Wang Tiankai: Viewing the slowdown in the textile industry

As the growth rate of the profit rate of the textile and apparel industry slowed down, a newspaper interviewed Wang Tiankai, vice president of the China National Textile and Apparel Industry Association. He said that the industry's self-healing function must be treated as if it were to slow down.

Recently, people often hear that the media in the “High-speed Rail Incident” has reacted excessively to the operation of the industry, which roughly means: “It is more unfortunate to depict misfortunes instead of actively thinking about solutions, and it has no meaning to the development of events. ."

Coinciding with the seventh issue of the “China Textile Enterprise Managers Survey Questionnaire,” the reporter interviewed Wang Tiankai, vice president of the China National Textile and Apparel Industry Association, and the topic of “overreaction” was constantly infiltrated. According to the data representation of the quality of the industry's first half of the year and various external rumors, the issues raised by reporters are particularly acute:

Why does the industry's profit rate slow down? Can product prices continue? How to digest the increase in stocks? Does order transfer mean that export competitiveness is declining? Why do companies generally feel that this year's industry situation is extremely serious...

Faced with overwhelming questions of “slowing down”, Wang Tiankai believes that looking at the industry at a macro level, many seemingly complex phenomena can often find simple answers. What the industry is currently experiencing, some of them are personal experiences in a large environment, and others are also tending to open up the big environment. Looking calmly at the mid- to long-term problems faced by the industry and the difficult issues at hand, using the market's standards to measure the prospects, the industry's self-healing function can work more effectively.

Visitors to be slowed by appearances ★ To distinguish which are the major environmental problems and which are the development factors that still exist outside the macro-environmental environment ★ Capital shortages are often the first to bear the brunt of SMEs, cotton reform lags behind resulting in violent fluctuations in cotton prices ★ Rely on cheap labor, excessive energy consumption The traditional development ideas will never be able to escape the “cost” curse Reporter: “Retard” has become the key word for defining the quality of the industry in the first half of the year. Do you agree with this?

Wang Tiankai: “Tendency” is the characteristic of the operation of the industry in the first half of the year, but it must also be affirmed that the operation of the textile industry was basically stable in the first half of the year. With stable growth in production, sales, exports, investment, and benefits, the domestic demand market continues to play an important role. The advancement of industrial structure adjustment and the improvement of operating quality have provided the fundamental driving force for the economic growth of the industry. On this basis, there are some signs of "tweening" that need to be watched.

For example, at the same time of stable growth in production and sales, the growth rate of total industrial output value and sales value in January-June was 1.59 and 1.47 percentage points lower than that in January-March, and the growth rate of yarn, cloth, clothing, and chemical fiber production was 1 month to 3 months respectively. Declined by 1.4, 4.06, 2.13 and 2.63 percentage points. The proportion of domestic output value continued to increase but the growth rate declined. From January to June, retail sales of clothing products above designated size increased by 23.9% year-on-year, which was 0.1 percentage points higher than the same period of last year. However, actual price increase was 23%, which was a decrease from the same period of last year. 2.2 percentage points, of which the growth rate in May and May decreased by 3.9 and 5.5 percentage points year-on-year respectively.

Raw material prices have risen ups and downs, enterprises are facing hard problems, increasing production costs, increasing operating pressures, increasing export pressures, and slow growth in international market demand. These are outstanding issues in the first half of the year. Under the influence of these factors, the industry’s profit growth continues to slow down. From January to May, the growth rate from January to April and January to March dropped by 4.05 and 10.73 percentage points, respectively, and the total profit growth in the month of May was 30.04%, down by more than 20 percentage points from the beginning of the year.

Reporter: Companies generally feel that the industry situation this year is extremely severe. What factors do you think are worth paying attention to?

Wang Tiankai: The textile industry has always faced the pressure of adjustment and upgrading since it entered the market economy as a traditional industry. Visible difficulties are our normality. The only thing that needs to be distinguished here is which of the major environmental problems and which are the development issues that still exist outside of the macro-environmental factors. To clarify the relationship between the two can be coordinated with the pace of the company's own pace, not lost in the immediate difficulties.

