The Loss Is Over 192 Billion! When Will The "Heavy Blow" To China'S Textile And Garment Industry Recover?

At the beginning of 2020, a sudden outbreak gave everyone a head start. The control of epidemic situation caused the national economy to stagnate. From the statistical chart of the textile industry operating rate, we can see that the operating rate in early February was only 30%, which was restricted by the epidemic control and traffic blockade, and had experienced a long recovery period. Up to now, it has not been restored to the same period in 2019, and both ends of the supply have been hit, which is a great blow to the entire textile industry.

Now the epidemic is basically over, but its impact on the industry is lingering. Now we might as well go back to check the damage caused by the epidemic.

2018-2020 years of mainstream textile enterprises start up

1, raw materials and yarns are in the downward range for a long time.

Three major raw material price charts

The above is the three major raw material price chart since 2019. Actually, starting from 2019, textile raw materials are in the downward range. Among the three raw materials, cotton is a relatively strong one, which began to decline in May 2019. At the end of the year, it was affected by the favorable trade between China and the United States, and there was a wave of rebound. Cotton fell to 13% yuan from 15369 yuan / ton in the beginning of the year to 13369 yuan / ton. By the end of 2020, the price of cotton fell to 13601 yuan / ton from the beginning of the year to 11807 yuan / ton in May, and 13 points were also recorded.

Viscose staple fiber decline momentum is irresistible, in 2019 from 13700 yuan / ton fell to 9500 yuan / ton, a total of 30%, and there is no decent rebound. Viscose staple fiber in 2020 showed a relatively low resistance, from a sticky short 9500 yuan / ton down to 8800 yuan / ton, a total of 7.4%.

Polyester staple fiber began to decline in July 2019, down from 8850 yuan / ton in 2019 to 6900 yuan / ton, down 22%. In 2020, the impact of the oil slump began to accelerate, and the trend of stabilization began to stabilize in the near future. By the end of May, it had dropped from 6900 yuan / ton to 5720 yuan / ton, which is 17%. This is the largest decline in the three raw materials this year.

From the overall price fluctuation, the risk of the three raw materials is not small. Cotton fell by 29%, polyester staple decreased by 40% and viscose staple fell by 38%. For cotton textile enterprises, raw material is the main component of cost. When raw material prices are down, warehouses can not be quickly converted into products sold, and they are losing money every day. This undoubtedly increases the difficulty of enterprise cost control and production and operation.

Three categories of yarn price chart

The price of conventional yarns is also declining, which is relatively stable compared with raw materials, but the trend is stronger. In 2019, the total cotton 32S decreased from 23200 yuan / ton to 20635 yuan / ton, which dropped by 11%. Polyester 32S dropped from 13550 yuan / ton to 11335 yuan / ton, and the total 30S dropped from 18350 yuan / ton to 14700 yuan / ton.

In 2020, yarn products were affected by the shrinkage of demand, and the trend of decline was more obvious. The cotton 32S decreased from 20700 yuan / ton to 18700 yuan / ton 9.7%, polyester 32S decreased from 11335 yuan / ton to 13.3%, and cotton 30S dropped from 14700 yuan / ton to 12300 yuan / ton 16.3%.

From 2019 to now, the total 32S of cotton has decreased by 19.4% from 19 to 23200 yuan per ton in January 2nd and 18700 yuan per ton. In April 12th, the polyester 32S19 reached the highest level of 13740 yuan / ton in April 12th, the lowest 9800 yuan / ton in May 9th 20, and 28.7% in the May 9th. The highest 18480 yuan / ton in February 15th 30S19 February 15th was the lowest 12300 yuan / ton.

2, volume and price fell, the losses of enterprises increased.

According to the output statistics of China Cotton Association, the output of yarn and cloth decreased by 20.93% and 29.07% respectively over the first 4 months. The biggest decline in yarn products was cotton blended yarn, which dropped by 32.98%, followed by the largest yield of cotton yarn, down 18.86% compared to the same period, and chemical fiber yarn decreased by 15.09%. Fabric production decreased more, cotton blended fabric decreased by 44.25%, dyed fabric decreased by 37.35%, cotton cloth decreased by 28.55%, and chemical fiber staple fabric decreased by only 13.58%. Affected by the shrinking of consumption, the upper and middle reaches of the entire textile industry are in the process of volume and price dropping.

