The Current Situation Of Textile And Apparel Industry Under The Financial Crisis

The speed of the global economic deterioration in 2008 has constantly challenged the limits that various industries can afford, and the operation of Chinese textile and clothing has also been in a low ebb.

According to the trend of finished product sales, China's textile and garment industry chain can be divided into two parts, namely, export and domestic retail. About 60%-70% of the industry's income is related to international exports. About 30%-40% is related to domestic retail.

The main driving factor of export is the global economic situation, and domestic consumption demand depends on the direction of China's economy.

Affected by the global economic crisis, export growth began to descend from April 2008. Although exports rebounded slightly in October, because of the unclear international economic situation, it is still difficult to have inflection points in 2009.

However, China's textile and garment exports have obvious advantages in scale, cost and industrial chain matching. This advantage has been consolidated by importing countries in the economic downturn in the procurement of cheap products, while importing countries are also inclined to purchase large quantities of goods from single exporting countries to reduce the cost of purchasing and purchasing. Therefore, the international competitive advantage of Chinese textile and garment exports is still optimistic.

With the growth of China's economy and the increase of residents' income, the growth of domestic textile and clothing consumption has begun to enter an ascending channel.

A group of enterprises that grew up through brand operation, channel construction and supply chain management began to stand out from manufacturing leaders who are good at cost control, process improvement and equipment localization.

The proportion of domestic income from the retail sector rose.

There is no doubt that the pulling effect of exports on the industry has been weakening, and domestic demand will become a new driving force in the industry.

But the industry is still oversupply.

In the 1-9 month of 2008, the growth rate of the main products of the industry continued to increase slightly. The stock of textiles and clothing increased by 33.10% and 25.09%, respectively, showing that the contradiction between production and demand remained.

At the same time, raw material prices are decreasing.

The production cost of textile and garment industry accounts for 60%-70%, which is the main factor affecting production cost.

In the case of sufficient supply of raw materials, the price trend of raw materials is determined by industry demand.

In addition, various factors of raw material circulation can also cause fluctuations in raw material prices.

Textile industry is one of the most labor-intensive industries in the national economy. The government often adjusts the profitability of the industry through various industrial policies, and the adjustment of export tax rebate rate is most commonly used and most effective.

China's textile and garment export tax rebate has gone through three adjustment cycles, such as 1995-1996 years' reduction, 1998-2001 years' increase and 2004-2007 years' reduction, with the lowest level being 6%, the highest being 17%.

It is worth noting that after 1998-1999 serious losses in 1997, the government has raised the export tax rebate rate for the three time in a row. The policy intention of supporting the industry is very obvious.

Under this stimulation, the industry profits began to bottom in 1998, and the industry profit realized a rebound point in 1999.

It can be seen that the export rebate rate plays a significant role in the industry.

The adjustment effect of export tax rebate rate on industry profits is achieved through general trade in exports: for a 100% general trade export enterprise, the export tax rebate rate rises by 1%, and its gross margin will also increase by 1%.

At present, about 60% of the income of China's textile and garment industry comes from exports. About 70% of the total trade is exported (30% of which are processing and processing trade, not involving export tax rebates), that is, the gross profit margin of general trade, which accounts for 42% of the industry's income, has increased by 1 percentage points, and gross margin of the whole industry will increase by 0.42 percentage points.

If the industry profits are calculated in accordance with the projected level of US $184 billion 900 million in 2008 and the level of exchange rate 6.83, the general trade export volume can reach 884 billion yuan.

The export tax rebate rate will increase by 1%, and the industry will increase the total profit by 8 billion 800 million yuan.

In 2008, snow disaster, earthquake, stock market bubble burst and economic recession were expected to continue to hit consumer confidence. However, domestic and retail sales of textile and apparel industry continued to maintain a high growth rate of more than 25% in 1-9 months, exceeding the market expectation, until October.

On the one hand, it comes from the lag reaction of textile and clothing products consumption to the economy, on the other hand, it also shows the good defense characteristics of the industry in the economic downturn.

Yang Jing: editor in charge