From a macro perspective, the direction of the national policy is to tighten the currency around governance inflation, so companies feel that capital shortage is determined by the big environment. The policy of "limit more than encouragement" is not felt in the textile industry. The macro goal is to bring down the rate of growth, and the problems we encounter are nothing more than the immediate feelings in a large environment. In the middle of this, we must pay attention to some unique external environments faced by the industry. For example, the capital shortage is often the first to bear the brunt of SMEs, cotton reform lags behind resulting in severe volatility in cotton prices, the export market must maintain the stability of relevant policies, especially the stability of export tax rebate policy. Wait.

However, some issues cannot be blamed for the “time”. It should be regarded as the reality that the industry has faced in the process of transformation and upgrading and will be more severe in the future. For example, the issue of labor prices and energy prices will be the medium and long-term problems that accompany the development of the industry. As far as the current level of wages is concerned, the distribution of labor is not ample. The same principle holds that limited energy sources are forcing companies to invest in environmental protection. The traditional thinking of relying on cheap labor and over-consumption of energy will definitely not work, and it will never be able to escape the “cost” curse if it does not change its development model.

Long-term problems and thorny problems ★ From the end consumer goods growth trend, it can be concluded that the transmission of price in the upstream sector is temporarily blocked. It will be digested sooner or later. ★ Whether there is no loosening currency tightening policy will cut off the "funds throat" of SMEs should be vigilant ★ Establish "improvement "The competitiveness of manufacturing industry is the greatest protection for planting industry" to study and solve the cotton issue Reporter: What particular reasons do you think have caused the industry's current development difficulties?

Wang Tiankai: The cost constraints of labor resources and energy are the long-term problems faced by the industry. Therefore, there is a long-term development strategy of “adjusting the industrial structure and transforming the growth mode”. In addition to this, there are also some issues that are more urgent in the near future, and they have a greater impact on the normal operation of the company and require special attention.

The first is funding. During the financial crisis, we have been investigating. Businesses have died because of shrinking markets. Or is it because the capital chain collapsed? The vast majority of companies that have gone out of business quickly are broken capital chain. It was not true that a large number of small and medium-sized enterprises in the Yangtze River Delta and Pearl River Delta region had been rumored by the outside world some time ago. The increase in the cost of various forms is not enough to overwhelm the enterprises. On the contrary, the policy of monetary tightening that has not shown any signs of loosening so far will cut off the “funds” of SMEs in the future.

The results of the survey conducted by the current managers showed that 33.9% of the surveyed companies were under tight funding. 41.7% of the surveyed enterprises in the cotton spinning industry, which had a large demand for funds, reported that liquidity was in short supply. Some companies were forced to withdraw their finished products at low prices due to financial pressure. The funds have aggravated the price volatility in the product market; some SMEs are unable to obtain credit support from banks, and the use of private lending has greatly increased the risk of assets. As it is difficult to guarantee the liquidity needed for enterprises to survive, medium- and long-term investment will inevitably decline. In the first five months of this year, the number of newly-started projects for fixed assets investment in the textile industry will be negative, and the growth rate of investment will be slowed down month by month.

At the same time, monetary policy tightening has led to a rise in market interest rates, and the cost of enterprises has increased significantly. 42.5% of the surveyed enterprises using private lending reflected that the interest rate was higher than the bank's benchmark interest rate by more than 10%, and 19.1% of the enterprises reported that the private lending rate was 30% higher than the bank benchmark rate. The sharp increase in interest rates has strained the financial status of enterprises. From January to May, the interest expenditure of textile enterprises above designated size increased by 37.8% year-on-year, which was higher than the growth rate of main business income by 6.75 percentage points.

The second issue is raw materials. The problems with cotton that existed more than a decade ago still exist today, indicating that the cotton issue has not been solved at all. The cotton system has long been in the traditional thinking of administrative allocation of resources, and it has also opposed planting and manufacturing. It is necessary to establish the idea of ​​“improving the competitiveness of the manufacturing industry as the greatest protection for the planting industry” to study problems and solve problems. Last year, the state introduced many regulatory policies. From the point of view of market performance alone, there is a certain relationship between the high cotton prices and the reasonableness of the State Reserve Cotton Auctions. In the future we expect more effective regulation.

Reporter: Does the inclusion of various issues mean that the industry operation will be filled with pessimism in the second half of the year?