2011-2020 years of loss making in textile, clothing and apparel industry

According to the statistics of National Bureau of statistics, by the end of 2019, the number of enterprises in China's textile and clothing industry was 13876, of which 2225 were the number of loss making enterprises. In 2020, under the influence of the epidemic, the garment industry faced unprecedented challenges, and the number of deficit making enterprises increased significantly. Data show: as of the first quarter of 2020, the number of textile and clothing enterprises in China was 13113. Among them, the number of loss making enterprises was 4587, compared with 2948 in the same period last year, an increase of 55.6% over the same period last year. Because of the outbreak of the epidemic, the epidemic has had a tremendous impact on the textile and garment factories, resulting in a rapid decline in terminal consumption and a serious accumulation of inventory. Orders for textile and clothing are getting smaller and smaller. During the epidemic period, foreign textile industry is at a standstill, most orders are cancelled or postponed, and the number of loss making enterprises has increased significantly.

3, both domestic and foreign trade cliffs fall.

Retail sales and growth of clothing, shoes and hats and needle textiles

In terms of domestic sales, the total retail sales of consumer goods decreased by 20.5% in 1-2 months, and then gradually recovered, with a year-on-year decline of 7.5% in April, but the consumption of clothing, shoes and hats and needle textiles was even more severe. In the first four months of 2020, the total retail sales of clothing, shoes and hats and needles and textiles were 305 billion 700 million, down 29% from the same period last year. The decline was only slightly smaller than that of gold and silver jewelry. Without the outbreak, according to the growth rate in 2019, the total retail sales of clothing shoes and hats and needles and textiles will be about 442 billion 900 million in 2020, while the actual situation is only 305 billion 700 million, and only 137 billion 200 million of the whole industry will be lost.

According to the General Administration of customs data, exports of spinning, fabrics, finished products and related products were 263 billion 100 million in the 1-4 months, up 5.9% from the same period last year. The increase was mainly driven by anti epidemic items, and the overall growth rate was not significantly different from that of last year. In the 1-4 month, the export garments and accessories 212 billion 500 million decreased by 20.2% compared with the same period last year. According to the 2019 garment export growth rate of 0.3%, the export volume in 2020 was about 267 billion 300 million before 2020, and a loss of clothing exports was about 54 billion 800 million.

The loss of industry caused by the epidemic is roughly estimated at 192 billion of domestic sales and exports. 192 billion what is the concept? There are 30 textile manufacturing enterprises in the A share, and the 30 market capitalization is only 117 billion 800 million, the impact is obvious.

The epidemic is a storm, but the storm is too violent. Some of the ships have been overturned and disappeared. Some ships have been forced to change their routes, but the wind and rain will eventually pass away.

In June the traditional off-season hit, the textile industry is still in a painful period.

Entering the market in June, the market is approaching the normal off-season, and the market confidence of spinning enterprises is low. Regardless of domestic demand or foreign trade, enterprises generally believe that the downstream market will enter the off-season, and the cotton textile industry will face the big test again. Small and medium-sized textile enterprises will again face a crisis of production and downtime.

Domestic demand: low season prelude, small and medium enterprises under pressure

From the time of consumption habits and downstream replenishment, we will enter the off-season in 7 and August, and the order is in a state of slack. Industry experts said that some of the small and medium-sized enterprises may face pressure to cut production, shut down, vacation or even shut down in the month of 6~9.

Export: prelude to holiday, less orders.

The EU generally has high temperature holidays in 7~9 months, and France, Italy and Holland will have at least one month to go. Therefore, the export orders for the market in 6 and July are relatively small, and will increase again after 8 and September. Therefore, the downstream market in 6 and July is generally not optimistic, and the market will not improve until August.

Expert analysis

The impact of the new crown epidemic on China's textile and clothing exports and Countermeasures -- Donghua University Wang Hua

At present, with the gradual control of the epidemic situation, the national textile and garment enterprises are speeding up the resumption of production and production except for Hubei province. However, whether they are raw material prices, product inventory or transportation logistics and export orders, they have encountered unprecedented new problems and new difficulties.

What is the export market in the post epidemic period? Can it still appear as the result of the export trend after the 2003 SARS and the year-round increase in the export volume of textile and garment? This article tries to make an analysis to help the textile and garment enterprises recognize the market changes and improve their contingency and adjustment capabilities.

