Status quo of China’s home textile industry,Jan.-Oct.,2017

By+Flora+Zhao

In January - October， 2017， Chinas home textile industry as a whole continued to maintain a steady growth； investor confidence in the industry was further enhanced； and the growth rate of investment in fixed assets of all sub-sectors achieved positive growth. However， the data show that the cost of the industry continues to be high， resulting in margins squeezed.

Stable overall operation & significantly increased investment growth

From January to October in 2017， 1，918 abovedesignated textile enterprises achieved main business revenue of 240.39 billion yuan， an increase of 7.93% year on year. Among them， the domestic output value was 185.75 billion yuan， a year-on-year increase of 8.76%. The growth rate of main income and domestic output increased by 4.47 percentage points and 4.56 percentage points over the same period of the previous year respectively.

According to the data from National Bureau of Statistics， from January to October last year， home textile industry saw a total investment of 61.3 billion yuan， an increase of 6.43%， and a continuous growth rate of 17.27 percentage points higher than the previous year and 1.6 percentage points higher over the same period the previous 9 months last year. The growth rate of investment in the three sub-industries continued to rise on the basis of the first nine months of last year （Table 2）.

High costs squeezed profit margins

From January to October， the above-designated home textile enterprises achieved a total profit of 13.16 billion yuan， a year-on-year increase of 4.9% and a profit margin of 5.48%. The total profit slightly slowed down from the same period of the previous year， representing a decrease of 3.67% over the first nine months and a decrease of 2.36% from the same period of the previous year. The reasons for the slowdown in profit growth are as follows：

From January to October last year， the above-designated home textile enterprises realized a total main business cost of 210.89 billion yuan， an increase of 7.84% year on year. The growth rate has been consistent with that of main business revenue. The ratio of industrys main business cost to main business revenue was 87.7%， 2.2 percentage points higher than that of the industrial enterprises above designated size in the country. From the recent changes in the ratio of the main business costs of the industry to those of the main business revenue， the proportion has been consistently higher than the average level of industrial enterprises above designated size in China. The high costs have limited the profit margins of home textile enterprises.

During the first ten months of last year， the operating expenses， administrative expenses and financial expenses of home textile enterprises above designated size increased by 15.02%， 9.94% and 16.68% respectively， all higher than the growth of main business revenue. Since the beginning of 2017， the growth rate of such expenses has been further expanded， which was also reflected in various sub-sectors. The industrys original profit margins are further squeezed.

In the future， on the one hand， it is a must to focus on improving business management capabilities and reasonable cost control to increase revenue. On the other hand， enterprises themselves are also required to pay attention to improving the added value of products and promoting enterprise restructuring and upgrading in order to explore and expand new profit margins.endprint