Textile Industry: Steady Growth Will Become A Possibility

In the four quarter of 2012, the major economies in the world textile China's textile and garment export growth has ushered in a year-end performance with a slight increase in the import and export demand for clothing narrowed and the ASEAN market has greatly increased the demand for textile and clothing imports.

 

According to customs data, China exported textile products to the world in 2012. clothing 262 billion 600 million US dollars, an increase of 3% over the same period last year. Although it is still a small increase in export prices, the export volume is still rising slightly, but the export volume has been slightly reduced, but exports have maintained a positive growth, and there has been a slight improvement in the four quarter. It has become a fine day in the gloom of China's textile industry in 2012.

From the recent indicators in January 2013, the overall export data growth rate continued to improve, and also strengthened our judgement of textile and clothing exports. According to customs express data, China's textile and apparel exports reached US $24 billion 691 million in January 2013, an increase of 14.8% over the same period last year.

With the parabolic decline of the world economy, the operation of our national economy is also slowing down. In 2012, the growth rate of GDP in China was 7.8%, which has reached a low point in recent years. Although our domestic demand market is showing signs of wave adjustment despite the slowdown in domestic economic growth and product price increase, it still plays a leading role in stimulating domestic economic growth.

Although the growth rate of total retail sales in China showed a trend of "V" in 2012, there was a slight slowdown after the Spring Festival. However, the consumer market gradually began to heat up in the second half of the year. The contribution rate of consumption to economic growth in the three quarter exceeded investment for the first time since 2006. According to projections from relevant departments, the total social sales volume in 2012 amounted to 20 trillion and 700 billion yuan, and the contribution rate to economic growth increased from 51.6% in 2011 to around 55%.

Our country Textile industry It also benefited from the growth of the domestic demand market. The "positive energy" of domestic sales has become an important guarantee for the operation of China's textile industry in 2012. According to the statistics of National Bureau of statistics, the domestic sales value of China's textile industry was 47804 billion yuan in 2012, an increase of 12% over the same period last year, and the share of sales value increased to nearly 84% compared with the previous year.

From the perspective of the industry chain itself, although the upper bound industry is subject to the impact of rising cost of raw material consumption and pressure, it has shown a rapid decline in profits since the beginning of 2012. However, after the second half of the year, the profit margins of cotton spinning and chemical fiber industry gradually narrowed down. At the same time, the sub sectors close to market terminals, such as clothing, home textiles and industrial use, are developing at a faster pace. Thus jointly promoting the whole industry's profit growth rate gradually stabilized, and also released a positive signal for the industry to rebound steadily.

On the whole, the fourth quarter of 2012 showed a moderate trend of development. However, it is undeniable that the price of textile raw materials has fluctuated greatly, and the prices of production factors such as labor force and fuel power have continued to rise, resulting in the increasing cost pressure of enterprises. All these factors determine that the cost pressure will become the norm in the operation of the industry. Especially domestic and foreign cotton price inversion problem is serious, in the short term is difficult to alleviate the solution.

Looking forward to the 2013 world economic outlook, under the complex and variable environment, we have seen a glimmer of dawn in the icy cold wind. Although the slow growth of the world economy will become the norm in the future, the pace of global economic recovery is expected to accelerate in 2013. At the same time, the favorable conditions for domestic economic recovery are also increasing, and the effect of the series policy of "steady growth" will be further manifested. Under such a macro environment, China's textile industry will continue to grow further and will become a probability event.

Global markets are generally facing trade difficulties.

Economic growth continues to slow down, making countries and regions in the world facing serious employment problems and debt problems, increasing trade disputes, increasing commodity prices and financial market turbulence. The downturn in demand in the international market is also inevitable. In 2012, the growth rate of Global trade was only 3.2%, lower than the previous year's growth rate of 1.7 percentage points, even lower than that of 2010's growth rate of 10.8 percentage points.

The third lowest growth rate of the global economy in the past 10 years

Looking back in 2012, the global economy continued the downward trend in 2011, and the economic recovery was staggering and the challenge exceeded expectations. International agencies such as the United Nations, the world bank and the International Monetary Fund have repeatedly lowered global economic growth expectations.

