Sun Ruizhe: Innovation And Development Of China'S Textile Industry Under Great Changes

In June 26th, the Forum on "innovation and development of textile and garment industry under the great changes" was held during the "helping Henan clothing industry - the 2020 brand clothing live broadcast conference". Sun Ruizhe, President of China Textile Industry Federation, delivered a keynote speech.

Innovation, development and Prospect of China's textile industry under great changes

Sun Ruizhe, President of China Textile Industry Federation

June 26, 2020

Distinguished leaders and guests:

Hello everyone! I am very pleased to meet with you in Xiping to exchange the current situation and talk about the future of the industry.

At present, we are experiencing a historic juncture. The total number of new global crown pneumonia has reached nearly ten million, which is more than 1/1000 of the total population of the world. Under the big picture of a hundred years of change, the new crown has undoubtedly become an important variable affecting global development. The latest outlook, released by the world bank in June 8th, predicts that the global economy will shrink by 5.2% this year, the worst recession since World War II. The proportion of the economy with declining per capita output will reach the highest level since 1870. At least 60 years, emerging market and developing economies will contract for the first time. Under the pressure of development, some countries are moving against the tide for short-term interests. Trade protectionism is rising and geopolitical conflicts are deepening. Global development is facing enormous systemic risks.

These great changes bring us a profound lesson: human beings are closely related to each other's destiny. The ultimate value of all political and economic activities must be happiness for the people. The textile and garment industry is pursuing the value of "real", "good" and "beautiful". It is such an industry that benefits the people of China and the world.

01 responsibilities and missions of China's textile and garment industry

The responsibility and mission of the textile and garment industry is to constantly satisfy people's new expectations for a better life and promote national prosperity, national rejuvenation and people's happiness. Such responsibilities and missions are concentrated in three major relationships.

First, the relationship between products and people. This is essentially the relationship between supply and demand, and the process of supply is the process of continuously satisfying the needs of product elements. The evolution of textile fiber materials from natural to natural to natural and ultra natural is behind the upgrading of human survival needs, life needs, quality needs and development. As a multi value carrier, the pursuit of multiple functions and beautiful forms reflects the value of people's "quality, taste and conduct". With the improvement of function and performance, textile products play an increasingly important role in the fields of national economy and people's livelihood and major strategic areas. Textile products are the deep integration of technology and fashion, and the development aesthetics of production, life and ecology. The trend of people's consumption demand upgrading will not be reversed, and the role of textile products in satisfying people's fine life can not be replaced.

The two is the relationship between enterprises and society. Society is the great environment for the development of enterprises, and enterprises are building social ecology. In the process of adaptation and construction, textile enterprises and society realize the exchange of spirit and material. Textile enterprises are important creators of social wealth. As the main supplier of important livelihood products, textile enterprises continue to create material wealth, flourish the regional economy and drive the development of related industries. Textile enterprises are important exporters of social innovation. From material innovation, product innovation to design innovation, mode innovation, from basic research, production management to digital economy, textile enterprises have strong innovation vitality. Industrial chain length, high degree of correlation and high degree of regionalization make textile enterprise innovation have significant spillover effect. Textile enterprises are important undertakers of social responsibility. The huge economic volume, employment capacity, high degree of internationalization and marketization determine that the industry and enterprises are important positions to promote social responsibility construction.

The three is the relationship between industry and the state. The textile industry is a powerful undertaker for the industry to serve the country and the powerful and enrich the people. It plays an important role in realizing the great rejuvenation of the Chinese nation. Industry is an important supporting force for the construction of a modern power. The complete industrial system and systematic innovation ability make the textile industry have strong international competitive advantage and the most potential industry department to take the lead in building a strong country. Industry is an important supporting force for building a moderately prosperous society in an all-round way. As the pillar industry and livelihood industry of the national economy, the textile industry plays a constructive role in stabilizing growth, promoting employment, benefiting people's livelihood and preventing risks.

Industry is an important supporting force for the construction of human destiny community. As a key area of international high-quality production cooperation, the textile industry has strongly promoted the industrialization and industrial development of the relevant countries. Industry is an important supporting force to establish cultural self-confidence. As a cultural carrier, the development of the industry carries the creative transformation and innovative development of contemporary culture.