Epidemic situation after 2020

Textile and garment export market faces severe challenges

According to the analysis of China Textile Industry Economic Research Institute, the export situation of China's textile industry is more severe due to the weakening of external demand and the increase of trade environment risk. According to China Customs data, the total export volume of textiles and clothing in China in 2019 was 280 billion 700 million US dollars, down 1.5% from the same period last year, the growth rate was 5.3 percentage points lower than that of the previous year, but it was 0.8 percentage points higher than the three quarter of 2019. From the perspective of product mix, textile exports amounted to US $127 billion 250 million, an increase of 1.4% over the same period last year, and clothing exports amounted to US $153 billion 450 million, a decrease of 3.7% over the same period last year. From the perspective of market structure, exports to emerging markets performed better than traditional markets. In 2019, the amount of textiles and clothing exported to countries and regions along the belt and road grew by 3.7% over the same period in 2019, while the export volume for the US, Japan and the EU decreased by 6.6%, 4.6% and 4.4% respectively.

We can summarize the impact of SARS and the epidemic on the export of China's textile and clothing products in 2003.

The time of outbreak of the first, second outbreak, the speed and scope of spread of the epidemic are different. The impact of the outbreak is much greater than that of SARS on economy and society. Second, the export environment is different when the outbreak occurs. Under the Sino US trade friction in 2019, the US market is already the third place in China's export market, while Japan is the fourth place. But at present, there are also outbreaks in Japan. Third, the internal and basic conditions of textile and clothing export are different. Sino US trade friction, China's textile and garment industry transfer overseas, the cost of production factors rise, the demographic dividend disappeared and so on. Therefore, in 2020, we will face the test of a more complex environment.

In addition, during the outbreak period in China, the United States tried to improve the US market access threshold. This will give rise to pressure on Chinese textile and garment exports. When competing in the US market, they will face competition from other developing countries that can enjoy government subsidies, and the textile and garment industry chain will shift to Southeast Asia, Eastern Europe and Africa. The next step is to focus on China's various industry subsidies and launch targeted trade surveys to further curb the competitiveness of related Chinese products in the US market. As foreign trade is squeezed, domestic demand may face a period of intense competition, so the supply side reform must keep pace with it.

Product development of textile and clothing and chemical fiber industry

What's the inspiration?

Our country is a large textile manufacturing country and a large producer of chemical fiber. It has a complete industrial chain. Although the experience and emergency reserve of public health emergencies are insufficient, we have a "hard cover" and "one cloth (PP melt blown cloth) hard to find" at the beginning of the epidemic. However, China's mask production capacity has reached 116 million per day, and it is fully capable of ensuring public health and epidemic prevention needs. It can be exported to other countries with epidemic situation. But after the outbreak, we may have to ask: why can masks always be sold out?

In fact, we should notice that the small mask is a big business and the technology of the small mask is high. First, the market of Chinese masks is highly concentrated. From SARS, haze to the current epidemic situation, the mask market is rising with the deepening of public health awareness. Two is the mask technology content is high (materials, technology, standards). The respirator with strong protective function has high requirements for material adherence, filtration efficiency, impedance and die precision. Three, the brand awareness of masks is high. When brand awareness is established, it is also very difficult for consumers to change the existing consumption habits and replace the new ones. In other words, once consumers form consumer cognition, it is difficult to change other brands. Therefore, the market of post infection masks is bound to be fiercely competitive.

Another revelation we get is that the business logic of masks, protective clothing and sanitary textiles has changed. Judging from several major domestic and foreign epidemic events, the market position of masks is high, because masks and protective clothing are included in the strategic material reserves of various countries. Two, the public consumers' hygiene habits and awareness of epidemic prevention have been promoted. Masks, disinfectant and sanitary textiles will slowly change from protective products to daily necessities. A huge market has formed, and industrial textiles will be promising. Three, the marketing mode has changed. SARS in 2003 has made Taobao, Jingdong and other platforms rise rapidly, and online consumption patterns have become more popular among people. In 2020, the new crown pneumonia epidemic situation also led to the emergence of a large number of knowledge paid people, the emergence of live goods and net red, which changed the one-way expression of original picture and text into two way entertainment expression of video and live broadcast. Therefore, we think that protective and sanitary textiles are new consumption demands under the background of big health. This industry is a sunrise industry for sustainable growth.