IMF predicted in October 2011 that global economic growth in 2012 was 4%, and world GDP reached US $73 trillion and 700 billion. However, a year later, IMF reduced global economic growth to 3.3% in 2012, and the world economy dropped to 71 trillion and 280 billion US dollars. This growth rate is far below the 5.1% growth rate in 2010 and 3.8% in 2011. It is the third lowest growth rate in the past 10 years after 2008 and 2009.

GDP shrinking in developed economies

From the US perspective, the decline in GDP in the four quarter of 2012 was largely due to a sharp reversal in corporate inventories and a sharp drop in federal defense spending, which reduced the economic growth by 1.3 percentage points by two. This seems to indicate that the US economy remains weak but steady 1% to 2% growth momentum at the fundamental level. However, since the end of the recession in 2009, the US economy has reported contraction for the first time, which is a blow to confidence and highlights the uncertainty caused by fiscal policy.

From the EU perspective, the EU economy continued to slump in 2012, and the euro zone economy even fell into the second recession in 3 years. According to the European Commission's autumn forecast, GDP in the European Union and the euro area is expected to shrink by 0.3% and 0.4% respectively in 2012. Europe's sovereign debt crisis continues to ferment, which is the main reason for the continued downturn in the EU economy. In the past year, the European Union, especially the euro group, has been able to solve all the problems of the sovereign debt crisis. The European debt crisis forced EU Member States to tighten fiscal policy, which directly led to the EU economy in trouble.

Weakening of engine role in emerging market countries

In the past 10 years, emerging economies have been growing fastest in the global economic map, especially in the international financial crisis since 2008, playing the role of the "new engine" of the world economy, and becoming an important support force for the global economy to get out of the recession. However, in the past two years, the most beautiful scenery in the world economy is somewhat inferior. Affected by the European debt crisis and the US economic downturn, the external demand has dropped sharply, resulting in the export of traditional markets blocked. It also includes factors such as the weakening of internal demand dynamics in emerging countries, the outflow of international capital, the increase of production costs and the reduction of policy stimulus space. The adjustment of domestic economic structure in the emerging countries is also slowing down the pace of economic growth to a certain extent.

Cost pressures increase to become operational normality

It is undeniable that the price of textile raw materials fluctuates greatly, and the prices of production factors such as labor force and fuel power continue to rise, which results in the increasing cost pressure of enterprises. All these factors determine that the cost pressure will become the normal operation of the industry. Especially domestic and foreign cotton price inversion problem is serious, making China's textile industry has undertaken a heavier cost burden of cotton spinning raw materials.

Labor costs in Southeast Asia still have great advantages.

From the perspective of labor cost, in recent years, all walks of life in China are facing the problem of rising labor costs. In recent years, China's labor costs have shown a relatively obvious upward trend. According to statistics, the average annual salary of urban employment personnel increased from 10834 yuan to 36539 yuan in 2001~2010 years, with an average annual growth rate of 14.6%, with an average annual growth rate of 12.4%. On the one hand, the improvement of the income level is indeed a favorable factor to improve the domestic market demand and stimulate the consumption of the residents. On the other hand, for our labor intensive textile industry, the increase of the workers' wages means a significant increase in the cost of labor.

Nowadays, the price of labor force in China is much higher than that in Southeast Asia and other surrounding areas. Though starting from January 1, 2013, many Southeast Asian countries will simultaneously raise the minimum wage standard. But compared with China, the cost of labor in Southeast Asia still has great advantages. This has also become an important impression factor for the relevant competitive countries to develop the textile industry and the loss of some international market orders to Southeast Asia.

The average price difference between domestic and foreign cotton is 5536 yuan / ton.

The more obvious cost factor affecting the textile industry is the enlarging of the domestic and foreign cotton price difference, which results in the heavy cost of domestic cotton textile raw materials. In 2012, affected by the shortage of demand, the international cotton prices showed a downward market performance, while domestic cotton prices remained high under the support of temporary purchasing and storage prices, resulting in the growing price gap between domestic and foreign cotton. According to the relevant market data, the average price of domestic cotton in January 2013 was 5536 yuan / ton higher than the average price of international cotton. The spread of price differentials has resulted in a serious decline in the competitiveness of China's cotton textile industry chain and an increase in the cost of production.

Industry exports increased slightly by 3% over the same period last year

China's textile and clothing exports have increased slightly in the past year, thanks to the common market demand for imports and the slow growth of demand and the explosive growth of demand in emerging markets. According to our customs data, in 2012, China's total exports of textiles and clothing amounted to US $262 billion 600 million, an increase of 3% over the same period last year.

