To Accelerate The Development Of The Industrial Internet, How Many Opportunities Exist Under The 5 Trillion Scale Of China'S Textile Industry?

First look at a set of data, citing the speech of Hou Xi, vice president of China Textile Association, at the expert forum of 2019 national manufacturing power construction.

In 2018, the main business revenue of China's textile enterprises exceeded 5 trillion yuan, accounting for 5.9% of the revenue of manufacturing owners' business, and the total profit was 276 billion 610 million yuan, accounting for 4.9% of the manufacturing sector's share.

In that year, the proportion of China's textile exports accounted for 11.1% of the total merchandise exports of the country. When the total net foreign exchange earnings reached 250 billion 190 million US dollars in the whole industry, the net earning capacity of the textile industry was outstanding, contributing 71.1% of the total.

In addition, China's status as the world's first textile producer and exporter has not been shaken, and exports account for about 1/3 of the world.

A large amount of historical data is enough to show the strong strength of China's textile industry as the first of the four elements of "clothing, food and shelter", and the textile industry has played an important role in the national economy for a long time.

Up to now, the state is speeding up the construction of the industrial Internet, because the development patterns and domain knowledge of the industrial subdivision scenarios are not the same. As the key component of the manufacturing industry, the textile industry has been singled out for a separate analysis, including the "13th Five-Year development plan" of the textile industry, which clearly defines the goal of China's textile industry as a whole to maintain a relatively fast growth. And according to market research, the majority of industrial Internet service providers have chosen the textile industry as the focus area, which indicates a larger room for development.

The production capacity is very scattered, and the market share of the head company is less than 1%.

The reason why China's textile industry maintains a leading position globally is not related to the complete textile industry chain in China.

Take clothing textile manufacturing as an example, upstream fibers and other raw materials are spun into yarns in the spinning mill, then transferred to the middle weaving plant for weaving and dyeing and printing. Then they are circulated in the market in the form of finished fabrics and transferred to the downstream garment factories. Finally, they are produced and supplied to garment brands by garment factories, such as familiar UNIQLO, NIKE, Adidas and so on.

Statistics show that China's textile industry as of November 2019, there are 18305 enterprises, including a large number of small and medium-sized enterprises. The quantity is dynamic, for reference only, but it can excavate the composition characteristics of the textile industry: the concentration degree is not strong, the market is extremely dispersed.

According to a previously compiled data from Huaxing capital:

In the field of yarn manufacturing, the yarn income of listed companies such as Baron East and Huafu fashion in 2018 is about 5 billion 730 million yuan and 7 billion 220 million yuan respectively, and the market share is less than 1%.

In the field of grey cloth production, the head fabric of Wei Qiao textile company in 2018 was about 6 billion yuan. In the trillions of gray cloth market, the market share was less than 1%.

In the field of printing and dyeing, Jiangsu Sheng Hong group and hang min share, which have the highest capacity of printing and dyeing fabrics in China, account for only about 4% and 2% of the total capacity of the country.

In the field of garment manufacturing, there are about 40 garment manufacturers in the market. The number of manufacturers above the scale (the main business income is more than 20 million yuan) accounts for only about 5%, and the Shenzhou International Company, which is located in the leading position, accounts for less than 1% of the total annual revenue of the company in 2018.

Old problems and new troubles emerge at the same time.

Textile enterprises face life and death exams

Old problems refer to the short board of the industry, and new troubles refer to the changing industrial environment.

As mentioned above, the textile industry is highly fragmented, with large and small factories in their respective battalions, backward technology and equipment, low level of informationization, lack of innovation capability, serious homogenization of products, low gross profit, and lack of capacity coordination ability of the whole industry to a certain extent.

Now, what makes the old problem more obvious is the change of the industrial environment.

First, the demand for the market has changed, and the textile industry has changed from the incremental market to the stock market. In the era of increment, small and medium-sized textile enterprises are able to obtain large profits even though extensive production mode is adopted. However, with the weakening of downstream demand, extensive management methods are difficult to achieve in the stock age, and the phenomenon of oversupply and backlog of small and medium enterprises often happens.

Followed by personalized demand began to emerge, small single fast reverse trend. The change from demand side often brings tremendous pressure to the supply side. According to the industry disclosure, the number of orders for small and medium-sized textile enterprises over 10000 meters has decreased significantly in recent years, while the number of orders for hundreds of meters has risen rapidly. The operation mode of traditional postpartum sales is defective, and the demand side has challenged enterprises to make flexible production and rapid production.