Wang Tiankai: Using the market to determine the standards of all things to measure the prospects, panic is completely unnecessary. From the perspective of the growth in the demand for consumer goods in the terminal market, it can be judged that the transmission of prices in the upper reaches of the industry will be temporarily blocked and will be resolved sooner or later.

Since the financial crisis, the industry has not felt like it has been unreasonable as the outside world has imagined. It can be said that the effectiveness of the policy of expanding domestic demand is obvious. According to the data, from January to June this year, the industrial output value of enterprises above designated size in the industry was 2020.98 billion yuan, up 32.42% year-on-year, 1.16 percentage points lower than the growth rate from January to March, but higher than the export growth value of the same caliber 12.76 percentage points. . The proportion of the domestic sales value of the enterprises above designated size in the sales output value continued to increase, reaching 82.76% from January to June, an increase of 1.5 percentage points over the same period of last year. As long as the terminal is good, there is no bad reason in the upstream. At present, the resistance encountered by the upstream and downstream companies in the transfer of prices is largely due to the temporary blockage caused by fluctuations in raw material prices.

Although there are still some unstable factors in the recovery of the international market, the supporting role of the domestic market has made the overall atmosphere of the textile industry far from the harshness of outside rumors. The data shows that although the fluctuations in the raw material prices of upstream enterprises led to a significant increase in inventory, the turnover rate of finished products of enterprises above designated size from January to May still increased by 0.22% over the same period of last year to 18.83 times per year, and the total asset turnover rate reached 1.57 times per year. , year-on-year increase of 8.73%.

In the current survey of managers, 59% of the surveyed companies' average prices of main products increased compared with the previous period, and large and medium-sized enterprises increased their prices by 67% and 60.5% respectively. It should be noted that price transmission also has the effect of adjusting the product structure according to the market. As long as the market can accept it, price transmission will continue.

The industry chain seeks breakthroughs. ★ Poor orders may be due to a drop in demand, or it may be due to delayed orders due to fluctuations in raw material prices. ★ If the decline in the benefits of cotton textiles is a return to normal, then the printing and dyeing industry will have to pay special attention to the future downturn. ★ The domestic market If there is no significant breakthrough in propaganda and acceptance, the energy of linen cannot be released forever. Reporter: From the perspective of the economic operation of the industry in the first half of the year, there are generally unfavorable profits, orders and stocks in the upper reaches of the industry chain. This is a dangerous signal. ?

Wang Tiankai: For some extreme data performance, we need to make some rational interpretations.

Take the textile industry last year, if careful analysis can be seen, how much of the profit structure of cotton spinning last year was adjusted by product structure? How much depends on the price drop of cotton? Some big companies in the past year took a handful of cotton to obtain more profit than to improve management efficiency. The short-term profits at the expense of management are profits under abnormal conditions. The so-called “decline of benefits” in the first half of this year is more like returning to normal.

The so-called "decline of order quantity" also requires careful analysis of what kind of situation is declining. In fact, the fluctuation of cotton price is more frightening than rising, because the high price can still be transmitted to the downstream, and frequent price fluctuations will affect the company's order mentality. For upstream companies, the bad order may be due to the decline in demand caused by the market itself is not good, it may be due to delays in the order of raw material prices, the current view belongs to the latter. Short bills, small bills are fine, and medium and long bills must be implicated.

The decrease in the turnover rate of upstream and downstream finished products causes “increase in inventory” to be bundled with the volume of orders, which is a problem of price transmission level, and it cannot be simply attributed to shrinking demand. On the contrary, the relatively stable turnover rate of downstream products can further confirm that the overall environment of the consumer goods market is conducive to the continued growth of the industry in the future.

Reporter: While looking for confidence factors in the industry chain, can we also see some weak links?

Wang Tiankai: If the decline in the benefits of the cotton spinning industry is a return to normal performance, then the decline in the printing and dyeing industry's benefits will have to pay special attention to the continuing downward trend in the future. In recent years, the printing and dyeing industry has spent a lot of effort on energy utilization and cleaner production, and the environment has become increasingly demanding. In the first half of the year, the purchase price of fuels for industrial enterprises increased by 10.5%, the prices of dyes and auxiliaries imported from January to May increased by 16.67%, and the reduction in profits due to the increase in energy costs and environmental protection costs will intensify. In the first half of this year, the sales profit margin of the printing and dyeing industry contributed the lowest in all sub-industries in the industry chain. As the bottleneck industry in the mid-end of the industry chain, there will be a lot of losses if the transmission is not smooth.

