China Knitting Industry Association: Analysis Of Economic Operation Data Of Knitting Industry In The First Half Of The Year

On the whole, the knitting industry was under pressure in the first half of this year. Thanks to the release of the vitality of the domestic demand market, the production and marketing situation has improved from the first quarter, but the growth momentum is still insufficient, and the industry is still in the recovery stage; At the same time, affected by such adverse factors as serious inflation in Europe and the United States, a sharp shift in macro policies, and the deterioration of the international situation, the pressure on the external demand market has not eased, and overseas orders have declined significantly.

　　 01 Decrease in production and sales has narrowed

According to the statistics of the National Bureau of Statistics, from January to June 2023, the clothing output of enterprises above designated size in China will decline by 7.84% year on year, 1.86 percentage points lower than that in the first quarter of this year; Among them, the production of knitted clothing decreased by 6.65% year on year, with a growth rate of 2.88 percentage points higher than that of the first quarter. The proportion of knitted clothing output in the total clothing output is 64.40%, 2.27 percentage points higher than that of 2022. In recent years, the proportion of knitted clothing in the total clothing output has shown an obvious upward trend, reflecting the continuous growth of demand for knitted clothing in the consumer market.

In terms of revenue, the performance of the second quarter was significantly better than that of the first quarter, but it was still in the stage of recovery growth. From January to June, the main business income of enterprises above designated size in the knitting industry decreased by 6.19% year on year, 4.11 percentage points lower than that of the first quarter. The changes in operating costs of enterprises above designated size were basically in line with the operating revenue, down 6.21% year on year. Among them, the operating revenue of enterprises above designated size for knitted fabrics decreased by 2.52% year on year, and that of enterprises above designated size for knitted clothing decreased by 8.28% year on year, with the decline rate slowing down by 5.43 percentage points and 3.39 percentage points respectively compared with the first quarter of this year.

　　 02 Profitability improved

Since this year, the industry profits have continued to shrink year-on-year, but as enterprises actively respond to external changes and adjust their development ideas, the situation began to improve in June. From January to June, the total profit of enterprises above designated size in the knitting industry decreased by 8.49% year on year, a decrease of nearly 10 percentage points compared with the first quarter of this year. Knitted fabrics performed better than knitted garments, with total profits falling by 6.84% and 9.15% year on year, respectively, 11.42 percentage points and 9.53 percentage points lower than that in the first quarter of this year.

At the same time, the profit margin and loss of enterprises above designated size in the knitting industry have improved, but the operation quality still needs to be improved. From January to June, the profit margin of enterprises above designated size in the knitting industry was 3.93%, which was basically the same as that of the same period last year, a slight decrease of 0.1 percentage points year-on-year, and an increase of 1.56 percentage points compared with the first quarter of this year; The loss area was 28.62%, 4.84 percentage points lower than that of the first quarter. Over the same period, the profit margins of knitted fabrics and knitted garments were 3.06% and 4.46%, up 0.09 and 2.45 percentage points respectively from the first quarter; From January to June, the losses of knitted fabrics and knitted garments were 26.26% and 29.89%, respectively 6.85 and 3.76 percentage points lower than those of the first quarter. In the same period, the industry's total asset turnover rate and finished product turnover rate also slowed down year on year, and the operation quality still needs to be improved.

　　 03 Export continued to shrink

Since the second quarter of this year, the situation of foreign trade in the industry has remained relatively severe. After the short-term recovery of the release of backlog orders in early March this year, it has begun to turn downward. According to the statistics of China Customs, from January to July this year, the national textile and clothing exports reached US $169.79 billion, a year-on-year decrease of 10%, and the decline in the first half of the year increased by 1.7 percentage points. Among them, textile exports reached 78.85 billion US dollars, down 11.9% year on year; Clothing exports reached 90.94 billion US dollars, down 8.3% year on year.

From January to June, the export of China's knitting industry was 48.771 billion US dollars, down 10.25% year on year, 4.46 percentage points more than that of the first quarter. Among them, the export volume of knitted fabrics was US $10.772 billion, down 14.4% year on year; The export of knitted clothing and accessories was 37.999 billion US dollars, down 8.4% year on year. In June, China's knitting industry exported 9.777 billion US dollars, down 15.75% year on year.

From the perspective of major export markets, the export volume of China's knitting products to several major export destination countries from January to June still kept shrinking, and the decline trend was larger than that of the first quarter. From January to June, China's exports of knitted products to ASEAN, the United States, the European Union and Japan were US $9.036 billion, US $8.465 billion, US $6.675 billion and US $2.983 billion, respectively, down 11.91%, 22.14%, 19.09% and 11.54% year on year.

Over the same period, China's exports to Central Asia, the Middle East, Russia and other regions and countries have increased significantly. From January to June, China's exports of knitting products to the five Central Asian countries totaled 2.406 billion US dollars, up 61.15% year on year; Exports to Russia reached 1.088 billion US dollars, up 45.34% year on year; Exports to Saudi Arabia, Turkey, Nigeria, Brazil and other countries also increased significantly.

