China’s textile and garment processing enterprises may be able to survive the winter safely in 2009
Data from many aspects shows that my country’s economic growth rate dropped significantly in the third quarter, and there is also the risk of a decline in demand for textiles and clothing caused by the economic recession in the country. According to WIND’s consumer confidence index statistics, my country’s consumer confidence also declined month by month in 2008. Therefore, the first half of 2009 will become a difficult period for the textile and apparel industry.
The overall expected policy is favorable
Due to the impact of the financial tsunami and its related effects, the current economic downturn in major countries has led to an overall decline in textile and clothing consumption. According to the forecast of the International Monetary Fund in November 2008, coupled with the sensitivity analysis of the growth rate of the self-imported textile and apparel amount of the United States and the European Union from 1990 to 2007 and the corresponding macroeconomics, it is expected that in 2009, the total self-imported textile and apparel amount of the United States will increase year-on-year. fell 5.1%, and the EU will fall 1.2% year-on-year.
Judging from the situation at the 2008 Canton Fair, textile and apparel exports in 2009 are not optimistic. my country’s textile and apparel production capacity is large and it is highly dependent on the three major economies of the United States, Europe and Japan. Under such economic crisis conditions, in the first half of 2009, the continued economic recession in the United States, Europe and Japan will make my country’s textile and apparel industry face hard situation.
However, there are also many positive factors.
In 2008, taking into account the severe situation faced by China’s textile and garment industry, the State Council increased the export tax rebate rate for textile and garment industry enterprises several times. Shows the government’s concern for this industry.
In China’s textile and garment industry, especially the small and medium-sized enterprises, it plays an important role in solving employment problems. Therefore, relevant national departments will further introduce some policy support. It is expected that the policy support measures that will be implemented and may be launched in 2009 will include: RMB devaluation, loan interest rate reduction, and local tax incentives for enterprises in the industry to promote employment.
The export tax rebate rate has been raised in place, interest rates have dropped, the RMB has been basically flat or depreciated against the US dollar, raw material costs have dropped, and export market share has increased, etc. continue to constitute the main driving force for export companies in 2009.
Some companies have stopped production and industry concentration has increased
Judging from the current situation, although some companies are in trouble and even suspend production or close their doors, the concentration of the industry has increased. The growth of leading companies is faster than the overall economic decline of the industry. Leading companies rely on their funds, scale, Customer advantages and risk resistance can achieve a higher growth rate than the industry average. From 2001 to the first three quarters of 2008, the total profit share of the top 10 listed textile and apparel companies in the top 40 increased from 53% to 68%.
The international competitiveness of China’s textile and apparel industry is still there. The increase in market share can effectively resist the slowdown in demand. With the industry’s comprehensive supporting advantages, the comprehensive price of my country’s textile and apparel is still significantly lower than that of major competing countries. In 2008, the EU lifted China’s quantity restrictions. In the first nine months, China’s exports to the 15 EU countries increased by 33.6%, and its market share exceeded 35%. From January to August 2008, the average price of China’s textile and apparel exports to the United States was only 83% and 82% of that of India. In the past 17 years, China’s exports of textiles and apparel to the United States have increased eightfold, and the contribution to growth from increased share has reached 70%. In 1991, the U.S. GDP fell by 0.2%, but China’s textile and apparel exports to the United States still grew by 5.5%.
Processing and “binding” brands to spend the cold winter together
The macroeconomic outlook is expected to slow down, the growth rate of residents’ income has dropped, and the growth rate of domestic sales of clothing has also gradually slowed down. From the first to the third quarter of 2008, the per capita disposable income of urban residents increased by 14.68% year-on-year, and the per capita cash income in rural areas increased by 19.57% year-on-year. The growth rate decreased by 2.56 points and increased by 4.15 points year-on-year. From the first to the third quarter of 2008, the per capita clothing consumption of urban residents in my country was 839 yuan, a year-on-year increase of 10.58%, and the growth rate dropped 5.27 points year-on-year; from the first to the third quarter, the per capita clothing consumption of rural residents was 150 yuan, a year-on-year increase of 9.64%, and the growth rate dropped year-on-year. 7.28 points. The retail volume of clothing in large shopping malls across the country increased by 11.03% year-on-year from January to August 2008, and the retail sales increased by 20.81% year-on-year.
The proportion of my country’s per capita clothing consumption and home textile consumption is far lower than that of developed countries. In the long run, my country’s domestic brand retail and advantaged home textile enterprises will still maintain good growth. With reference to the evolution of the relationship between residents’ clothing consumption and macroeconomics in the United States, South Korea, India and other countries over the past 40 years in multiple economic cycles, combined with the history of my country’s domestic residents’ clothing consumption and macroeconomics from 1992 to 2007, combined with the macroeconomic analysis of GDP in 2009 According to the judgment, it is estimated that in 2009, my country’s overall domestic clothing market will have a year-on-year growth rate of 1.3%-5.3%, with an average of 3.3%.
At the Joint Annual Meeting of the Professional Committees of the China Garment Association held in November 2008, Gao Zhiwei, President of Hempel International Group, put forward a point of view that was generally recognized by industry insiders: In 2009, export companies can choose suitable domestic superior clothing. Brands cooperate to jointly develop domestic and foreign markets. This formulation has practical feasibility: processing companies have good processing and supporting capabilities, brand companies have mature domestic market channels, and have relatively rich brand operation experience. In 2009, which was generally not optimistic, the two types of Types of enterprises cooperate with each other to complement each other’s advantages, which can be regarded as a way to jointly spend the cold winter by “you lend me a house and I lend you cotton clothes”.
Exports will still grow but at a smaller rate
Europe, the United States and Japan are the main markets for my country’s textile and apparel exports. From January to October 2008, the cumulative export of textiles and clothing was US$153.7 billion, a year-on-year increase of 8.6%, and the growth rate dropped by 11.5 points compared with the same period last year. From January to September 2008, my country’s exports to the 15 EU countries were US$25.9 billion, a year-on-year increase of 33.6%, exports to the United States were US$18.1 billion, a year-on-year decrease of 0.72%, and exports to Japan were US$14.6 billion, a year-on-year increase of 6.41%. The 15 EU countries, the United States, and Japan were respectively Accounting for 19.54%, 13.66% and 11.01% of total exports.
Sensitivity analysis of textile and apparel consumption in major export regions shows that China’s textile and apparel exports are expected to grow by 6.9% and 1.6% year-on-year in 2008 and 2009, reaching US$187.7 billion and US$190.6 billion respectively.
The above forecast takes into account the factors that the RMB exchange rate against the US dollar will maintain a narrow range of fluctuations in 2009. At the same time, it remains cautiously optimistic about the policy of the United States after the abolition of textile and apparel quotas in 2009, that is, it is assumed that it will not introduce rigid quantity controls. The comprehensive supporting advantages of the industry will ensure that the market share of domestic enterprises will further increase by about 3 points.
In addition, in 2009, the United States lifted restrictions on the quantity of Chinese textiles and clothing, and the country raised the industry’s export tax rebate rate to 17%. The RMB has stabilized or depreciated against the US dollar. According to the economic forecast of the International Monetary Fund and our analysis of textiles and clothing from major countries Based on the economic sensitivity analysis of imports, it can be expected that industry exports will still grow in 2009, and the growth rate will not be too large, within single digits.
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