China Textile Industry Development Analysis
Author: Aug 31, 2011 16:40
|
As the energy consuming industry, textile industry has become the key industry for energy conservation and pollution reduction. Data shows, energy needs for a ton of fiber is 4.84 ton of coal. Among which, in the garment making industry, a ton of garment needs 1.05 ton of coal, in weaving industry, the energy consumption is 0.95 ton of coal, in dyeing and printing industry, the energy consumption is 2.5-3.2 ton of coal, for a ton of fiber the average energy consumption needs is 2.84 ton of coal. In the near future, under the background of low labor absorption, no matter on China’s domestic policy or on export trade policy, the government protection to textile industry will be weakened.
Firstly, textile product export competitiveness is lessened.
1. The policy environment has gone against textile exportation.
Currently, there are 16% of export rebates, which means even textile product makes no money; they can also get the rebates. Meanwhile, foreign buyers have already take the factor into consideration when offer the price. Therefore, when the rumor of 16% rebates lowered down to 11%, many enterprises claim that there will be no profit at all, which in return reflected the fact that our textile enterprises bargaining and profiting ability is low.
2. Pressure from appreciation of the RMB
RMB appreciation means a high settlement price of foreign currency, which also means the price competitiveness is lessened. See from the current situation, RMB appreciation will go on, increasing the pressure of textile exportation. RMB against Dollar rate is around 6.4 for it has appreciated about 5.88%, while in June, 2010, the exchange rate is 6.8. According to exchange rate theories, with the development of economy, the rate will undoubtedly increase. On the base of the past economic development and its exchange rate in China, we can find that the current exchange rate level is relatively underestimated.
3.Abroad production cost comparison.
On production cost, cost percentage of raw material, labor, energy and other aspect is different, but labor cost and energy cost is notably increasing. In recently years, the salary level is increasing continually. But still many enterprises have the problem of manpower hire difficulty. Although some enterprises have less orders, they dare not to stop production for the main reason is afraid of labor loss. Meanwhile, material cost is also increasing fast. Cotton cultivate cost increases fast, while it take the biggest portion of the whole textile industry, which is 60%-80%. See from both the global and China’s domestic cotton cultivate cost, China’s cotton cultivate cost is the highest globally, bringing a great cost pressure to the domestic textile enterprises.
4. Over supply
China’s cotton textile industry is in the over supply situation, with an insufficient operation rate. According to survey, production capacity in 2010 is 120 million spindles, and it is expected to reach 150 million spindles this year. Major enterprises have a high operation rate, while the medium and small enterprises operation is unsecured. Under the over supply background, new enterprises are inevitably to face the challenge of low profit and market shares. Raw material price sharply rise and fall speed up the industry shuffle, which means the medium and small sized enterprises that have a low operation rate will soon go bankruptcy.
5. Chemical substitute products increased.
High cotton price has led to the substitute of chemical fiber products. Under high cost pressure, textile enterprises have resort to using poly staple fiber or viscose staple fiber instead. In addition, with the development of more and more natural fiber products, now many chemical fiber products texture is close to cotton products. Textile enterprises have a broad raw material choice. Therefore, chemical fiber products will play a more and more important role in the replacement of cotton products, which will be a shock to the pure such pure cotton weaving enterprises.
6. Orders are continue to move toward Southeast Asia
Recent years, orders move toward Southeast Asia is notably. Orders come from Europe and America have partly shift to Cambodia and Vietnam. From Jan to Apr this year, American garment import increased 6.6% on the general, but its importation from China was reduced slightly, while importation from some other southeast Asia countries is increasing over 15% on average. Orders shifting leads to China’s textile industry shifting. China’s textile shifting has two trends, one is to shift the plants to middle east part of the country, while the other trend is to shift the plants to other countries of Southeast Asia.
Secondly, domestic sale becomes more important.
1. Domestic living standard improves, and its textile demand will be enlarged.
See from China’s marketing, domestic textile need is increasing, with its quantity, variety, and quality requirements becomes higher and higher. When export faces pressure, domestic market becomes the key market for most enterprises. The enlarged domestic demand provides a good market for the textile industry. The domestic market have a huge potential for the 1.3 billion demographic total consumption determines that the domestic demand must rely on the native textile industry.
2. Domestic high grade textile products exports is still competitive
Domestic cotton textile industry chain is relatively complete, on high end products, other Southeast Asia countries are at a disadvantage, therefore, China’s high end products exports are competitive. But after the global economic crisis, U.S. economy recovery slow, and European debt crisis is consisting, which forms a distinct contrast with China’s economy development. Economic crisis led to low consumer demand. Orders from Europe and America are still depressing, mostly are short term orders or small orders, which also reflected the fact that income determines consumption.
Thirdly, high and low end industry stays in different existence state.
When cotton price sharply rise and fall, middle and small sized enterprises are influenced the most for they are weak in front of risk. Many enterprises stop production or half stop. About one third of the middle and small sized enterprises closed and another one fifth began to sell its machinery. Some enterprises are suffering to sustain, for once they stopped production, it is hard to recruit employees and also have the influence of material resources and distribution channel.
|
Editor: Candy From: 168Tex.com
Most Read