Rising raw material prices, rising labor costs, shrinking foreign trade orders, sluggish domestic demand, and difficulties are among the many factors that constrain China's textile industry to face many challenges. Recently, we went to Wujiang City, Jiangsu Province, where our textile industry has gathered. We learned that in the first half of this year, the domestic and foreign troubles of China's textile enterprises have become increasingly prominent. The situation of textile enterprises and natural fiber textiles has further deteriorated, and chemical fiber companies are seeking to break through due to their comparative advantage.

Shengze Town, Wujiang City, the traditional silk capital of China, has now become a gathering place for the modern textile industry. With tens of thousands of sets of domestic and foreign leading production equipment, the town produces 6 billion meters of various textiles every year. However, since last year, Shengze has been affected by internal and external troubles.

According to the latest data released by the General Administration of Customs, from January to May of this year, China’s textile and apparel exports totaled US$88.835 billion. From the sales amount, the growth of textile and apparel exports showed signs of shrinkage. From the month of May, textile and apparel exports totaled 20.038 billion U.S. dollars, a year-on-year increase of 23.77%, and a decrease of 9.76 percentage points from the 33.53% growth rate of the same period of last year. This was a significant slowdown compared to the first four months of this year. “The appreciation of *** and the reduction in foreign trade orders directly led to the decline in sales volume of small and medium-sized textile enterprises with low-end textiles as their main products.” Cai Yanhua, secretary general of Wujiang Textile Industry Association, said that China’s textile industry relies heavily on exports, and some companies’ products are relatively single. The scale is relatively small, foreign trade orders account for a relatively high proportion of total orders, and the reduction of foreign trade orders has a considerable impact on these companies.

This is a "foreign trouble", "internal concern", the first is the rise of raw materials. “The minimum cotton price has risen from about 12,000 yuan/ton to about 34,000 yuan/ton, and now it has dropped to about 24,000 yuan/ton. The price is still high; the cotton yarn has increased from 30,000 yuan per ton to 60,000 yuan per ton. There are many varieties.” Wen Hao, deputy general manager of Jiangsu Hengli Chemical Fiber Co., Ltd. introduced that not only natural fiber is gaining momentum but also the cost of chemical fiber raw materials is rising. In addition, there is an increase in labor costs. According to Cai Yanhua, from the second half of last year to the first half of this year, the labor costs of Wujiang textile companies rose by 20%, and the monthly salary of textile workers rose to 3,500 yuan to 5,800 yuan. According to sources in the textile industry, under the dual constraints of high costs and declining sales volume, the profits of textile companies have been further compressed: the industry’s average net profit before was about six points. According to the current situation, profits may only have four points.

“The above-mentioned internal and external problems, coupled with the increased financing shortage of SMEs, make the living conditions of SMEs and natural fiber companies worrying, but it is good for the chemical fiber textile industry.” Wen Hao told the author, contrary to the tight funding chain of other textile companies The fact is that since the start of 2009, chemical fiber industry products have generally had high profits without inventory.

It is reported that during the recovery process after the financial crisis, loose monetary policy led to a substantial increase in the downstream scale of the textile industry. However, due to the long construction period of the textile raw material industry, at least one and a half years have passed since the project was established and the production time was extended. In the downstream, the unbalanced supply and demand led to the general high profits of the chemical fiber industry and there was no inventory, and the capital chain was also relatively loose. In an interview with Wu Jiang, the author learned that in the context of the overall downturn in the domestic textile industry in the first half of this year, the chemical fiber textile industry has achieved unprecedented development – ​​the price of cotton yarn increased sharply last year, resulting in a gap between cotton yarn and chemical fiber. Obviously, downstream garment factories cannot accept such high cotton yarn prices, forcing weaving mills to search for alternative raw materials: When downstream fabrics are placed on orders, they are replaced with chemical fibres as much as possible to avoid the use of natural fibers.

“In 2008, the price of polyester was about 18,000 yuan/ton, and the price of cotton yarn was 15000-16,000 yuan/ton. Today, the price of cotton rose to 23,000-24,000 yuan/ton, and the price of polyester still hovered around 18,000 yuan/ton. It shows that as a raw material, polyester can maintain a more stable price." Wen Hao said that this year Hengli Chemical Fiber research market development trend, developed several varieties of properties that are closer to cotton yarn, and registered the brand.

“We feel that the chemical fiber market has suddenly expanded a lot. Our gross margin space last year and this year is the largest in recent years, and the average gross margin is about 30%.” Wen Hao said that the current demand direction of the market is to locate porous ultra-fine special fiber products. The performance is similar to the substitute of natural fiber, and in this regard, Hengli Chemical Fiber is more advanced in domestic R&D, and its R&D fabric has entered the global supply chain system of brands such as Nike, Adidas, and Toyota Motor.

Cai Yanhua, secretary general of the Wujiang Textile Association, said that every crisis is the turning point for the industry. In the long run, the use of industrialized synthetic spinning materials will be the trend and the direction of industrial upgrading of the textile industry.

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