What’s behind Tongzhou’s home textile export growth returning to zero

In 2013, the export volume of home textile products in Tongzhou District, Nantong City, Jiangsu Province was US$980 million, accounting for nearly 50% of Nantong’s home textile export volume. In the first half of this year, Tongzhou’s home textile exports totaled more than 500 million US dollars. Although it is the largest export industry in the region, the growth rate dropped from 0.5% from January to May to about 0.4%, and its proportion also dropped from 40% in the past. %, a decrease of nearly 38%. Among them, the export volume in June was nearly 70 million US dollars, a year-on-year decrease of 0.1%. The home textile industry, which once made great contributions to Tongzhou’s foreign trade, is now facing many difficulties.
Recently, when the author visited some home textile foreign trade companies with relevant personnel from the Tongzhou District Commerce Bureau of Nantong City, Jiangsu Province, he found that many companies are facing multiple problems. Ji Wei, chief of the Foreign Trade Management Section of the Tongzhou District Commerce Bureau, believes that from the perspective of the industry development environment, problems such as labor and other production costs continue to increase and financing difficulties are difficult to completely improve in the short term. The price gap between domestic and foreign cotton is still widening, and the development environment of the home textile industry Still grim.
​Trouble 1
Raw material prices fluctuate and production costs increase
From the perspective of the general environment, in recent years, due to factors such as weakening international market demand, slowing domestic market demand growth, and excessive price differences between domestic and foreign cotton, my country’s home textile industry has shown a downward trend, and production growth has dropped significantly. , the number of exports has decreased, corporate efficiency has shown signs of decline, and the cotton spinning and chemical fiber industries at the front end of the industrial chain have also suffered increased losses, production has grown at a low speed, and the growth rate has fallen rapidly.
From the perspective of the small environment, the upward pressure on cost factors such as labor, raw materials, resources, and the environment is long-term and rigid, and these have a greater impact on the development of small and medium-sized enterprises. This year, fabric companies in Tongzhou have been greatly affected by fluctuations in cotton yarn prices, and the situation is worrying. A company’s import and export volume last year reached US$22.938 million, ranking among the top 30 companies in Tongzhou in terms of total import and export volume. However, in the first half of this year, its import and export volume fell by 44.7% year-on-year. According to reports from enterprises, affected by the rising prices of raw materials such as cotton yarn, the number of orders has significantly decreased, and foreign customers have begun to shift to Southeast Asian countries such as Vietnam and the Philippines.
​Trouble 2
Low technological content and single product structure
The home textile industry is one of the pillar industries of Tongzhou’s foreign trade. The Tongzhou District bedding base has formed a complete industrial chain integrating spinning, weaving, printing and dyeing, finished products, packaging, and sales. However, most of the products of these home textile companies Positioned at the mid-to-low end, with low technological content and low added value, they usually focus on “running volume”. Such a product structure can indeed quickly open up the market in the short term, but in the long run, due to the low cost factors of countries such as the Philippines, Vietnam, and Malaysia, the competitiveness of Tongzhou’s mid-to-low-end home textile companies will gradually weaken.
In contrast, Jiangsu Golden Sun Textile Trading Co., Ltd. relies on its strong R&D team to continuously develop new products with high technological content. Golden Sun Home Textile Design Institute has also become a home textile product design and development service platform in Nantong City, and its designed products continue to occupy the high-end Home textile market and won higher profits. Last year, the company achieved export volume of US$11.261 million, an increase of 132.3% over the previous year. According to the person in charge of the company, the company’s orders for the first half of this year were finalized at the beginning of the year.
​Trouble 3
Rising labor costs highlight employment problems
After the Spring Festival, the recruitment market gradually heated up, but some small and medium-sized home textile companies in Tongzhou experienced difficulty in recruiting workers and labor shortages. Even after the Lantern Festival, workers were not fully in place.
