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Two days ago, a reporter spoke with Wu Tong from Xintang Shentong Textile Co., Ltd. on the phone. According to Wu, one of the most critical challenges currently affecting many small and medium-sized enterprises (SMEs) in the textile industry is the difficulty in cash flow management. Shentong Textile, like many other yarn producers, typically receives payment after delivering goods to their upstream suppliers. However, downstream businesses often demand payment before receiving goods, creating a mismatch that makes ensuring timely payments one of the top priorities for companies today. The overall business environment for fabric enterprises remains challenging.
At this stage, breaking through development barriers is no easy task, especially for SMEs, who are facing what can be described as a "survival of the fittest" scenario. Whether it's "eating small" or "fast eating slow," the pressure is mounting due to the ongoing appreciation of the RMB. On September 20, the central parity of the RMB against the U.S. dollar continued its upward trend for the eighth consecutive day, hitting a seven-day high since the exchange rate reform. Alongside the RMB’s appreciation, raw material costs have risen, labor expenses have increased, and energy-saving and emission reduction requirements have become more stringent.
While some companies remain optimistic, believing that all firms face similar challenges and thus no one is immune, others see this as an inevitable phase of eliminating outdated production capacity. As industrial resources gradually shift toward high-value-added large enterprises, the pressure on smaller players becomes more intense. Some companies have well-integrated supply chains, allowing them to better manage rising input costs or maintain stable customer relationships. In contrast, SMEs often lack such advantages. To avoid being absorbed in this competitive landscape, shifting from "slow" to "fast" may be a more practical strategy than trying to grow quickly from "small" to "big."
In recent years, many SMEs have shown remarkable growth by embracing flexibility. A common approach is the "one-stop shopping" model, which starts from clothing design, includes fabric selection, and extends all the way to garment production, offering complete solutions to customers. Xu Mulin, vice president of corporate analysis, noted that many clothing brands have growing procurement demands, prompting companies like Zhonghe to expand into downstream industries and strengthen collaboration with clients. This allows clothing enterprises to reduce both fabric procurement and garment processing steps.
Zhonghe has also been actively participating in major domestic and international exhibitions to enhance brand visibility and attract quality customers. While the production capacity of domestic fabric companies is widely recognized, there are underlying risks—such as product homogeneity, where styles and colors differ slightly but the core features remain similar. This leads to intense price competition, which is unsustainable and limits profit margins. Price wars are becoming unavoidable, posing a significant barrier for SMEs looking to upgrade.
However, many companies now recognize that developing unique, practical products is key to gaining a foothold in the market and breaking out of homogenized competition. Some enterprises have introduced new fiber concepts, though these are often speculative rather than truly innovative. Others, like Wu Jiang Deyi, have made real progress by focusing on product development. Their star product, copper ammonia fabric, is made from cottonseed and aligns with current environmental and low-carbon trends. It offers excellent breathability, drape, and anti-static properties. Due to the need for imported raw materials and specialized equipment, the fabric is relatively expensive, with prices ranging from 30 to 60 yuan per meter.
To make copper ammonia fabric more accessible, companies have started blending it with other fibers like wool, silk, cotton, and polyester, maintaining the fabric’s desirable characteristics while broadening its appeal. Additionally, improvements in color and style have been made to meet evolving consumer preferences.
A representative from the China Printing and Dyeing Association, after visiting several industrial clusters, emphasized the urgent need for enterprises to improve their product structures, not just focus on quality. With the increasing emphasis on energy-saving and emission reduction, individual companies alone struggle to bring about fundamental change. Government and industry organizations play a crucial role in supporting SMEs during this transition.
Mitac’s Witch Manager shared that only about 20% of their current orders generate modest profits, while the rest either break even or operate at a loss due to rising operational costs. He expressed hope for more government support, including funding and successful case studies, as well as improved business environments.
Many fabric companies, when interviewed, admitted that finding effective short-term strategies is difficult. Most SMEs rely on low-cost energy and inefficient water and steam usage, leading to improper sewage disposal. While the general condition of fabric industry equipment is good, energy efficiency and emission reduction depend heavily on technological upgrades. For most SMEs, government support in the form of special promotional funds is essential for sustainable development.