Textile Industry: Grasp The Opportunities Under Industrial Upgrading

Our country Spin The take-off stage of industry was in the late 50~70 twentieth Century, characterized by the planned economy system; the products were mainly made of natural fiber raw materials; production was mainly to meet domestic demand; the market layout was relatively scattered, and the concentration of production was not high. During the great leap forward in 50s, although China imported textile equipment, but due to the lack of skilled workers, coupled with three years of natural disasters leading to the reduction of cotton production, the textile industry has a significant trend of closing, stopping, transferring and transferring, and the production scale has been greatly reduced. According to statistics, the output value and tax revenue of the textile industry have decreased by 1/3 and 1/2 respectively during this period.

In the late 80~90's twentieth Century, China's textile industry entered a stage of rapid growth. The typical feature was the transition from planned economy to market economy, with large numbers of private and foreign enterprises entering. The products were mainly made of bulk textiles and garments; a large number of products were exported, and the textile economy was developing outward oriented economy; and the layout of production was concentrated from scattered distribution to regional concentration. Since 1980s, under the background of reform and opening up, China's textile industry has experienced a period of rapid expansion with the advantage of cheap labor. According to the statistics of wage cost of labor in the world textile industry by German Werner International Inc, China ranked forty-eighth in the 54 countries surveyed in the autumn of 2000, and the cost of labor wages is only 2.6% of Japan and 4.8% of the United States.

In the middle of the 90s, China took advantage of labor costs and other advantages to undertake the low-end capacity transfer from the four small dragons in Asia. However, due to fierce competition in the market, homogenization competition resulted in imbalance between supply and demand. At that time, most state-owned enterprises were heavily burdened with heavy capital and equipment, and the whole textile industry suffered losses for many years. With the rapid development of textile and private enterprises, the textile industry has reached a breakeven point by the end of 90s. The textile industry was a big industry in China at that time and occupied an important position in the whole economic structure. In 1999, the export surplus of the textile industry was 32 billion US dollars, accounting for 70% of the country's foreign trade surplus. According to statistics in 2000, 13 million of the textile industry workers accounted for 13% of the total number of industrial workers in the country, accounting for 11.4% of the fixed assets.

After China joined the WTO in 2001, the biggest beneficiaries were the textile industry with relatively prominent international competitive advantages. In 2004, the proportion of the total output value of textile industry, the proportion of industrial workers and the number of enterprise units reached the peak of this stage.

2005 Consider To the overall interests of the national economy, Chinese enterprises have made a "sacrifice" for the establishment of a new global textile trade order. The active improvement of China's export tariffs has relieved the positive conflicts of short-term trade and the pressure of RMB appreciation, but the textile industry has entered a stage of adjustment. At the same time, the labor cost in China is showing a trend of rapid growth. The labor cost of the textile industry has gone all the way. It has strong competitive advantages compared with the developed countries and the international average. However, compared with the main competitors in Asia, the wage cost of China has no advantage. In 2002, the average wage level of China's textile industry has reached 1.12 times that of India and 1.86 times of that of Pakistan. The two rising countries in the late 1990s are increasingly becoming China's strongest competitors in low value-added and popular textile and clothing products.

In the 2007~2008 year, although European and American restrictions on textiles in China have expired one after another, the relative advantage represented by labor costs has been weakening, which has weakened the competitiveness of China's textile industry in the world. The 2008~2009 year financial crisis has postponed the pressure of rising labor costs. However, in 2011, "compensatory" wages rose, and employee welfare and other standardization indirectly increased labor costs. China's textile industry was increasingly impacted by Vietnam and other countries.

Since 2012, the pressure of labor costs continues to rise, environmental protection and other policy pressures have increased. Industrial transformation and upgrading are imminent. The middle and low end production capacity has been accelerated to Southeast Asian countries. In 2013, Vietnam's textile exports amounted to 23 billion US dollars, accounting for 15% of the total GDP value of Vietnam, and Vietnam resolved 3 million people's employment. The textile industry has become the traditional pillar industry in Vietnam.