It should be said that the responsibility and mission, value and responsibility of the textile industry have been fully reflected in the epidemic. Facing the impact of the epidemic, China's textile industry has played an important role in safeguarding life and health, stabilizing people's livelihood and promoting economic development. From March 1st to May 31st, China exported anti epidemic materials to 200 countries and regions, including 70 billion 600 million respirators and 340 million protective clothing, which strongly supported the global epidemic prevention and control. The development of the industry has greatly promoted the implementation of "six stability" and the "six guarantees" task.

02 development status of China's textile and garment industry

With the strategic results of China's epidemic prevention and control, the industry's production order has basically recovered, and the domestic demand market has gradually recovered. The main economic indicators of the industry have improved marginal. Although the economic downturn is still under great pressure, the situation is gradually changing to the right direction.

Production growth has slowed down. The capacity utilization rate of textile industry is below normal level, but the rate of decline in production continues to narrow. According to the National Bureau of statistics, 1~5 months, the industrial added value of textile industry above Designated Size Enterprises decreased by 8.2% compared with the same period last year, the decline narrowed by 3.1 percentage points compared with 1~4 months, and the growth rate in May was negative. Among them, the industry, chemical fiber and filament weaving industry has become the main driving force for growth. In May, the industry's textile and finished products manufacturing industry was driven by centralized production of masks, protective clothing and other anti epidemic materials. It showed a 88.3% high growth rate. The chemical fiber weaving and printing and finishing industry gradually increased by 6.7% when the consumption of domestic demand gradually recovered, and the cumulative decline narrowed to 2.9%. The chemical fiber industry, driven by the downstream market and the rise in crude oil prices, showed a 4.3% increase. The decline narrowed to 2.9%. The clothing and apparel industry and household textile industry were affected by the shrinkage of terminal demand. The industrial added value in 1~5 months decreased by 12.8% and 10.6% respectively. Textile machinery manufacturing industry added value decreased by 20.8% compared to the same period last year. The major categories of textile products, except for non-woven fabrics, have decreased compared with the same period last year. In 1~5 months, the output of chemical fiber, yarn, cloth and clothing decreased by 3.2%, 18.1%, 27.6% and 17.9% respectively.

Market demand is insufficient, but the decline continues to narrow. Affected by the epidemic, domestic consumption of textile and clothing commodities is still weak, online and offline sales have declined sharply compared with the same period last year, but the decline has narrowed. According to the National Bureau of statistics, in 1~5 months, the retail sales of clothing, shoes and hats and needle textiles decreased by 23.5% compared with the same period last year, and the decline was narrowed by 5.5 percentage points compared with that in 1~4 months. To compensate for offline losses, textile companies generally strengthen online channel construction, and online retail sales continue to narrow. In 1~5 months, the online retail sales volume decreased by 6.8% over the same period last year, a decrease of 5.2 percentage points from 1~4 months.

In 2020, "618 Shopping Festival", Jingdong and Tmall accumulated a total of 269 billion 200 million yuan and 698 billion 200 million yuan respectively, all of which were innovative records, of which clothing, shoes and hats and needle textiles ranked first in the retail sales of the whole network. With the export of anti epidemic materials, the decline of trade exports has gradually narrowed. According to China Customs express, 1~5 textile and apparel exports in China decreased by US $96 billion 160 million in the month of 1~5, representing a decrease of 1.2% over the previous 4 months, narrowing by 0.7 percentage points compared with the same period last year. Among them, the export volume of textiles increased by 21.3% over the same period last year, and the proportion of exports increased to 60.3%. Clothing exports continued to decline, and exports dropped by 22.8% over the same period last year.

The scale of investment has been greatly reduced. Under the influence of the epidemic, industry enterprises generally lack investment confidence and ability, and the scale of investment has shrunk dramatically. According to the data of the National Bureau of statistics, the fixed assets investment in textile industry decreased by 30.5% compared with the same period last month in 1~5 months. In terms of industry, investment in textile, chemical fiber and garment industries decreased by 26.2%, 23.2% and 39.2% respectively. From the regional perspective, the total investment in the five eastern coastal provinces has shrunk significantly except Zhejiang province. The investment in clothing and apparel industry in Jiangsu, Fujian, Shandong and Guangdong has decreased by 68%, 44.9%, 50.4%, 80% respectively.

