2015:Expected to maintain a steady operation

By+Zhao+Zihan

Since 2014， in line with the central governments overall tone of“seeking improvement in stability”， Chinas textile industry has been adhering to further promote the transformation and upgrade as well as actively adapting to the economic development of the new normal. In this way， a series of complex factors have been overcome， such as sharp price fl uctuations， slowing demand growth， and growing increased integrated cost， generally maintaining a stable development trend， together with a reasonable range of economic performance and gradually improved development structure and quality.

In 2015， the industry is still facing a more complicated external situation with many risks and challenges； therefore， development is still under large pressures， while it is a very diffi cult task to assure the industry a stable and healthy development.

Main development characteristics of Chinas textile industry in 2014

Since 2014， Chinas textile industry has been gradually going deep into the new normal in transformation and upgrade with basically stable economic performance. The economic growth has continued gradually shifting from high speed to medium speed， while the supporting role of industrial structure optimization and operation quality improvement has been further enhanced. Development of the industry is mainly characterized by the following characteristics：

Basically normal economic performance

The main operating indicators of the textile industry have been enjoying growth since 2014； however， influenced by such internal and external factors as sharp fl uctuations in raw material prices， slowing demand growth and the transformation of their development stages， the industry has continued the gradually slow-down growth rate in total amount since the 12th Five-Year Program Period， and the growth rate of every indicator has witnessed various degrees of dropping compared to the year of 2013.

According to the National Bureau of Statistics and China Customs， in 2014， Chinas 38，000 above-designated textile enterprises saw an increase in the industrial added value by 7% year on year， 1.3 percentage points lower than that in 2013. From January to November， the main business income reached 6.07619 trillion yuan with a year-on-year increase of 7.3%， 4.2 percentage points lower than the same period of the previous year； while the total profi t grew 9% year on year to 311.19 billion yuan， 8.1 percentage points lower than the same period of a year earlier. Throughout the year， the textile and apparel exports in China were totaled 298.43 billion USD with an increase of 5.1% year on year， while the growth rate dropped 6.1 percentage points than that in 2013； as for the over-fi ve-million-yuan projects in the entire industry， the investment in fi xed assets amounted to 1.03625 trillion yuan with a growth of 13.4% year on year， 3.9 percentage points lower than that in 2013.

Progressing transformation and upgrade

The textile industry continued to make new progresses in transformation and upgrade in 2014， which became the main supporting factor for the industry to achieve smooth operation. The industrial added value of above-designated industrial textile businesses jumped 11.7% year on year， 4.7 percentage points higher than the growth rate of the entire textile industry， while during the fi rst 11 months， its total profi t rocketed 20.5% year on year， 11.5 percentage points higher than the growth rate of the whole industry. The new growth point of the industrial chain still played a prominent role. The garment and home textile industries presented stable economic performance， for their above-designated enterprises saw respective profi t margins of 5.4% and 5.5% during the fi rst 11 months， while the e-commerce turnover saw a cumulative growth of 39.2% in the fi rst half of 2014， refl ecting that the brand added value and market adaptability have been enhanced， and the textile industrial chain and terminal market have stayed a basically smooth connection.

For the above-designated enterprises in the central and west regions from January to November， a proportion of the main business industry revenue to the entire industry amounted to 22.1%， 0.9 percentage point higher than the same period of a year earlier； annual fi xed asset investment completed accounted for 40.2%， up by 1.2 percentage points year on year， together with growing in-depth industrial area layout adjustments. During the fi rst 11 months， the above-designated enterprises saw a profi t margin of 5.1%， increasing 0.1 percentage point year on year； fi nished goods turnover rate reached 20 times/year， an acceleration of 1.1% year on year； the asset-liability ratio was 54%， down by two percentage points， indicating the improvements in such comprehensive abilities as corporate earnings， market reaction and risk control as well as the quality of economic performance.