Current countermeasures and suggestions

Facing the 2020 epidemic crisis is the watershed of many enterprises. How can enterprises save themselves? How can we find new opportunities for development in the crisis? What changes have taken place in market consumption? The epidemic situation has completely changed the external environment of enterprise operation. Most of the business models and business models familiar before the epidemic are not suitable for the epidemic situation, and enterprises' capacity, technological development capability and quick response capability need upgrading and innovation, even production. Industry chain also needs to be restructured, and mode innovation is urgent. The epidemic tests not only the immunity of everyone, but also the immunity and quick response ability of an enterprise. 2020 is the year of full commercial 5G, and AI artificial intelligence + big data +5G+ block chain will bring enormous changes to many industries. The centralization of distributed computing with various timeliness and agility will greatly enhance the efficiency of the whole society. The epidemic will be withering away and let the changes that can be completed in the next 3~5 years come across in a short time. This is a comprehensive physical examination of every enterprise and urges enterprises to make a comprehensive adjustment.

In the face of the re production and product mix adjustment under the epidemic situation, we put forward the following countermeasures and suggestions for textile and garment enterprises:

First, at all levels of the local government level, we must implement a prudent monetary policy + a positive fiscal policy + a big reform and opening up, and reform as a breakthrough to help enterprises implement the policies of the state to deal with the epidemic. Now the central government's policy is available, but the key to the problem is to implement the credit policy of banks to enterprises. We should truly help enterprises and categorized the goblin to help enterprises. All localities should strengthen the docking with financial institutions, strictly implement the requirements of district classification, precise rework and re production, and promote the resumption of production and textile industry in an orderly way. We should optimize the way to reduce taxes and reduce fees, and shift from the current tax reduction pattern that is mainly aimed at VAT to reducing the social security rate and corporate income tax rate, enhancing the sense of enterprise acquisition, and really let the enterprises get tangible benefits and get out of the predicament. SMEs play an indispensable role in China's economy, especially in terms of employment. Local governments at all levels should attach great importance to steady employment, stable economy and stable export. We should understand and implement the policies of the central government and really help the small and medium-sized textile and garment enterprises to help the poor.

Second, at the enterprise level, we should grasp the opportunity of the transformation of the industrial chain from globalization to regionalization, make full use of the "one belt and one road" initiative, and lay a good layout for the capacity and order mechanism of enterprises at home and abroad. China's textile industry is also continuing to plan for the international production cooperation of textiles with the "one belt and one way" country. Israel, Jordan, Pakistan, Vietnam and Indonesia will play an important role in the future China oriented Asian textile industry chain. With the outbreak of Japan, Korea, the Middle East and Italy, China's textile and clothing exports, which are the most active and the largest volume of foreign trade, are bound to bear the brunt. Major epidemic will lead to changes in people's consumption concept. Textile and garment enterprises should grasp the needs of knitted underwear industry in the post epidemic period and the demand for sanitary textiles in the non-woven market. We should further develop our own brand, make full use of the current low interest loans of banks, develop intelligent manufacturing, and docking the industrial Internet and the Internet of things. Establish enterprises to respond quickly to global supply chain, industrial chain and value chain. In terms of scientific and technological innovation, the development and extension of key fiber new materials and intelligent manufacturing related technologies, and the expansion of new application fields of industrial textiles are still the focus of development. Therefore, enterprises should introduce and cultivate skilled personnel, product development talents and new mode of e-commerce marketing personnel, and constantly develop new technologies and functional new products.

Third, at present, the textile and garment market will need time to make a substantial improvement in the upstream and downstream markets, coupled with the spread of epidemics abroad, or will affect global consumption. In the short term, the market situation will not be able to support the growth of textile and clothing exports. However, there will be an explosive growth in the textiles for epidemic prevention. We must seize this favorable window period and promote export of masks, protective clothing and other sanitary and disinfectant textiles to enhance the global market share of China's industrial textiles and make up for the shortfall of exports of other textile and garment exports, so that the export data of the whole year will remain unchanged from 2019. We need not only "the mountains and rivers, the wind and the moon", but also the "green hills together with the rain and clouds, and the moon is the two country." Investment has the help of the central bank. China will rely on the manufacturing capacity of the whole industrial chain and the consumption of large domestic demand. The new economic growth point will appear in the second half of the year. In East Asia, China, Japan and South Korea will forge closer ties through the outbreak of disease, and the situation in East Asia will change unprecedentedly. The China Japan Korea free trade zone is likely to be established in the second half of this year.

General Secretary Xi said: "the Chinese nation is a nation that is more and more brave, and its resilience is unthinkable. Through the baptism of this great epidemic, China will be able to stand at a new historical starting point. It is also sure that some enterprises will take a new step, because the final height of a person or enterprise is not a starting point, but a turning point, because opportunities are turning points. Thousands of sails on the side of the sunken boat. Let's hand in hand and shoulder together to welcome the bright future.