Industrial development refers to the evolution process of the continuous progress of industries in a country or region, that is, changes or changes in economic structure, social structure, political structure and sense of consciousness, which are accompanied by the growth of output. The factors that affect industrial development are: 1) demand factors, such as investment structure, personal consumption demand, and so on; 2) supply factors, such as natural resources, human resources, capital supply, production technology system, and so on; 3) foreign trade factors, such as import and export trade, international technology transfer, and so on; 4) besides, economic system factors, environmental factors, etc.

The life cycle curve of industry is the envelope of product life cycle curve. Under normal circumstances, the life cycle of industry is divided into four stages, each stage has different characteristics: 1) the introduction period, the number of enterprises is small, the concentration degree is high; the technology is immature, the product variety is single, the quality is low and unstable; the market scale is small, the demand growth is slow, and the price elasticity of demand is also very small; Industry profits are thin or even the whole industry is losing; barriers to entry are low, competition level is weak, product pricing is different from each other; 2) growth period: large number of manufacturers enter, low concentration of industries; production technology is becoming mature and stable; products are diversified, differentiated, quality improved and stable; market scale increases, demand grows rapidly, and price elasticity of demand increases. Industrial profits increase rapidly and profit margins are high. Barriers to entry are low. inside The competition pressure is great, and the form of competition is mainly price competition. 3) mature period: high concentration of industry and a certain degree of monopoly; mature technology, product differentiation, high product quality, slow growth of market demand, reduced price elasticity of demand, and high profit of industry. Barriers to entry are high, mainly reflected in scale barriers, competitive means to non price means; longer duration is the stable stage of industrial development; if there is technological innovation, there will be a longer period of sustained growth; 4) during the recession: the number of firms is decreasing; demand is decreasing; sales are decreasing; profits are decreasing; new products and substitutes are appearing in large numbers, and the competitiveness of original industries has declined.

For the general industry, its life cycle can be divided into germination stage, growth stage, maturity stage and recession stage. From the perspective of industrial growth, it can be divided into seven sub industrial stages: (1) young industry: in the initial stage of development, because of the scale of production is too small, the cost is too high, the technology is immature, and can not enjoy the advantages of economies of scale and lack of international competitiveness of the industry; (2) emerging industries: industries that are in the stage of growth, showing that the overall market demand of the industry is not large, but the rate of growth is very fast. Even if the proportion of the industrial structure in a short period is very small, it will have a greater effect on the whole industrial structure from a longer period of time. (3) sunrise industry: the further development of the emerging industries, and entering the period of mature technology, declining average cost, expanding industrial scale and increasing market demand. (4) mature industries: showing a slowdown in growth and a relatively stable proportion in the whole industrial structure system. To become a pillar industry is a sign that the new industry will enter a mature stage; (5) declining industries: due to the gradual aging of technology, the gradual shrinking of market demand, and the rising average cost, the industry will gradually decline in scale returns, and the industrial scale will gradually shrink and its position and role in the entire industrial structure will continue to decline. (6) sunset industry: declining industries will continue to decline, they will not get the support from the government, nor will there be a major breakthrough in technology to reform the original technological conditions and will soon withdraw from the market industry or industrial cluster; (7) eliminate the industry: the industry withdrawing from the market due to the aging of technology, shrinking demand, rising costs and long-term losses.

Through sorting out the development history of textile industry, 2004 is the peak stage of China's textile industry development. Since 2008, the operation environment of textile industry has changed greatly. (1) from the demand side, the textile industry as a traditional export strong industry, in recent years, with the rising production cost represented by labor force, it has been divided into low cost countries such as Vietnam and other Southeast Asian countries. Under the current situation, the export advantage is weakening, and the low end production capacity is facing the trend of transfer. From the export data, the increase of garment exports and the import of chemical fiber and textiles continue to increase. In contrast, the rapid industrialization in China has brought about a large increase in the urban population, and the domestic consumer market has expanded rapidly, and the domestic market is easier to enter. (2) from the supply side, China's textile industry has a wider range of textile and clothing production, and chemical fiber, home textiles and industrial textiles are also in the stage of rapid development. (3) from the scale income of the industry, the scale income of textile industry has gradually declined, and the textile industry regulation has gradually reduced and its position and role in the entire industrial structure has been declining. With the slowdown in demand for textile products, the return on investment in textile industry continued to be lower than the average value of various industries and showed a downward trend. In view of the fact that China's textile industry has gradually reduced its scale returns and gradually reduced its industrial size and its position and role in the entire industrial structure due to rising costs, we believe that the textile industry should be attributed to declining industries in a strict sense.