Once again, the problem of soaring costs. Traditional textile enterprises are characterized by labor intensive. Early domestic cheap labor assistance has gained performance. However, with the continuous increase in labor costs in recent years, enterprises even have difficulty in recruiting workers and recruiting workers. The cost of normal operation of textile enterprises is getting bigger and bigger.

And the international environment is affecting the export trade of textiles. Besides the impact of Sino US trade war, the trend of the transfer of some medium and low end production capacity to overseas is unavoidable due to the increase in domestic labor costs and preferential export policies. Meanwhile, Southeast Asia and South Asia are also increasing the intensity of competition from the domestic market share, and some downstream orders are beginning to drain. Due to the impact of the epidemic this year, the demand for textile and cotton fabrics is declining globally, and the growth of textile orders is beginning to fail.

Referring to the smile curve, the domestic textile industry is more located in the middle position, and the added value or profit margin is relatively low. The main task in the future is to evolve towards high value-added technologies such as technology, patents, and brands and services.

In fact, there are also lessons to be learned globally. Today, the developed countries have basically no traditional textile industry, but the earliest textile industry originated in the United Kingdom, and with the development of the country, low value-added parts have been transferred to the United States, Japan, new Asian countries, China, and the trend of being transferred to Southeast Asia. At this point, domestic textile enterprises seize the opportunity to transform and upgrade the most important.

The rise of industrial Internet and the way to break through bottlenecks

Since there is a lack of synergy between the upstream and downstream industries, the leading industry Shenzhou International focuses on the middle and lower reaches. The business scope covers a number of vertical integration processes of fabric production, printing and dyeing and garments, and the effect is remarkable in shortening the delivery period. But this mode requires heavy asset investment, which is not enough for small and medium-sized enterprises with small revenue.

At present, many third party companies in the industry are providing diversified service modes to empower the vast textile enterprises.

In September 2019, Zhi Bu Internet announced the completion of the $100 million C round of financing, led by Tencent and Sequoia Capital China fund, broadband capital and investment. Through the data sharing between the Internet of things and cloud ERP, the company independently develops the MES system of textile industry, completes the informatization and data management of the textile production process, and at the same time, it connects the enterprises of the textile industry chain of N, including garment factories, weaving factories, printing and dyeing factories, etc., on the one hand, it concentrates on the order of garment factories, on the other hand, it adopts intelligent scheduling and scheduling to improve the industry. Upstream and downstream docking efficiency and product efficiency, reduce target customer procurement costs and shorten delivery cycle. It is reported that Zhi Bu Internet has completed the scale of profits of tens of millions of yuan in 2018.

In December 2019, the textile B2B platform announced the completion of the D round of $300 million, making it the largest single round of financing in China's textile and textile industry so far. There are two major business segments of Bai Bo, which are the upstream grey fabric factories and a group of businessmen. They jointly build the intelligent cloud factory of grey cloth production, and connect a group of manufacturers with the downstream small and medium-sized garment factories, and establish a trade platform for high-quality finished cloth. According to the data, hundreds of billions of sales have been achieved in 2019. The AIoT equipment in the upstream production sector has laid over 100 thousand looms, covering 8% of the whole industry loom and covering 70% of the finished products and products. It is expected that in 2020, the number of loom looms covered by 100 AIoT equipment will reach 400 thousand, and the loom productivity coverage rate will exceed 26%.

Zhi Bu Internet and Bai Bu are two typical enterprises which are concerned by capital and colleagues.

First, we should aim at the middle reaches cloth factory to help increase the number of orders and optimize the production schedule.

The two is for downstream garment factories or clothing brands to help shorten the delivery cycle and reduce procurement costs.

If we look at it further, we will implement the equipment intellectualization, supply chain coordination, industry data model establishment and data analysis. Besides, the domestic textile industry is facing the tightening of the environmental protection policy. If it helps enterprises to optimize energy consumption and environmental protection management, it can be regarded as a path.

In view of this, the transformation path of the domestic textile industry is still in its infancy, and the industry still has much room for improvement.

As to whether it will usher in a take-off period because of the policy of "accelerating the development of industrial Internet", the third party company with huge volume will be born.