In contrast, the profitability of the hemp spinning industry is considerable. But the key to the problem is to find out exactly where the reasons for growth come from? At present, the overall small environment of the Mafang industry is good, but if there is no significant breakthrough in the promotion and acceptance of the domestic market, its growth energy will never be released. From raw materials to the production chain of hemp to hemp and hemp garments, it is necessary to carefully analyze which link has been achieved in the first half of the year.

Transformation of the two market structures ★ The decline in the growth rate of textile exports from developed countries can only indicate that we have gradually withdrawn from low-value-added markets. ★ The number of garment exports is declining, while the export of high value-added and high-tech fabrics is increasingly Occupy the Dominant ★ Concerned with the multi-level demand structure of the domestic consumer market, the raw material supply structure will also be adjusted accordingly. Reporter: Outsiders believe that China's textile export competitiveness is declining. In the first half of the association, “China’s textile export prices have grown faster than the quantitative increase”. How do you look at your traditional advantages in the future?

Wang Tiankai: The fact that export prices have grown faster than quantitative growth does not mean that there has been no increase in the quantity. Not to mention price factors, the number of industrial exports from January to May this year increased by 3.88% year-on-year, even if the growth rate of exports is flat, it will not have a catastrophic impact on the export advantages of the industry. Calculated from the proportion of domestic sales, exports have become less and less important for the overall market of the industry.

As for the rise in export prices, there may be two factors: one is the transmission of rising costs, and the other is the adjustment of product structure. The manufacturing of low-end products in China is indeed decreasing, and manufacturing in Indonesia, Vietnam, and Thailand is increasing. The current decline in the growth rate of textile exports from developed countries can only indicate that we have gradually withdrawn from the low value-added markets that fight raw materials and fight labor costs, and the profit distribution pattern is changing. On the one hand, the number of garment exports has fallen; on the other hand, the export of high value-added, high-tech fabrics has increasingly dominated, which indirectly reflects the important role of the printing and dyeing industry in upgrading the industry in the future.

Reporter: Can the industry's export situation in the second half show changes in the pattern of boosting confidence?

Wang Tiankai: Since 2011, the overall growth rate of the international market has been slow and has dropped from the same period of last year. Japan’s demand due to the earthquake has shrunk; in the EU, the average retail sales rate for clothing from January to April was 1%, a decrease of 2.8 percentage points from the same period of last year; and US apparel imports increased by 6.28% year-on-year, a drop of 6.9 percentage points from the same period of last year. Although the economic growth of the emerging markets is basically good, due to rising prices and political turmoil in some regions, the growth in end-user demand has slowed since the beginning of the year.

According to the forecast data released by the International Monetary Committee in June, the global trade volume in 2011 is expected to increase by 8.2% year-on-year, with the growth rate falling by 4.2% from the previous year. Therefore, in the second half of the year, the export orders of China's textile industry are unlikely to significantly improve.

The survey results of managers in this period also showed that 65.1% of apparel companies under investigation had no increase in the next period of foreign orders compared to the first half of the year, and the market price competition faced by export processing small businesses was still very fierce.

Reporter: Does this mean that the future development of the industry still needs to gradually transition to the domestic market?

Wang Tiankai: In the first half of this year, although inflation has given some restraint to the domestic textile and apparel consumption, the growth rate has remained above the retail sales growth of consumer goods in the entire society. The end-use consumption and brand consumption of apparel home textile products have played a crucial role in driving, relying on intensifying the brand and marketing channels to innovate “inciting” the domestic market demand leverage in the second half of the year. Its price and sales volume will become the wind vane for domestic consumption growth. It will facilitate the smooth transmission of the cost of fabrics and gauze products in the upper and middle reaches.

Industrial textiles, as a new economic growth point for the industry, needs to increase the connection with the downstream application industries in such key areas as filtration and separation, medical and sanitation, automotive use, pontoon and geotechnical use, and expand the market demand for cross-border industrial chains.

