Status quo of dyeing and printing industry in H1，2018

Operation of dyeing and printing industry in the first year

Generally， Chinas economy has been converted into “high-quality growth model” from “high- speed growth stage”， namely the new stage focusing on quality improvement instead of traditional stage inclining to quantity expansion.

In the first half year of 2018， the dyeing and printing industry run stably in case of a sharp drop in output growth.

Drop sharply in output growth

From January to June in 2018， the output of dyeing and printing cloth of dyeing and printing enterprises above designated scale reaches up to 22.499 billion meters， with a year-on-year decline of 17.2%. The growth has been fallen by 23.3 percentage points compared with the same period of 2017.

Under the effect and influence of national industrial policy guidance， strict environmental protection， industrial transformation and upgrading， market demand and other factors， the yield and growth of dyeing cloth are the lowest since “the 12th Five-Year Program”.

Basically sound performance

In addition to the silk， the proportion of three wastes of other four industries fell year-on-year. The profit ratio of sales for chemical fiber and linen increases， and the other three industries decreases on year-on-year basis； the silk declines 1.37%. Turnover rate of finished products of cotton and chemical fiber has been improved， while that of the other three industries declines on year-on-year basis. The turnover of account receivable and total assets turnover of linen has obvious improvement on year-onyear basis.

From January to June in 2018， the main business income of dyeing and printing enterprises above state designated scale reaches up to RMB 141.82 billion Yuan， with a year-on-year growth of 3.22%. The growth increases 1.83 percentage points compared with the first quarter， total profit is RMB 5.679 billion Yuan， with a year-on-year decline of 2.83%， the growth improves 19.27 percentage points； the profit ratio of sales is 4.0%， which is 0.25 percentage points lower than that of the same period of 2017 and 1.26 percentage points higher than the first quarter.

The quality and efficiency of the industry is basically sound， while the profitability declines slightly. The main business cost improves 3.82% on year-on-year basis； Due to the influence of rise of factor price and increased environmental investment， dyeing and printing enterprises still face huge pressure， which cannot be changed in the short term and become one of the reasons for the impact on industry performance. On account of demand and cost of down-stream products （garments）， the profit growth rate of chemical fiber was faster than that of main business of cotton， and the main business income and profit growth of chemical fiber are higher than these of cotton， while the profit ratio of sales of chemical fiber dyeing and printing finishing is 1.35 percentage points higher than that of cotton dyeing and printing finishing.

Expansion in scale of losses， increase in deficit

From January to June in 2018， there are 382 dyeing and printing enterprises above state designated scale， the scale of losses reaches up to 22.78%， which expanded 5.14 percentage points compared with the same period of 2017. The scale of losses achieves new high in recent years， the total loss is RMB 1.192 billion Yuan， with a year-on-year growth of 20.21%.

Operation of primary clusters

On the transition road， although experienced plenty of pains， Keqiao Dyeing and Printing Mill still runs sound under the general context of the overall decline of the industry. The main business income and total profit growth are higher than the related economic indicators of the enterprises above state designated scale according to the statistics of National Bureau of Statistics. Seashore industrial area， as the representative of agglomeration development of dyeing and printing industry， presents more obvious agglomeration upgrade affect after a decade of pushing.

At present， more than 60% of dyeing and printing equipment reaches the international advanced level； in addition， there are 20 national high-tech enterprises of textile dyeing and printing， and 19 provincial R&D; centers of high-tech enterprises. We will firmly carry out the agglomeration upgrade project in dyeing and printing industry， and regard it as an important breakthrough for promoting regional economic transformation and upgrading， and strive to promote the traditional textile industry toward the medium-high end of the industrial chain and value chain.

Main issues in dyeing and printing industry - pressure of rising costs High costs

The first option of main problems of production and management stage of enterprises：

The international market demand is insufficient（18.8%）， domestic market demand is also insufficient （6.3%）， trade friction is on the rise （12.5%）， the cost increases （50%）， capital shortage emerges（6.3%）， financing has difficulties （6.3%）， and energy conservation and emission reduction faces huge pressure （6.3%）.

The costs in the first half of 2018 are significantly higher than the same period of the last year. The prices for bulk chemicals including industrial salt， liquid caustic soda， hydrogen peroxide， sodium hydrosulfite and others have risen sharply.For instance， the price of industrial salt increases to 550 yuan/ton from 270 yuan/ton， which has been increased more than 2 times； the price of liquid caustic soda increases to 1180 yuan/ton from 650 yuan/ton， which has been increased more than 1.8 times； meanwhile， the price of hydrogen peroxide increases to 960 yuan/ton from 560 yuan/ton， which has been increased more than 1.7 times.

The price of dyestuff rises， of which VAT， disperse， reactive dyes increase greatly； the price has been increased by 8%-50% relying on different colors. The environmental costs and operating costs have risen due to constant improvement of governance requirements of waste water and waste gas.

Labor costs rise. Environmental protection pressure

Recently， a series of environmental protection policies have been issued in China， including Water Pollution Control Action Plan， Standard Conditions of Dyeing and Printing Industry， “13th FiveYear program” Ecological Environmental Protection Plan， Implementation Plan for the Permit System for Controlling Pollutants Emission， Environmental Protection Tax Law of the Peoples Republic of China， Pollution Prevention and Control Plan on Key Basin Water （2016-2020）， and Environmental Protection Plan for the Yangtze River Economic Belt， etc. Besides， higher requirements on energy conservation and emission reduction of dyeing and printing industry is put forward， and the environmental input and operating costs of enterprises are increased further.

The central environmental inspector， which started in 2016， has led a series of environmental protection storms in the dyeing and printing industry in recent years. In retrospect， the central environmental inspector has established supervision groups in every place so far， and the local governments make every effort to consolidate and expand environmental improvements.

Driven by increasingly high environmental requirements and social responsibilities， the investment and operation cost of enterprises on environmental protection management facilities continue to increase. Meanwhile， technological innovation and technological transformation， improve the level of technical equipment and clean production level； the upgrading of waste water treatment facilities satisfies the requirements of discharge of water pollutants. Besides， the waste gas treatment facilities are being upgraded， which meet the increasing requirements for waste gas treatment and up-to-standard discharge. Various supervisory systems including self-monitoring systems and so on are improved. According to the stipulation of Measures for Disclosure of Environmental Information in Enterprises and Institutions， Technical Guide for Self-monitoring of Pollutant Discharge Units - Textile Dyeing and Printing Industry （HJ879-2017） and other rules， the enterprises should develop their own monitoring schemes， carry out regular total indicator monitoring， standardize monitoring records and increase the intensity of environmental information disclosure. By measuring， the monitoring expenses of dyeing and printing enterprises are 580 million Yuan/year approximately if they implemented self-monitoring on the basis of HJ 879-2017， which accounts for 3.06% of total profits of industry （18.918 billion Yuan in 2017）.

Prediction of 2018

It is expected that the output of dyeing cloth will continue to decline in “the 12th five-year plan” period in 2018； main business revenue， profit and other major economic indicators will maintain low operation， while the export is predicted to improve. In addition， the production costs of dyeing and printing industry will remain high in general； the overall production and operation situation of the industry will remain grim， which will be more urgent to boost the high-quality development of the industry.