China Knitting Industry Association: Analysis Of The Economic Operation Of The Knitting Industry In 2023

In 2023, the knitting industry will face a complex and severe external environment. The scar effect of COVID-19 infection, geopolitical conflicts, and the intensification of big country games will lead to shrinking overseas demand, insufficient endogenous power, transfer of international orders, and the quality and efficiency of industry operations will be under pressure. However, the whole industry withstood the pressure, overcame difficulties, innovated and changed, and tried every possible way to solve the adverse factors. The industry rebounded as a whole, with marginal improvements in revenue, profits, and exports.

　　 01 The overall industry rebounded and the proportion of knitted clothing continued to increase

According to the data of the National Bureau of Statistics, in 2023, the main business income of enterprises above designated size in the knitting industry will decline by 4.17% year on year, 0.55 percentage points less than that in the first three quarters of 2023. Among them, the business of enterprises above designated size for knitted fabrics dropped 1.78% year on year; The operating income of enterprises above designated size of knitted apparel fell 5.53% year on year. The performance of knitted fabric in weaving is better than that of end knitted clothing.

In terms of the production of knitted clothing, although it has shrunk year-on-year, with the continuous innovation of the consumption scene, the consumption habit has changed to leisure and sports, which has promoted the production process of knitted outerwear fabrics to make great progress; The development and application of knitted clothing products such as shirts, suits, women's coats and sun proof clothes have increased rapidly, and the proportion of knitted clothing has continued to rise. In 2023, the clothing output of enterprises above designated size will decline by 8.69% year on year; Among them, the production of knitted clothing decreased by 5.08% year on year. At present, the proportion of knitted garment production in the total garment production is 66.19%, which is 4.06 percentage points higher than that in 2022.

　　 02 Operation optimization and steady improvement of profit quality

According to the data of the National Bureau of Statistics, the total profit of enterprises above designated size in the knitting industry in 2023 will decrease by 4.22% year on year, 2.38 percentage points lower than that in the first three quarters of 2023, and 6.59 percentage points lower than that in 2022. Among them, the total profit of knitted fabrics increased by 1.35% year on year, realizing the growth rate from negative to positive; The total profit of knitted clothing decreased by 7.14% year on year.

In 2023, the profit margin of enterprises above designated size in the knitting industry will be 4.32%, an increase of 0.45 percentage points over the first three quarters of 2023, maintaining the level of 2022; The loss area continued to decline, with the annual loss area level of 19.27%, 5.37 percentage points lower than the first three quarters of 2023 and 0.35 percentage points lower than that of 2022; The turnover rate of total assets and the turnover rate of finished products slightly slowed down compared with the previous year, but basically remained within a reasonable range.

　　 03 Domestic sales continued to recover and consumption hotspots emerged frequently

In terms of domestic sales, with the continuous efforts of a series of national promotion fee policies, the gradual recovery of offline consumption scenarios, the promotion of shopping festivals and other promotional means to stimulate consumption enthusiasm, the domestic market has shown a gradual recovery. In 2023, the annual GDP will exceed 126 trillion yuan, an increase of 5.2% over the previous year. The total retail sales of consumer goods in the whole year was about 47 trillion yuan, an increase of 7.2% over the previous year, 7.4 percentage points higher than that in 2022. Among them, the retail sales of clothing, shoes and hats, knitwear and textiles above the designated size increased by 12.9% year on year, and the online retail sales of physical goods increased by 10.8% year on year.

With the gradual recovery of offline scenes, brand operators have made in-depth exploration and innovation on subdivision scenes; Fashion IP and consumption hotspots frequently appear. Lightweight outdoor knitted clothes are popular. Knitted sunscreen clothes, outdoor assault suits and ski clothes containing high-tech functional fibers are hot. Children's outdoor sports clothes are in the blue ocean; The national tide and national style consumption boom integrating traditional culture and ethnic elements are constantly emerging. Mass consumption is becoming more rational, from focusing on "cost performance ratio" to focusing on "price heart ratio", "flat replacement" and "white brand" have become hot words of consumption, and processors and brands have ushered in a period of development opportunities.

04 The decline in exports gradually narrowed and exceeded 100 billion US dollars throughout the year

In 2023, the export volume of China's knitting products exceeded 100 billion US dollars for the third consecutive year during the 14th Five Year Plan period, and the total annual export volume was 104.094 billion US dollars, down 9.36% year on year from last year's high base. Among them, the export of knitted fabrics was 21.523 billion US dollars, down 9.3% year on year; Exports of knitted clothing and accessories reached US $82.571 billion, down 7.8% year on year.

From the perspective of export market, the export structure of China's knitting products continued to adjust, and the trade market was diversified. In 2023, China's exports of knitted products to the United States, ASEAN, the European Union and Japan will decline by 12.24%, 13.51%, 17.73% and 12.75% year on year respectively. During the same period, China's exports to Central Asia, the Middle East, Russia and other countries and regions performed well. In 2023, the export of China's knitting products to the five Central Asian countries will increase by 45.41% year on year; Export to Russia increased by 20.64% year on year; Exports to Turkey increased by 18.71% year on year. In addition, exports to Nigeria, Cameroon, Brazil and other countries also achieved good growth.

From the perspective of category breakdown, the export of T-shirts, socks and other products will decline slightly in 2023. Among them, the export decline of fleece fabrics and underwear and household clothes narrowed significantly, 4.55 and 5.00 percentage points lower than that in the first half of the year respectively.

According to local customs data, in 2023, the export of Xinjiang, Guangxi, Hubei, Sichuan and other central and western provinces and cities will grow rapidly, with export growth rates of 58.13%, 18.42%, 45.70% and 55.26% respectively. At present, the export volume of the five eastern coastal provinces accounts for 75.24% of the national total, which has decreased by 2.18 percentage points compared with 2022. During the same period, the export proportion of the central and western provinces and cities has increased, and the industry has further coordinated development in the east, west, and east. In the future, with the continuous release of the effect of the Belt and Road policy, the establishment of the Xinjiang Free Trade Zone and the implementation of the policy of opening to the north will create more favorable opportunities for the export of China's central and western regions and northeast regions.

Looking forward to 2024, the domestic economy is expected to continue to recover and improve, but the tasks of stabilizing growth, adjusting structure and promoting reform are still arduous, and the recovery of consumption and investment confidence is still under pressure. The effective domestic demand is insufficient, the external demand shrinks, the e-commerce live broadcast platform competes at a low price, and the trend of industry price "involution" may intensify, and the enterprise benefit restoration still faces challenges.

In terms of international trade, geopolitical risks are rising, the game among major countries is intensifying, and the global trading system is in a fragile period on the eve of the establishment of a new order. The world will face more uncertain factors. The International Monetary Fund (IMF) predicts that the global economic growth will slow to 2.9% in 2024, and it is difficult for the demand side of the international market to improve significantly. From the perspective of the inventory cycle of overseas clothing brands, the destocking is coming to an end, and the subsequent purchase demand will rise, but it is difficult to offset the profound impact of the international supply chain restructuring on the industry. It is expected that the industry's export will continue to decline in 2024, continue to return to the normal development before the epidemic, and cross-border e-commerce will accelerate its development. The export market shows a trend of "rising in the east and falling in the west", that is, exports to developed economies in Europe, the United States and Japan are declining, while exports to countries along the Belt and Road are rising, and the market share is concentrated in leading enterprises with international supply chain layout and core competitive advantages.