With the increasing proportion of domestic output value, while focusing on the multi-level demand structure of the domestic consumer market, the raw material supply structure will also be adjusted accordingly. In addition to accelerating the research and development of high-simulation, functional, differentiated fibers and biomass fibers, qualified companies can even invest overseas in the construction of textile raw material bases, establish a recycling system for recycled textile fibers, and enrich raw material supply channels.

Leading thinking must also be advanced. Management topics are long-term topics, and have different connotations and extensions in different periods and industry development stages. ★ The total amount of liquidity of textile enterprises above the scale has not decreased, but the proportion of private lending has risen to increase financial risks. ★ The western region should Focus on resource advantages and ethnic characteristics to do their own industry, calmly determine the development of ideas Reporter: According to the characteristics and direction of industrial restructuring, China Textile Entrepreneurs Federation how to carry out related activities?

Wang Tiankai: Management topics are long-term topics and have different connotations and extensions in different periods and industry development stages. In September of this year, we will adopt an industry-wide “Management Benchmark for Management Innovation” to establish a group of model companies with leading values ​​in different management fields to provide lively materials for enhancing the appeal of management topics.

Although there are many pressures on the industry's operation this year, the improvement of management level is very obvious. From January to May, the labor productivity of enterprises above designated size (according to the total industrial output value) was 482,800 yuan/person, an increase of 21.62% over the same period of last year, and 16.72% higher after removing the ex-factory price increase factor; the proportion of three fees above designated size was 5.83%, a year-on-year decrease of 0.16 In terms of percentage points, the proportion of financial expenses increased by 0.05 percentage points year-on-year due to the increase in interest expense of the company, but the management expenses decreased by 0.14 percentage points year-on-year.

Compared with other traditional industries, the textile industry has great potential in management, but it has not yet been fully explored. By combining with information technology, high-tech and other fields, traditional industry management models will be reconstructed and remodeled, for example, in human resources management, financial management and other aspects have in-depth exploration of space. At the same time, we have noticed that some large companies have advanced their creative thinking, have a solid management foundation, and have the conditions and obligations to play a more extensive guiding role in the industry.

Reporter: In this issue, the “Questionnaire on Business Operators” has improved over the past in the number of participating companies and the distribution of industries. In this case, will the mobilization of the questionnaires jointly conducted by all parties of the association be conducted in the future?

Wang Tiankai: This time, 402 valid questionnaires are returned. If you hope that the actual reference value of the questionnaires is even better, the number of participating companies can be expanded to 1,000. But the key lies in the scientific nature and effectiveness of the problem setting. In the future, the questionnaire will be narrowed down, highlighting the more individualized issues that are in line with the current development of the industry, such as focusing on the thorny funds and raw materials in the first half of the year, and designing related issues to be more focused.

Take the flow of corporate capital as an example. At present, the questionnaire is only a basic composition for investigating the sources of funds. In the future, it will be able to understand in depth the increase and decrease of various components and changes in interest expenses. These are the details that can not be achieved by the macro analysis, and the significance of the questionnaire is also here. If we only look at the statements, the total liquidity of more than 30,000 textile enterprises above designated size has not decreased, but the composition of the structure has changed, the number of banks has decreased, and the proportion of private loans has increased. Therefore, financial risks require special attention. The fact that there is no reduction in the total amount of liquidity does not mean that there is no shortage of funds. This implies that there are various factors such as the expansion of production scale and the expansion of sales volume. Only a comprehensive analysis can tell the crux of the problem.

Reporter: When evaluating the overall operation of the industry in the current period and the next period, the proportion of surveyed enterprises opting for optimism in the western region is significantly higher than that in the central and eastern regions. Does this explain the phased results of industrial gradient transfer?

Wang Tiankai: Among these factors, there are industrial transfer factors but not all of them. Compared with their past in the Midwest, the confidence index is certainly high, especially in the Xinjiang region. However, it needs to be concerned that the western region should do its own industry by embodying its resource advantages and national characteristics. It is necessary to calmly determine the development thinking, and in particular to take full account of such crucial elements as technology, talent, and market.

In the next 5 to 10 years, industrial transfer will be a major trend. Currently studying the domestic transfer, we must pay attention to the global layout in the future. The industry transfer office that the association is planning to build will first have to do a full-blind industry survey and summarize the experience to find out. It is necessary to study the overall train of thought of the transferee, as well as to compile the experience of the transferee. There is a lot of articles to do.