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Two days ago, a reporter spoke with Wu Tong from Xintang Shentong Textile Co., Ltd. about a pressing issue affecting many small and medium-sized enterprises (SMEs) in the textile industry: the difficulty of cash flow. According to Wu, the problem is one of the key challenges that SMEs face today. Textile yarn companies usually receive payment after delivering goods, while other businesses often get paid before receiving the product, creating an imbalance. As a result, ensuring smooth payments has become a top priority for many fabric companies, and the business environment remains challenging.
At this stage, breaking through development hurdles is not easy for domestic fabric enterprises, especially SMEs, who are facing what could be described as a "survival battle." The pressure is intensifying, with some companies either "eating small" or "swallowing the slow." Since the beginning of the year, the appreciation of the RMB has been a major concern for the industry. On September 20, the central parity of the RMB against the U.S. dollar continued its upward trend for the eighth consecutive day, reaching a new high since the exchange rate reform. Alongside this, rising raw material prices, increasing labor costs, and stricter energy-saving and emission reduction regulations have further complicated the situation.
While some companies remain optimistic, believing that all firms are in the same boat and no one can escape the pressure, others see this as a natural phase of eliminating outdated production capacity, where resources gradually shift toward larger, high-value enterprises. However, not all companies are equally equipped to handle these pressures. Some have a complete industrial chain, allowing them to mitigate the impact of rising raw material costs or maintain stable customer relationships. In contrast, SMEs often lack solid fundamentals and must find ways to survive without being absorbed by bigger players.
In this competitive landscape, transitioning from "slow" to "fast" may be more practical than trying to grow from "small" to "big." Over the past few years, many SMEs have successfully adapted by embracing flexibility. A common model among these companies is the "one-stop shopping" approach, which starts from clothing design, includes fabric selection, and continues through the entire production process, providing finished products directly to customers.
Xu Mulin, vice president of corporate analysis, noted that many clothing brands have a demand for garment procurement, and Zhonghe has extended its operations into the downstream supply chain, deepening cooperation with clients and helping clothing companies reduce fabric procurement and processing steps. Zhonghe has also actively participated in international exhibitions to expand its influence and attract quality customers. While there's no doubt about the production capabilities of domestic fabric companies, there are underlying risks—such as homogenization of products, which leads to fierce price competition. Without unique selling points, companies rely heavily on price, which can lead to shrinking profit margins.
To break free from this cycle, many enterprises now recognize that developing practical, market-ready products is essential. This is seen as a way to overcome homogenization. While some companies introduce new fiber concepts, it's often more about speculation than real innovation. However, there are genuine examples of companies that have succeeded through product development. For instance, Wu Jiang Deyi's star product, copper ammonia fabric, has gained attention due to its eco-friendly properties, breathability, and soft drape. Made from cottonseed, it aligns with environmental and low-carbon trends. Although imported raw materials make it expensive, the company has improved its blends and added color and style variations to enhance appeal.
According to Yao Yunzhen, general manager of the Ministry of Trade, the current price of copper ammonia fabric ranges from 30 to 60 yuan per meter, with additional finishing features increasing the cost. To make the fabric more accessible, companies have adjusted material ratios and used copper ammonia in warp threads without compromising fabric performance.
A representative from the China Printing and Dyeing Association highlighted the need for better product structure rather than just improving quality. With energy-saving and emission reduction becoming increasingly important, individual enterprises struggle to make significant changes. Government and industry support are crucial for SMEs to break through.
Mitac’s Witch Manager shared that only about 20% of current orders bring modest profits, while the rest either break even or incur losses due to rising operational costs. He emphasized the importance of government support, including funding, business guidance, and improved environments.
Many fabric companies are struggling to find effective solutions in the short term and hope for government assistance. Due to historical inefficiencies in resource use, many SMEs still discharge untreated wastewater into municipal treatment plants. While equipment is generally good, energy efficiency and emissions depend on technological upgrades, which require government support to ensure long-term sustainability.