According to the new theory of sustainable development of textile manufacturing industry (proposed by PeterKilduff2003, Professor of North Carolina University), the development of textile industry can be divided into five stages, each stage has its unique industrial characteristics and competitive advantages.

As one of the manufacturing bases of the global textile industry, China's production and processing is the most realistic way for China to participate in the international division of labor. But at present, China's main competitive advantage is no longer a cheap labor force, but a complete and perfect ecological structure. The continuous rise of costs has led to a marked decline in the international competitiveness of China's textile industry. From the perspective of the development of the global textile industry, industrial upgrading is the general trend and the industrial chain will accelerate integration. We believe that the technology upgrading of the middle and high end production capacity and the transfer of low end capacity to Southeast Asian countries are the specific paths for upgrading the industry. The integration of the industrial chain is mainly manifested by the outward transfer of low-end manufacturing links, and the transfer of resources to enterprises that manufacture high value-added products. After several rounds of elimination, the transformation of enterprises in the industry will be significantly differentiated.

The sharp rise in labor costs in the domestic manufacturing industry began to highlight after 2009. In 2011, the labor cost of leading enterprises rose by more than 15%. In addition, with the continuous standardization of labor laws and the rising cost of labor, hidden costs such as five risks and one gold, and the operating costs of staff community supporting facilities (canteens, health rooms, dormitories, cinemas, kindergartens, etc.) aggravated the use of enterprises. Since 2013, the industry has generally judged that the average annual increase in labor costs in the future is still around 10%.

The rise of labor costs is closely related to population structure, and is also related to the lifestyle of the new generation of labor force. In the short term, enterprises can only improve their manual efficiency through technological transformation. In the long run, leading enterprises will inevitably shift part of the cost pressure through continuous upgrading of products, while vulnerable enterprises are facing increasingly severe pressure of survival.

At present, China's textile industry is accelerating upgrading, while the middle and low end production capacity is accelerating to Southeast Asian countries. At the same time, resources are gradually gathering to leading enterprises, and textile enterprises are accelerating transformation and entering the stage of diversified development. Some leading enterprises strengthened their competitive advantages, and embedded resources and capabilities into the whole process of textile production, including downstream spinning, weaving, dyeing and garment manufacturing. Some other leading enterprises shifted from market to non-woven industries, and entered new fields of high speed development and rapid demand expansion, such as photovoltaic, lithium batteries, medical devices and so on. Under the environment of rising cost, vulnerable enterprises are facing more and more severe production pressure.

In the medium and long term, we are concerned about the two leading textile enterprises: one is the world-renowned brand, the future will continue to consolidate the competitive advantage of A, Bailong Oriental, Huafu color spinning, the other is the regional textile leader, with the potential of diversified development; In the short term, since 2014, overseas demand has continued to recover, the market share of indirect leading enterprises in the industry integration, the difference between domestic and foreign cotton prices tends to be reasonable, and the appreciation period of RMB has ended. It is estimated that the performance of leading enterprises in 2015 will be better.

The business risk of disadvantaged enterprises is increasing. Besides the cost rising and directly engulfing profits, the increase of operational risk will lead to a gradual decline in the competitiveness of enterprises' orders. Customers are more likely to concentrate their orders on large enterprises, and resources will gradually be concentrated on leading enterprises. The main business of disadvantaged enterprises will be more difficult, or fail, or switch to, or intervene in emerging industries, or restructuring. Type becomes inevitable.

At the industrial level, disadvantaged enterprises try to make up for the losses caused by backward technology in the market competition through diversified operation, and will accelerate their entry into industries with strong profitability or high speed development. To include food processing and real estate leasing.

At the asset market level, with the help of the platform resources of the capital market, the value of shell resources of the disadvantaged enterprises is becoming more and more prominent. Since the second half of 2013, restructuring events have emerged one after another. We predict that in the coming year, restructuring is still the mainstream capital operation mode of the disadvantaged enterprises. Pay attention to the theme investment opportunities brought by the transformation power of the weak textile enterprises.