Still highlighted development pressures

In spite of the basically stable operation， the textile industry still faces more prominent pressures in its development. Especially since the second half of 2014， the growth rate of most indicators in the industry showed a downward trend month on month. The major issues that the industry is facing are as follows：

Firstly， domestic cotton market situation is more complex， and the effect of the new policy of planting subsidies is still uncertain； therefore， cotton import quota and the policy of the release of the State Reserved cotton will still affect the cotton price movements. The price differences between domestic and overseas cotton remain at over 3，000 yuan/ton， and the textile enterprises have not been completely relieved from the pressures.

Secondly， the overall costs continued to rise； the industry average wage increased about 10% year on year； cotton prices was about 30% higher than the international market on the average； dye prices had risen 150% since the previous year. It is to such an extent that the medium-sized and small enterprises have to bear the cost burden， highlighting the plight of their survival.

Thirdly， in face of more intense international competition and the high costs， the international market share of Chinas textile industry declined to some extent. From January to November， the shares accounted in the United States， Japan， and EU import markets presented a decrease of 0.8， 3.9 and 0.5 percentage points respectively.

Fourthly， the brick-and-mortar retail channel slowed down its growth. The retail sales of above-designated garments， footwear， hats， and knitted textiles only saw an increase of 10.9% year on year in 2014， 0.7 percentage point lower than that in 2013 and 1.1 percentage points lower than the growth rate of total retail sales of social consumer goods.

Last but not the least， under the grim situation of environmental protection， the industry is required higher standards in pollutant discharge； in addition， the expanded scope of monitoring and the heavier task of total emission reduction made the medium-sized and small enterprises short of adaptability to response. The dyeing and printing industry is suffering serious limitations in upgrade and development owing to the local governments “one size fi ts all” management.

Economic operation trend of the industry in 2015

The textile industry in general is still facing a more complex development situation in 2015， together with a variety of external risk factors； therefore， it is a very difficult task to continue maintaining stable and healthy development.

Internationally， in 2015， the world economy is expected to see a slight growth in the support of the recovery in the United States； however， it is hardly to present remarkable improvements in the overall trend of slow recovery because of many uncertainties such as fi nancial market fl uctuations and geopolitical risks. In developed countries， the markets are mature so that economic recovery can only play a limited role in promoting the demand growth for textile and apparel products； while the demand growth in emerging markets is diffi cult to have a signifi cant improvement due to macroeconomic fl uctuations. It is predicted that the overall growth in the international market will remain the same as in 2014， or a slightly faster growth rate.

Domestically， the macro-economic growth in China will remain steady at high speed， and along with the growing incomes and steady urbanization， domestic demand will continue to expand. However， since consumption upgrade has become the main features of domestic demand growth at this stage， as the daily necessities， it is diffi cult for clothing to see significant improvement in growth rate of total consumption. It is expected that domestic demand retail scale growth rate will remain basically the same as that in 2014， and consumers design and development in personalization for textile and apparel products as well as demand for marketing mode innovation will become the main variation characteristics of domestic consumption.

In terms of production factors， the implementation of cotton subsidy measures will promote domestic and overseas cotton price difference to gradually adjust to a reasonable range， which is to guarantee the long-term supply of raw materials as well as a stable industry operation. However， the domestic cotton market will remain for some time a fl uctuated adjustment period， and the textile businesses still have to face cotton price differences. In addition， the implementation of the subsidy policy as well as the effect of the State Reserved cotton release policy and import quotas will have a signifi cant impact on domestic cotton. The textile industry factors are still encountering many uncertainties in supply environment.

Taking all factors in all， the overall textile industry in 2015 is expected to continue maintaining the smooth operation， but due to various uncertainties in internal and external markets and the supply of domestic factors， it is still hard for the industry to see signifi cantly reduced operating pressures compared with 2014. The growth rate of various operation indicators is predicted to basically remain the same as 2014， together with slightly improved export growth.

It is predicted that the textile industry will present a rising-after-restraining trend in economic growth for the whole year of 2015， while the growth rate may see a decline over 2014 in the f irst half owing to the relatively heavier pressures from cotton price f luctuation； however， during the second half， the industry will enjoy growing improvements in economic growth rate along with relatively smooth running of price difference range between domestic and overseas cotton based on proper application of such policies as cotton subsidies， cotton storage release， and import quotas.