Since this year, the import demand of knitting products from major developed economies in the international market, such as the United States and the European Union, has declined, and the share of Chinese products in the above markets has also declined. According to the statistics of OTEXA, Eurostat and Japan Customs, from January to May this year, China accounted for 18.42% and 53.73% of the imports of knitted products from the United States and Japan, respectively, a year-on-year decrease of 1.77 percentage points and 3.65 percentage points; From January to April, China accounted for 23.13% of the EU's import of knitted products, a year-on-year decrease of 2.51 percentage points.

From January to April, the import volume of knitting products from the EU fell 9.14% year on year, including 18.03% year-on-year decline in imports from China; From January to May, the imports of knitted products from the United States fell by 29.27% year on year, of which the imports from China fell by 35.48% year on year; From January to May, Japan's imports of knitted products increased by 6.99% year on year, of which imports from China increased by 0.21% year on year. The decline in exports is the result of the decline in foreign demand, order transfer, high base multi frequency resonance, and also the process of returning to normalization before the epidemic.

From the perspective of category breakdown, the export volume of most products in the first half of the year declined year on year, among which the decline of cashmere fabrics, sportswear and knitted children's wear was more obvious, with a year-on-year decline of 13.22%, 14.93% and 24.55% respectively. The export volume of knitted socks basically maintained the level of the same period last year.

According to the statistics of local customs, the export volume of Zhejiang, Guangdong, Fujian, Jiangsu and Shandong, the five major textile provinces in the first half of this year, declined compared with the same period last year. Among them, the export volume of Jiangsu Province declined significantly, down 23.96% year on year. However, there are also areas that are rising against the trend. From January to June, the export volume of knitted products in Xinjiang and Guangxi was 2.148 billion US dollars and 1.223 billion US dollars respectively, with growth rates of 99.45% and 172.55% respectively. Industries are transferred from the eastern coastal areas to the central and western regions in an orderly manner, and the regional structure is more optimized. Since this year, Xinjiang has benefited from a series of favorable policies of the state, as well as the demand of Russia, Central Asia and other markets, and its exports have remained high; Guangxi seized the opportune moment to launch enterprises to go to the ASEAN and Middle East markets to grab orders and expand the market, and achieved positive results.

　　 04 The domestic market continues to recover

In June, China's domestic market sales continued to recover. In the first half of the year, China's retail sales of consumer goods totaled 22.76 trillion yuan, up 8.2% year on year, 2.4 percentage points faster than that in the first quarter. Among them, the retail sales of clothing, shoes and hats, knitwear and textiles above the designated size were 683.4 billion yuan, up 12.8% year on year. From January to June, the online retail sales of physical goods nationwide reached 6.06 trillion yuan, up 10.8% year on year, including clothing goods, up 13.3%. At the same time, after falling below 90 points for nine consecutive months, China's consumer confidence index has shown a steady recovery since January this year, indicating that the domestic consumer market has continued to recover and the economy has recovered well.

In addition, according to the data of the National Bureau of Statistics, the purchasing managers' index (PMI) of China's manufacturing industry in July was 49.3%, up 0.3 percentage points from the previous month, and the prosperity level of the manufacturing industry has improved. Among them, the production index is 50.2%, still higher than the critical point, and the manufacturing production keeps expanding; The index of new orders was 49.5%, up 0.9 percentage points over the previous month, and the prosperity of manufacturing market demand continued to improve.

　　 05 Trend outlook in the second half of the year

Looking forward to the second half of the year, the knitting industry is still facing a complex market demand environment. In terms of domestic sales, China's macro-economy has continued to recover. The introduction of policies and measures such as the Opinions of the CPC Central Committee and the State Council on Promoting the Development and Growth of the Private Economy will inject new momentum into the development of enterprises. At the same time, the national consumption promotion policy has gradually come into effect, plus holidays and shopping festivals such as the National Day, the Double 11 Festival and the Spring Festival, it is expected that the recovery growth of domestic sales will be better than the first half of the year. However, the overall domestic demand is still insufficient, and the endogenous impetus for the economic recovery is not strong. It is necessary to consolidate the momentum and make progress while maintaining stability. In terms of export, the situation is still severe due to the economic downturn caused by the outbreak of overseas financial risks. The subsequent economic recession risks in Europe and the United States may increase. Exports will face the impact of the decline in foreign demand from the European and American markets and the profound adjustment of the international supply chain. With the reshaping of the global economic pattern, enterprises need to accurately grasp the new changes in global supply chain cooperation, further focus on and develop markets such as RCEP, Central Asia, the Middle East, and Russia, actively adapt to and flexibly respond to the international trade environment, and think about the industrial development layout in the balance of efficiency and security.

(Source: China Knitting Industry Association)