Us, EU and Japan import growth is improving.

Although the US economy contracted unexpectedly in the fourth quarter of 2012, its consumption structure increased by 2.2% at an annual rate, 1.5 percentage points for economic growth, and 8.4% growth in annual investment. The residential investment increased by 15.3% on an annual basis. These data indicate that fundamental needs are in good health. Data show that the import growth rate of imports of textiles and garments from the United States has significantly narrowed compared with the three quarter. According to the US Department of commerce data, in 2012, 1~11 months, the United States imported 93 billion 500 million dollars of textiles and clothing from the world, down 0.88% from the same period last year, the decline narrowed by 0.22 percentage points compared with the first three quarters of 2012.

Source: US Department of Commerce, EU statistics bureau, Japan Finance Ministry

Although the EU market is also a manifestation of confidence in its overall recovery, its decline in commercial inventories has also led to the narrowing of imports from the global market for imports of textiles and clothing. According to the European Bureau of statistics, in 2012 1~11, the European Union imported 84 billion 700 million euros of textiles and clothing from the world, down 4.95% from the same period last year. The decline narrowed by 1.34 percentage points compared with the three quarter.

According to Japanese customs data, 1~11 months in 2012, Japan imported 31210 billion yen of textile and clothing from the world, an increase of 1.73% over the same period last year, and the growth rate of imports continued to increase by 0.74 percentage points over the three quarter of 2012.

ASEAN has strong demand for textiles and clothing in China.

In addition to the slight easing of import demand fatigue in traditional markets such as the US, Europe and Japan, what is more important is the strong demand for Chinese textiles and clothing in the ASEAN market in the fourth quarter of 2012. According to our customs data, in 2012, China's exports to ASEAN textiles and clothing amounted to US $27 billion, an increase of more than 35% over the same period last year.

Growth of China's textile and clothing exports

Central and western enterprises to participate in New York exhibition increased significantly

Not only statistical data, but also the spring exhibition of China Textile and clothing trade exhibition (New York) has ended in 2013. In this spring New York exhibition, more than 100 exhibitors in China, double the previous spring exhibition, and showcase an area of nearly 2000 square meters. Not only did the old exhibitors in the past exhibit a strong willingness to participate in the exhibition continuously, but also from the regional distribution of exhibitors, besides the traditional textile developed areas, the exhibitors in the central and western regions increased significantly. It also reflects the improvement of China's textile and clothing export situation.

The proportion of domestic sales to enhance the "positive energy"

Although our domestic demand market is showing signs of wave adjustment despite the slowdown in domestic economic growth and product price increase, it still plays a leading role in stimulating domestic economic growth.

Consumption contributed more than investment in the three quarter of last year.

Although the growth rate of total retail sales in 2012 showed a trend of "V", there was a slight slowdown after the Spring Festival, but the consumer market gradually began to heat up in the second half of the year. The contribution rate of consumption to economic growth in the three quarter exceeded investment for the first time since 2006. According to projections from relevant departments, the total social sales volume in 2012 amounted to 20 trillion and 700 billion yuan, and the contribution rate to economic growth increased from 51.6% in 2011 to around 55%.

Textile industry accounted for nearly 84% of domestic output value.

China's textile industry also benefited from the growth of domestic demand market, and the "positive energy" of domestic sales has become an important guarantee for the operation of China's textile industry in 2012. According to the statistics of National Bureau of statistics, the domestic sales value of China's textile industry was 47804 billion yuan in 2012, an increase of 12% over the same period last year, and the share of sales value increased to nearly 84% compared with the previous year. The strength of the domestic market has become an important factor to compensate for the shortage of exports in 2012.

Industry chain upstream and downstream to promote industry rebound

In 2012, from the perspective of the industry chain itself, although the upstream industry was constrained by the impact of rising cost of raw material consumption and pressure, it showed a sharp decline in profit from the beginning of the year. However, after the second half of the year, the profit margins of cotton spinning and chemical fiber industry gradually narrowed down. At the same time, the sub industries close to market terminals, such as clothing, home textiles and industrial use, are developing at a faster pace. Thus jointly promoting the whole industry's profit growth rate gradually stabilized, and also released a positive signal for the industry to rebound steadily. National Bureau of statistics data show that in 2012 1~11 months, China's chemical fiber industry profits fell by 15 percentage points compared with the first half of 2012, the cotton textile industry profits increased by 9 percentage points compared with the first half of 2012.

