Economic operation of wool industry in 2014

By+Li+Yili

In 2014， Chinese wool industry was faced with slowdown of growth and reduced investment， especially the second half year， which became smooth with the effort of structural adjustment， innovation of end products as well as development and expanding of sales channels， etc. the year of 2015 will still witness a not-so-optimistic situation in wool industry.

Industrial added value

According to the National Bureau of Statistics， in 2014， the growth rate of wool enterprises above designated size fell by 2.2 percentage points in industrial added value over the same period of previous year， and slightly lower than the annual growth rate of textile industry in industrial added value.

From January to November， the 1185 wool processing and dyeing & finishing enterprises above designated size made main business income of 230.571 billion yuan， with year-on-year increase of 12.34%， the growth rate falling by 4.71 percentage points over the same period of previous year. And the average profit margin was 5.06%， rising by 0.1 percentage point over previous year and slightly lower than the average profit level of 5.11% of the whole textile industry. The average gearing ratio of enterprises above designated size was 53.17% in wool industry， declining by 3.17 percentage point over the previous year. A total of 39.245 billion yuan was in inventory， with an increase of 11.19%， significantly higher than the growth rate of 3.52% in textile industry.

Production

In the first 11 month of 2014， wool yarn made a year-on-year increase of 4.36% in production， accelerating by 1.40 percentage points compared with growth in the first half year and growing by 6.04 percentage points over the same period of previous year. In terms of wool fabrics， the production experienced monthly slowdown in year-on-year growth since July of 2014， which even developed into neg-ative growth in the fourth quarter. Up to November， the cumulative production of wool fabrics was 536 million meters， down by 1.61% over the same period of previous year， with growth rate falling by 2.68 percentage points compared with the first half year and declining by 2.97 percentage points over 2013. According to National Bureau of Statistics， from January to December of 2014， apparel， shoes， hats as well as other knitted and weaved textiles gained year-on-year growth of 10.9% in total retail sales， with growth rate higher by 0.9 percentage point over the first half year， yet lower than that of the total retail sales of social consumer goods， which was as high as 12%.

And the suits， as the main downstream products of wool fabrics， made year-on-year increase of 0.58% from January to November of 2014， among which the production of business suit fell by 4.09%， mainly flat with decline rate of the first half year.

Investment

In 2014， the wool industry completed fixed-asset investment of 33.032 billion yuan， increasing by 11.38% over the previous year， with growth rate falling by 8.46 percentage points compared with the same period of 2013 and decreasing by 10.23 percentage points than first half year， among which there were 402 completed projects， growing by 4.15% over the same period of previous year， with growth rate increasing by 3.10 percentage points than 2013 but falling by 53.88 percentage points than the first half year. New projects reduced by 7.32%， dropping by 18.80 percentage points from 2013， with growth rate falling by 0.35 percentage point compared with the first half year.

Import and export

In the first 11 months of 2014， the wool products and raw materials amounted to $ 16.289 billion in imports and exports， with a year-on-year increase of 4.43%， among which export contributed to $ 12.474 billion， with an increase of 8.27% and total import was $ 3.815 billion， down by 6.42%.

The wool knitted products stood out of all the wool products with total exports of 127 million pieces in wool knitwear， growing by 17.09% than the same period of 2013， with growth rate increasing by 12.28% over the previous year， but wool yarn exports fell by 2.31 %， with decrease rate narrowing by 6.66 percentage points compared with the first half year.

Meanwhile， the wool application in home textile also increased： in the first 11 months of 2014， the total exports of wool blankets grew by 112.14%， with growth rate higher by 126.44 percentage points over the same period of last year； wool carpet rose by 14.97%， with growth rate increasing by 20.14% compared with the same period of 2013.

In 2014， the US and European markets enhanced the consumer demand for wool products： Chinas exports of wool products rose by 8.33% to Euro- pean Union and 13.59% to the United States， with growth rate increasing by 1.78 and 10.58 percentage points respectively over the previous year. Although slightly decline happened to the total amount， the wool yarn exports to the US increased by up to 64.6% over the previous year.

Outlook and forecast

Since 2014， especially the second half year， the domestic economic experienced general slowdown and the annual growth rate of GDP was 7.4%， down by 0.3 percentage point compared with 2013， and 2015 is likely to continue the trend of decline. Therefore， the investment， which served as important driving force in the past， has been insufficient to support the development of wool industry. Meanwhile， uniform market narrowed due to the impact of policies， which will also affect the domestic demand of wool industry. In the future， wool enterprises， especially worsted companies will be faced with many challenges， such as development of new markets， adjustment of product structure and change of marketing model.

From a global perspective， the major producing countries like Australia exported 216，600 tons in the first 11 months of 2014， down by 11.98% over the same period of 2013， with export value falling by 14.08%. The wool production was at historic low for a long time， indicating the decline of wool industry caused by substitutes of wool products in the market， which will affect the development of the industry in the long term.

In addition， according to questionnaire on managers and entrepreneurs of textile enterprises， many Chinese wool companies reflected that the second half year was not as good as the first six months in production， orders and profitability， and the market demand and industry situation will not be optimistic in the next year. 2015 will be the year full of new challenges and development for wool industry.