Cotton Textile Industry Capacity Reduction Enterprises Urgently Need Strategic Pformation

Influenced by many factors, the production capacity of cotton textile industry in China has been greatly reduced, and the profits of cotton textile enterprises have been reduced, and the industry has entered a large-scale shuffling period.

Reporter survey found that the main task of cotton textile enterprises in China is to carry out strategic pformation from 3 levels, namely, increasing the rapid reaction mechanism, upgrading technology and equipment, and improving the level of mechatronics.

Changzhou Wujin district is South of Jiangsu's traditional cotton textile base, with more than 1500 registered textile enterprises.

Shen Yihua, general manager of Wujin cotton mill, a large local cotton textile enterprise, told reporters that the domestic cotton spinning industry, especially the eastern cotton spinning industry, is undergoing severe tests.

Shen Yihua introduced that in 2005, the company had a profit of 15 million yuan. By last year, the company had lost 3 million yuan. The main reason for the loss of profit was the rising cost.

For example, the water resources fee has increased by 0.5 yuan / ton, and the annual production of 20 thousand tons of sewage has reached about 10000000 yuan.

The cost of land resources rose from 0.5 yuan per mu to 6 yuan per mu last year, and this year it will increase to 16 yuan per mu.

In addition, electricity prices, coal prices and diesel prices have risen, and workers' wages have increased year by year.

While the expenditure is rising, the tax revenue of cotton textile enterprises has not decreased, accounting for 3%~5% of sales.

Shen Yihua said that the new land and factory buildings will no longer be used to produce textiles. This is because the investment in equipment will only be 60 million ~7000 yuan, and the output value of a year will be about 80 million yuan. The investment recovery cycle will be relatively long.

General manager of Wujin tiapai color cotton company, Mr. Tong Bao, said that because of the enormous pressure now facing the company, the company intends to stop the garment factory.

He said that the main difficulties faced by enterprises are three: first, the decline in labor cost advantage; two, the decline in raw material superiority, and now the domestic cotton is more expensive than the US market; three, the reduction of the policy advantage, such as the overall reduction of the export tax rebate in the textile industry.

In Wujin, the average profit of textiles in 2006 was only 3.5%, down 2% last year.

At present, most of the self-employed households have been closed down, and the handicraft shops have been completely shut down.

Shandong's Wei Qiao textile mill, the largest cotton textile enterprise in China, has shut down 2 million spindles, and the production capacity of Anqing textile mill and Zhangjiagang Huafang textile mill is also shrinking.

Cotton textile industry entered a large-scale shuffling period. According to the information released by China Cotton Textile Industry Association, the export growth of cotton textile industry last year was about 15%, 10 percentage points lower than that of the previous year.

According to the association, there were four unfavorable factors in textile exports last year: the appreciation of the renminbi continued to weaken the price advantage of China's textile exports; the impact of the export tax rebate rate reduction appeared last year; the unstable trade environment brought by the restrictions and trade frictions in Europe and America provided an objective opportunity for competitors; the industry still faced the constraints of domestic cotton shortage, long-term dependence on chemical fiber raw materials, excessive printing and dyeing water consumption, unbalanced energy supply and insufficient labor supply.

According to Lin Houyu, chief engineer of Jiangsu textile industry group, the textile industry, including cotton textile, has entered a large-scale shuffling period, mainly in two aspects.

First of all, the industrial layout is undergoing large-scale adjustment.

The Eastern Textile industry has been moving to the Midwest as a whole. The processing links of Shanghai textile enterprises have almost completely moved out, and some old textile enterprises in the East have begun large-scale relocation into industrial parks.

Secondly, there are signs of polarization in the industry.

According to statistics, since 2005, Jiangsu textile enterprises have been increasing in total volume of losses, and the total profit is also increasing.

This shows that the profits of the well run enterprises have been further improved, while the losses of the poorly run enterprises are aggravating.

The main reason for the aggravation of some enterprises' losses is that the low level of repeated construction is serious, resulting in vicious competition and declining profits.

The hidden surplus of China's textile capacity is mainly manifested in the low level expansion of low-end links, while in the high-end sector, the main factors hindering enterprises from participating in international competition are backward technology and equipment and lack of independent brands.

In addition to resource, exchange rate, tax rate and other factors, the rapid rise of cotton textile industry in developed countries and neighboring countries has also posed a threat to Chinese enterprises.

India has launched the new national textile industry policy, and will increase its textile and clothing exports from the current 15 billion US dollars to 50 billion dollars / year by 2010. Pakistan plans to increase production capacity and replace new equipment with an annual increase of 1 billion US dollars. China is an important target market.

India and Pakistan have lower labor costs, land costs and raw material costs than China, so products are more competitive in price.

At present, the quality of the cotton yarn of the "three funded" enterprises in addition to some imported equipment is superior to that of India, Pakistan and Indonesia. Most of the domestic cotton yarn quality is inferior to India and Pakistan, and the sales of these cotton and other textile products in China's market are very strong.

In view of the above situation, textile experts suggest that enterprises should carry out strategic pformation at the following three levels.

Enterprises should strengthen management, increase the quick reaction mechanism, and take the route of "small batch, multiple varieties, fast delivery and high quality".

Director of Human Resources Department of Wuxi cotton mill, Da Ping, told reporters that in the 90s of last century, the international spinning technology developed on the basis of single machine automation, and continued to develop in the direction of continuous production. Europe's automatic spinning workshop had only 6 workers in 10000 spindles.

There are about 60 workers in Wuxi cotton mill, and the number of new factories has been reduced to 30, while most of the cotton textile enterprises in China use about 200 people.

Such management is not competitive.

At present, the developed countries, represented by the United States, have established a rapid reaction system among retail, garment and textile factories.

After receiving orders from the clothing factories, the textile factories can provide the required fabrics in 12 hours, while the general enterprises in China need more than 12 days.

The new projects of enterprises focus on upgrading technology equipment and achieve leaping development.

Bai Guohua, director of the Jiangsu provincial economic and Trade Commission's two industry, said that the level of equipment is the basic condition for the competitiveness of the textile industry. Therefore, cotton textile enterprises should devote limited funds to the use of advanced cotton textile technology, and support the use of new and efficient cotton.