Interpretation of "demonized" inventory reduction

The clothing industry inventory crisis is exaggerated.

In 2012, the domestic media published an objective report on the inventory problem of the apparel industry in China, which was "three years" for the country's apparel enterprises. The lack of correct understanding of the clothing industry has been criticized as "extremely irresponsible" by the industry. To be precise, clothing inventory needs to digest for a period of time in the normal consumption process.

Inventory is the industry characteristics of clothing as a seasonal product in the process of operation. At present, as the domestic market consumption is weak, the increase of some clothing brand stocks does not affect the production and operation of these brands, and can not be regarded as the "inventory crisis" of the whole garment industry. Inventory is the finished product sold by the enterprise in the normal production and operation process, or in order to sell products that are still in production process, as well as materials and materials consumed in the production process and labor process. Therefore, it is necessary to further analyze the inventory structure of the garment industry.

"Irrational inventory" faces digestion treatment

The stock composition of the brand clothing enterprise generally includes the spare parts, unsalable and defective goods in the finished goods warehouse, as well as the spare raw materials and excess raw materials inventory in the raw material warehouse, and the inventory in the channel includes direct store inventory and dealer inventory, in transit inventory, that is, the inventory in the logistics section. Among them, unsalable, defective products and surplus raw materials are the unreasonable stocks that need to be dealt with.

Of course, it is undeniable that some enterprises do exist problems such as inventory backlog and turnover. However, we must see that the category of "inventory" contained in the financial reports of clothing listed companies is obviously broader, not merely referring to the "backlog and unsalable products" of the general concept. According to the inventory data in the clothing listed companies' earnings, it is not suitable for the garment industry to identify all of them as "backlog and unsalable products", and it is also unscientific.

Towards the goal of power in the middle of 12th Five-Year

Stage results witness implementation

"12th Five-Year" is an important period to push China's textile industry from strong to strong. The "12th Five-Year plan" is going to be more than half. During the two years of inventory planning and implementation, in the face of the complex and changeable economic environment at home and abroad, the export volume of China's textile industry has been growing at an average annual rate of 11.3%, and the total labor productivity growth has been obvious; the adjustment of the whole industry's regional structure and the pace of product structure adjustment have continued to strengthen; the work of energy conservation and emission reduction and brand building has continuously stepped to a new stage; the capability of scientific research in the whole industry has been continuously enhanced; the construction of the standard system of the industry is also continuously improving. A series of achievements have become an important witness for China's textile industry to stride forward towards the "12th Five-Year" goal and move towards a textile power.

The policy of "steady growth" is larger.

China's policy space for "steady growth" is still relatively large. In terms of monetary policy, the deposit reserve ratio remains at 20%, which is higher than the 1985~2012 year average value of 8 percentage points. In recent years, China's deposit reserve ratio has risen to the present high level. The main reason is that this policy instrument has been given the function of hedging foreign exchange and so on. It is expected that the hedge pressure will be significantly reduced in 2013, and the deposit reserve ratio will still have a big drop. From the perspective of fiscal policy, China's fiscal deficit in 2012 was only about 1.5%, plus the debt of local government financing platform, the proportion of government debt balance in the total economy was about 40%, and the space for more positive fiscal policy is still larger. Structural tax reduction has always been an important part of the proactive fiscal policy. The series of tax reduction policies supporting small and micro enterprises will continue to be effective in 2013, and the expansion of the scope and scope of the business tax reform VAT will be conducive to stimulating investment in service industries and expanding private investment. In addition, the implementation rules of "new non-public 36" in 42 sectors are expected to provide a good market environment for private economy and SMEs.

The world economy is expected to be slightly better than last year.

Looking forward to the 2013, the global uncertainties are still more, and the economic recovery will still be slow. Although the slow growth of the world economy will become the norm in the future, the macroeconomic policies of the major economies are at a loose state, and the world economy is expected to be slightly better than the previous year. Coupled with the favorable conditions for the domestic economic recovery, the effect of the series policy of "steady growth" will be further manifested. Under this macro environment, we are confident that we will look forward to the development of the industry cautiously and optimistically. It will become a probability event for our textile industry to maintain further growth in 2013.