In the central region, Hubei was seriously affected by the epidemic. The investment in textile industry, clothing industry and chemical fiber industry decreased by 75.2%, 69.8% and 62.4% respectively. The investment in clothing industry in Anhui and Henan provinces decreased by 47.9% and 31.4% respectively. In the western region, the investment amount of three sub sectors in Xinjiang is negative growth, and the investment in Sichuan chemical fiber industry has dropped by 70.5%. Due to the small base, the investment growth rate of Shaanxi and Gansu provinces is relatively high.

The benefit situation has deteriorated significantly. With the serious shortage of demand and the sharp decline in production and sales, textile enterprises' income has been greatly reduced and profits have shrunk. According to the National Bureau of statistics, in 1~4 months, 33 thousand Textile Enterprises above Designated Size achieved operating income of 1 trillion and 194 billion 250 million yuan, down 19.7% from the same period last year, and realized a total profit of 37 billion 700 million yuan, a decrease of 32.1% over the same period last year. The operating profit margin of enterprises was 3.2%, less than 0.5 percentage points in the same period last year. In the 12 sub sectors of textile industry, except for the positive growth in the profits of silk and industrial sectors, the other sectors are under pressure. Among them, the deteriorating situation of chemical fiber, textile machinery and cotton textile industry is more prominent. Specifically, the total profit of chemical fiber industry decreased by 60% compared with the same period last year; the total profit of textile machinery industry decreased by 56% compared with the same period last year; the total profit of cotton spinning industry dropped by 49.2% compared with the same period last year. In 1~4 months, the loss of textile enterprises above Designated Size reached 33.3%, an increase of 11.2 percentage points over the same period last year, and the deficit of loss making enterprises increased by 44.1% over the same period last year. The total assets turnover and finished product turnover rate were only 0.9 times / year and 10.3 times / year respectively, representing a slowdown of 22.7% and 27.5% respectively over the same period last year. The three fee ratio of enterprises is 7.5%, which is 0.4 percentage points higher than that of the same period last year.

Faced with the enormous pressure of the epidemic, industry enterprises actively promote innovation in the field, channel innovation and market innovation. Many enterprises take the epidemic as an opportunity to extend the industrial chain and expand the market for medical protective equipment. Focusing on channel innovation, industry enterprises rely on cost-effective products supply chain, actively layout live broadcasting providers, and create demand through enhanced interaction experience. At present, clothing products have become the largest trading category in live goods. In terms of market readjustment, many foreign trade enterprises promote the adjustment of export to domestic sales through their own adjustment, with the help of Alibaba and many other electronic business platforms.

03 the situation facing China's textile and apparel industry

Under the epidemic situation, the characteristics of the world's 100 year change are more obvious, and the uncertainty and instability of development are more prominent. In the face of unprecedented complexity, we need to identify trends and create new situations in changing situations.

(1) to adapt to the profound adjustment of the production pattern.

With the rising of emerging market countries and developing countries, the division of labor and interest pattern with the core of global value chain cooperation has changed. This has caused some countries to have a certain degree of resistance, unilateralism and trade protectionism continue to heat up. The outbreak of the new crown pneumonia has amplified some of the drawbacks of globalization and further strengthened the atmosphere of trade protectionism. Some countries have begun to seek a new balance between efficiency and security. Building a diversified, safe and controllable supply chain is becoming an important direction of global industrial policy. For example, the recent British plan for "security projects" is intended to reduce dependence on major importing countries such as China. Some countries such as the US and Japan are also trying to guide the return of manufacturing industry. Supply chain layout is the result of long-term evolution of market rules, and the position of China's textile industry in the global value chain will not change in the near future. But reducing dependence on Chinese manufacturing has become an option. This means that China's textile industry has less and less space to seek development in the global value chain, and it is the only way to accelerate industrial upgrading.

(two) to adapt to the market pattern and adjust profoundly.

The world is still in the deep adjustment period after the financial crisis, and the market demand continues downward. The spread of the epidemic has further exacerbated the shrinkage of global textile and clothing consumption. In April, the retail sales of clothing and apparel in the United States dropped by 89.3% compared with the same period last year, while the retail sales of textile and apparel in Japan and the EU dropped by 53.6% and 62.8% respectively. From traditional department stores to fashion retailers, they are under tremendous pressure. PVH group, INDITEX group, GAP and other first quarter sales fell by more than 40%. Many brands and traders cancelled orders, and the industry chain was directly impacted. ITMF's survey of 600 enterprises in the world showed that business orders fell by an average of more than 40% from May 20, 2020 to June 8, 2020. Global business turnover is expected to decline by an average of 32% in 2020. Global sluggish demand is becoming a long-term phenomenon. The importance of the domestic demand market is more prominent. On the other hand, the global trade pattern is focusing on regionalization. The proportion of intra regional trade in goods trade continues to rise, becoming a new feature of globalization. Since 2018, CPTPP, EPA, USMCA and other FTA have come into effect. EVFTA and RCEP will also take effect this year. The adjustment of market structure will have an important influence on the development of textile industry.

