first half of the year and pointed out that since 2012, due to the weakening of international market demand, slowing growth of domestic market demand, excessive price difference between domestic and foreign cotton and other factors, the operation of China's textile industry has shown a downward trend, the production growth rate has dropped significantly, the number of exports has decreased, and the enterprise benefits have declined, Losses at the front end of the industrial chain (cotton spinning, chemical fiber) increased. It is expected that the operating situation of the textile industry will be difficult to improve significantly in the second half of this year.

　　 Textile enterprises Profits continue to decline

The data shows that the profits of the whole industry continue to decline, and the losses of enterprises expand. In the first five months, textile enterprises above designated size realized a total profit of 91.7 billion yuan, down 2.4% year on year, and the growth rate was 40.5 percentage points lower than the same period last year; The loss of enterprises above designated size reached 18.6%, 5.4 percentage points higher than that of the same period last year; The loss amount of loss making enterprises increased by 128.5% over the same period last year, and the growth rate increased by 122 percentage points over the same period last year. Among them, the profit of chemical fiber industry dropped by 50.1% compared with the same period last year, and that of cotton yarn processing industry dropped by 5.9% year on year.

From January to May, the total industrial output value of textile enterprises above designated size nationwide totaled 2144.9 billion yuan, up 11.8% year on year, 18.3 percentage points lower than that of the same period last year.

While enterprises are losing money, although the industry's export still keeps growing, the growth rate of domestic demand declines. Statistics show that in the first five months, China's textile and clothing exports reached 90.6 billion US dollars, an increase of 2.1% year on year, which is lower than the 8.7% growth rate of the total national merchandise exports.

The growth rate of investment in the whole industry also slowed down, and the proportion of investment in central and western regions continued to increase. From January to May, China's textile industry accumulatively completed 261 billion yuan of fixed asset investment in projects with more than 5 million yuan, up 18.5% year on year, and the growth rate dropped 17.7 percentage points compared with the same period of last year, 1.6 percentage points lower than the growth rate of the whole society's fixed asset investment in the same period. Among them, the investment in the central region increased by 21.5% year on year, accounting for 29.4% of the country, 0.7 percentage points higher than the same period last year; The investment in the western region increased by 28.4% year on year, accounting for 7.8% of the national total, 0.6 percentage points higher than the same period last year.

Four main reasons affect industry growth

The Ministry of Industry and Information Technology believes that there are four major problems affecting the operation of China's textile industry. The lack of market demand is the main factor. At present, the overall domestic and foreign macro-economy is in a downward trend. The impact of the European sovereign debt crisis is still spreading, and the subsequent impact of the international financial crisis continues to emerge. The international market continues to be depressed and the prospects are uncertain. In 2011, the global textile and clothing imports of the United States increased by 8.6% over the previous year, while only 3.4% from January to April this year. EU demand also declined significantly. From January to May, China's exports to the EU fell by 11.2%. The domestic market is affected by high prices, lack of market confidence and other factors, and also shows a slowdown trend.

The continuous expansion of cotton price difference at home and abroad has also affected the operation of China's textile industry. Since the fourth quarter of last year, the difference between domestic and foreign cotton prices has been widening. As of July 5, the difference between domestic and foreign cotton prices was about 4500 yuan/ton. The increasing price difference between domestic and foreign cotton has seriously weakened the international competitiveness of China's textile industry.

From January to May, China's cotton yarn exports fell by 9% year on year, Imported cotton yarn The year-on-year growth was 78%, the import of pure cotton grey cloth increased by 133%, and the export of cotton products decreased by 3.4%. The loss of cotton textile enterprises tracked by China Cotton Textile Association reached 40%, and the production reduction and shutdown of spinning enterprises with less than 30000 spindles reached nearly 50%. Xinjiang is a region mainly engaged in the production of cotton textile primary products. At present, the loss of textile enterprises has reached about 65%, the sales revenue of the whole industry has dropped by 25%, and the loss of the whole industry has exceeded 300 million yuan.

The intensification of international market competition is also an important factor affecting the operation of China's textile industry. Affected by the increase of China's comprehensive factor cost and the improvement of textile competitiveness of neighboring countries, some purchase orders in the international market have gone to Southeast Asian countries, and China's market share of textile and clothing products in major developed countries has declined.

According to US customs data, from January to April, the total amount of textiles and clothing imported by the United States from China accounted for 36.1% of its imports of similar products from the world, down 4.04 percentage points from 2011; According to Japanese customs data, from January to April, Japan's total imports of textiles and clothing from China accounted for 73% of its imports of similar products from the world, down 1.95 percentage points from 2011. In the same period, India, Vietnam, Bangladesh and other countries have increased their market share in the United States and Japan.

The high domestic financing costs led to a 28.6% year-on-year increase in interest expenses of textile enterprises above designated size from January to May, 18.4 percentage points higher than the growth rate of main business income in the same period, while the growth rate of interest expenses was only 6.8 percentage points higher than the growth rate of main business income in the same period last year. In the case of a sharp slowdown in production and sales growth, a large amount of interest expenditure has become another bottleneck restricting the development of textile enterprises.

The loss area may expand in the second half of the year

The Ministry of Industry and Information Technology pointed out that from the perspective of the global situation, the international economic situation is still not optimistic, there are unstable factors in the political situation, local regions are in frequent turbulence, and the downturn in international demand will continue; From the perspective of the development environment of the industry, it is difficult to completely improve the problems such as the continuous increase of production costs such as employment and the difficulty in financing in the short term, the gap between domestic and foreign cotton prices is still widening, and the development environment of the textile industry is still grim, which cast a shadow on the development of China's textile industry.

However, the good news is that domestic economic policies have improved. After the deposit reserve ratio and interest rate have both been lowered, more "stable growth" measures are expected to be introduced, which may promote China's domestic economic situation to stabilize and improve, and become an important support for the industry's operating trend. Industry analysts believe that, on the whole, textile enterprises will still be in a difficult situation in the second half of the year Clothing export It will continue to grow at a low level, and the loss area of enterprises and the loss amount of loss making enterprises will be expanded. More medium, small and micro enterprises will face the risk of being eliminated.