Such problems are mainly caused by the continued rise in labor costs. The wages of front-line workers in a home textile company have now risen to 4,000 yuan to 6,000 yuan, which has put the company under pressure, and it is difficult to maintain long-term employment. The loss of workshop workers and business talents has also It brings difficulties to the sustainable production and operation of enterprises. At the same time, some large foreign customers also have stricter requirements for corporate employment. For example, workers must be provided with “five insurances and one housing fund” and arrange weekends off, etc., which has put many home textile companies under great pressure.
​Trouble 4
Financing is difficult and expensive, which hinders the development of enterprises
Difficult and expensive financing are bottlenecks that plague the development of small and medium-sized enterprises. Although the country has continuously introduced policies to promote financial services to increase services for small and medium-sized enterprises, small and medium-sized enterprises themselves have weaknesses such as opaque accounts and lack of effective mortgages and pledges. , and commercial banks’ profit considerations make it difficult for small businesses to obtain loans. They mainly rely on borrowing from relatives and friends, or private loans at high interest rates. Therefore, there is still a long way to go to solve the financing bottleneck of small and medium-sized enterprises.
​Trouble 5
Exchange rates are volatile and profit margins are shrinking
The RMB has depreciated this year, but the exchange rate has begun to rebound recently. On July 21, the central parity rate of the RMB against the U.S. dollar was reported at 6.1547, an increase of 21 basis points from the previous trading day, ending the “six consecutive declines” trend. The appreciation of the RMB has caused great losses to export companies, because the appreciation of the RMB has caused the prices of Chinese goods to rise in overseas markets, and the profit margins of companies calculated in local currency will shrink, causing the cost of exports to rise and affecting the company’s ability to compete in the international market. Competitiveness. A home textile company suffered a loss of 2 million yuan due to exchange rate in 2013. Coupled with high tariffs, the company was not competitive in terms of price, so it planned to increase domestic sales this year.� example to alleviate the dilemma. □ ADLINK
​Short review
How does the government help enterprises get out of trouble?
From the perspective of the global situation, the international economic situation is still not optimistic, there are unstable factors in the political situation, frequent turmoil in some regions, and the sluggish international demand will continue. Therefore, the State Council, the Ministry of Commerce and others have successively introduced support policies to support the stable growth of foreign trade and help enterprises get out of difficulties.
Actively explore international markets and drive steady growth in exports. The commerce department actively strives for various exhibitions for enterprises, broadens foreign trade marketing channels, contacts and consolidates existing export markets, makes deep friends with old friends, makes new friends widely, and organizes enterprises to go abroad to explore international markets such as the Middle East, Eastern Europe, Russia, South America, and Africa, and further Expand export scale. At domestic exhibitions, based on the characteristics of Tongzhou’s home textile industry and focusing on the Canton Fair, companies are encouraged to participate in some professional industry exhibitions. At overseas exhibitions, we will focus on exhibitions supported by Jiangsu Province and Nantong City, encourage enterprises to participate in exhibitions purposefully, and at the same time obtain relevant government financial support.
Promote product transformation and upgrading and optimize the structure of export commodities. Focus on platform construction and brand cultivation, promote enterprises to optimize product structure, and promote enterprise transformation and upgrading. Tongzhou Home Textiles will rely on Golden Sun to build a public testing and testing platform to provide systematic and reliable testing and testing services for enterprises in Tongzhou Home Textile Export Base. At the same time, efforts are made to encourage enterprises to cultivate independent brands, internationally renowned brands and Canton Fair brands, to help enterprises actively apply for key international brands to be cultivated and developed, and to improve the international visibility and market competitiveness of enterprises.
Make full use of supporting policies to encourage enterprises to become bigger and stronger. Actively carry out policy publicity and training to ensure that there are no blind spots in policy publicity. Strengthen the research on foreign trade support policies, actively guide and help enterprises to apply for projects, and do everything possible to obtain project financial support. Taking policy support as the starting point, efforts will be made to cultivate leading foreign trade enterprises. Improve the linkage mechanism with customs, Sinosure and other departments to guide enterprises to use policies to reduce import and export trade costs, resolve trade risks, and improve the level of import and export trade.