(three) to adapt to the profound adjustment of the pattern of factors.

At present, the fourth industrial revolution has sprung up. Technological innovation is causing major adjustments in social productive forces and production relations. Technology has become the core variable of reshaping the industrial structure. The industrial development mode and the industrial boundary have been profoundly adjusted. From the point of view of supply, the cross convergence of technology makes intelligent textiles and multifunctional textiles emerge in large numbers, the connotation of products is constantly enriched, and the application scenarios are constantly expanding. The links of the industrial chain are quickened to the direction of digitalization, networking and intellectualization. The level of lean supply, flexibility and service of industrial supply has been continuously improved. The rapid development and industrialization application of green fiber preparation technology, clean production technology, green printing and dyeing technology and fiber recovery technology are also being deepened. From the perspective of demand, driven by technology, there has been a profound adjustment in the way of resource organization and market connection, and new patterns, new formats and new attempts have been developing rapidly. Especially during the epidemic period, the innovation of live broadcasting, community marketing, network exhibition and other modes effectively made up for the blank of offline channels. The industry must speed up adapting to the adjustment of industrial structure brought by technological innovation and strive to gain competitive advantage in a rapidly changing world.

04 China's textile and garment industry has significant advantages.

Under the changing circumstances, the fundamentals of China's textile industry have not changed for a long time, and the trend of high quality development has not changed. Industry development has significant advantages. We are fully confident and capable of dealing with all kinds of changes.

The first is institutional advantage. The leadership of the party and the socialist system with Chinese characteristics are the biggest advantages of the development of the industry. This point has been fully demonstrated in the epidemic prevention and control. Since the eighteen Party's Congress, the modernization level of the state governance system and governance capacity has been accelerated and China's socialist market economic system has been continuously improved. With the deepening of market-oriented reform, the effective market and the "promising government" have been fully integrated, resources efficiency and enterprise vitality have been fully released; the process of rule by law has been continuously promoted, the competition neutral environment has been quickened, the industrial development has been more standardized, and the market competition has been fairer. From the point of Commerce to finance, the whole economy began to enter a new stage based on rules and system opening. The continuous improvement of the system provides a fundamental guarantee for industrial development.

The two is industrial superiority. The advantages of having a complete and robust industrial system are even more prominent under the epidemic. From the supply of raw materials, design and development, to textile dyeing and finishing, three terminal manufacturing, and brand operation retail, China's textile industry has formed the largest and most complete industrial system in the world. This ensures the independence and safety of the industry. Based on this, the textile industry is one of the few industrial sectors that have the closed-loop innovation capability of the whole industry chain in China. Technological innovation, process innovation, product innovation and mode innovation can be rapidly generated and applied to transform. Cultural and creative attributes precipitate a lot of resources such as design, creativity, IP and so on. The advantages of systematic innovation make China's textile industry increasingly becoming an important source of innovation in the global textile industry.

The three is market advantage. China has the most growing consumer market in the world. In 2019, the total retail sales of consumer goods amounted to 41 trillion and 200 billion yuan. Among them, the total retail sales of clothing, shoes and hats and needle textiles increased by 2.9% over the whole country, reaching 1 trillion and 350 billion yuan. The huge domestic demand market provides support for the industry to play a better role in scale economy, scope economy and network effect. Multi level consumption is an important feature of the domestic market. Relying on the largest middle income group in the world, the upgrading of consumption is the general trend. The process of urbanization is deepening, and the potential of the sinking market is also being released. Internet consumption is maturing and transnational consumption is developing rapidly. Diversification demands multidimensional innovation. The domestic demand market is forming the cornerstone of the industrial high quality cycle.

05 China's textile and garment industry's innovation, development and future

2020 is the decisive year for building a well-off society in an all-round way. It is also the key year for the industry to build a strong textile country. Despite the complexity of the current external situation, China's textile and garment industry is still in an important period of strategic opportunities. To adapt to changing circumstances and win the future, we need to focus on the industrial orientation of "technology, fashion and green". We should take innovation as the fundamental driving force, put it in the core position of the industry, and promote the high quality development of the industry with a new vision, a new pattern and a new mind.

Focus on systematic innovation and build new supply of industries with the core capability as the core. We must strengthen industrial manufacturing advantages, and continuously promote capacity upgrading and lean development. We should optimize the supply of products, pay attention to the innovative application of technology and design in products, and constantly enrich varieties, enhance quality and increase value. We should strengthen the original innovation and basic innovation, reduce the necking project, and focus on the development of strategic industries such as fiber materials, intelligent equipment and other related fields. We should foster cultural confidence and vigorously develop the textile industry culture with Chinese characteristics. We should promote the trend research, design ability and brand building with "masters, big cards and great events" as the starting point. Consolidate the advantages of the system, promote intensive development and enhance industrial concentration. We should constantly upgrade the efficiency of the supply chain of the industrial chain, achieve orderly flow of human property, and link up production, supply and marketing, and the development of large and medium-sized enterprises. We should develop cluster economy and actively promote the construction of world-class advanced textile and garment industrial clusters, and accelerate the formation of an industrial supply system with distinctive characteristics, complementary advantages, regional linkage and coordinated development.

Focus on market innovation and take domestic demand as the basis to form a new industrial cycle. Market demand is the "source of water" and "sunshine and rain" of industrial innovation and development. Under the new circumstances, the industry should develop an open economy based on the domestic market, and gradually form a new development pattern with the domestic big cycle as the main body and the domestic and international double circulation as the main force. We should make full use of the relationship between the domestic demand market and the global market to promote the docking of domestic and foreign trade resources with the market and reduce the cost of transformation. We should increase the opening up of industries and realize the flow of products, technology, production capacity, brand and capital in a wider range, wider fields and higher levels. On the one hand, we should give full play to the positive role of the domestic super large market in enhancing the total factor productivity of the industry, and promote industrial upgrading and trade upgrading with the upgrading of domestic consumption. On the other hand, we should give full play to the characteristics of differentiated and multi-layer demand in two international and domestic markets, and drive diversified technological innovation and product innovation with demand orientation.

Focus on digital innovation, take the digital economy as the background to cultivate new industrial kinetic energy. Digitalization, networking and intellectualization are the major trends of economic and technological transformation. The integration of digital economy has given the industry the opportunity to restructure its comparative advantages and realize the "asymmetric" catching up. On the one hand, we must strengthen the construction of information infrastructure, integration of infrastructure and innovation infrastructure. We should speed up the development of industrial and enterprise level industrial Internet platforms and big data centers. On the other hand, we should strengthen application innovation around intelligent equipment, intelligent operation, intelligent products and intelligent services. Promote the digital transformation of the way of industrial organization and market connection. We will vigorously develop new manufacturing models such as interconnection manufacturing and mass customization, and create intelligent and flexible supply chains. We will further enhance the breadth and depth of e-commerce in the industry, and cultivate new formats and new scenarios such as live economy, platform economy, shared economy, and community economy.

Focus on sustainable innovation and create new industrial value with the emphasis on social responsibility. Good value is one of the most distinctive characteristics of the textile industry. Globally, corporate social responsibility is being integrated into the industry's production system, value system and innovation system. We should continue to enrich the tools and methods of social responsibility, further promote social responsibility into the development strategy of industries and enterprises, integrate into the production and promotion of products and services, and integrate into the various links of value chain and industrial chain. We should deepen the people-oriented responsibility, take the industrial innovation and development better meet the needs of people's beautiful life, pay attention to the universality of development, and promote the policy of poverty alleviation and employment priority. We should deepen environmental responsibility, strengthen cleaner production and green innovation, and actively create green supply chains for industries and develop green low-carbon circular economy. We should deepen market responsibility, improve the integrity and trust mechanism of the industry, and promote the fairness and justice of the whole society and the all-round development of workers.

"There is nothing in the accumulation of force, but in the wisdom of all." Let's adapt to the trend, take responsibility, focus on innovation, coordinate resources to promote development, and create a better life for the people with the high quality development of China's textile and garment industry.

Thank you!