Economic Operation on China's Textile Machinery Industry in Jan.- Sep. 2006
Source: CCPIT TEX Date: 2007-01-12
1/ Economic Operation in First Three Quarters
Since the beginning of 2006, China’s textile machinery industry has maintained steady growth and various economic indicators all increased by different degrees. A survey conducted by China Textile Machinery Association on 748 textile machinery and equipment manufacturers shows that by the end of Sep. 2006, the industry's gross value of industrial output amounted to about RMB 38.12 billion yuan, up 26.46 % over the same period of 2005, the profit totaled RMB 1.92 billion yuan, up 20.67 % and goods delivered for export amounted to RMB 3.65 billion yuan, up 17.98 %
(1) Both production and sales grew steadily and economic benefits increased moderately
Statistics shows both production and sales of textile machinery and equipment has maintained high growth over the past two years. This is because on one hand, since the beginning of 2006, the Chinese textile industry has maintained a fast-growing trend; textile production kept stable and profit rose rapidly; and the investment in fixed assets continued to grow, resulting in a high demand for textile machinery and equipment on the market. The import of textile machinery and equipment in this period also reflects the high demand on market. In the first three quarters of 2006, China imported near 2.91 billion worth of textile machinery and equipment, up 12.82 % compared with same period of 2005. Excluding the US$ 887 million import, the trade volume of textile machinery and equipment in the first 9 months of 2006 totaled RMB 52.5 billion yuan.
On the other hand, the export of textile machinery rose rap-idly in 2006 in quantity term. The sales in the first three quarters of 2006 registered a net increase of RMB 6.3 billion yuan compared with same period of 2005, in which, the export in-creased 2 billion RMB yuan.
(2) Geographically, Jiangsu and Zhejiang Provinces are top players
In the first three quarters of 2006, the textile machinery industry sold 96.80 % of the total output, 0.39 percentage point higher than the same period of 2005. Jiangsu Province is the No. 1 player (covering 30.55 % of the total sales), followed by Zhejiang Province (covering 21.79 %). Shandong Province ranks the third (covering 15.42 %), and other major textile machinery manufacturing provinces/municipalities except Fujian Province have all increased their production and sales, while Liaoning, Hubei and Shandong provinces record the fastest growth.
(3) Foreign-funded enterprises develop steadily, while private firms grow even faster
In the first three quarters, foreign-funded (including Hong Kong, Macao and Taiwanese-invested enterprises kept high-margin growth in production and sales, while private firms grew exceptionally fast. This situation has facilitated the further re-structuring of the textile machinery industry. The capital structure shows that the textile machinery industry has entered into a new stage of the restructuring process and has established a new framework under which enterprise of different ownership collaborate with each other strive for development on mutual complementary and benefit basis.
Over the past few years, the textile machinery industry has accelerated its restructuring step. As a result, the ownership structure of enterprise has changed significantly. State-owned enterprises have further receded from this sector. Meanwhile, the investment of private and foreign-funded enterprises has been increasing year by year. A new ownership structure has been established. Fig. 3 shows the change of ownership structure since the beginning of 2006.
(4) Cotton spinning machinery is the best-selling product on market
The sales of cotton spinning machinery maintains high growth rate in the first three quarters of 2006. The typical feature of the production and sales lies in the notable change of product mix. The sales of conventional cotton spinning machinery were flat, but the sales of new spinning and combing machines rose rapidly. According to incomplete statistics, 3,776 combing machines were sold in January-September period, up111.42 % over the same period of 2005; 1,326 staple fiber two-for-one twisters were sold, up 68.49 %; 489 automatic winders were sold, up 88.80 %; and 227 blowing-carding ranges were sold, up 35.93 %.
Recently, newly emerged dyeing and finishing machinery manufacturers have seized increasing market share. However, due to the price hiking of raw materials such as stainless steel, their production costs are rising, hence brought down the sales by certain extent.
The sales of knitting machinery increase slightly and the sales in first half are better than the second one, while circular weft knitting machine is the bestseller. According to related statistics, the textile machinery industry produced and marketed 20,520circular knitting machines in the first three quarters, in which,55 % of them are from Fujian Province, 13 % from Jiangsu Province, and 9 % from Guangdong Province. Compared with2005, both production and sales of warp-knitting machine rose markedly by 112 %.
(5) Export of textile machinery and equipment maintained fast and steady growth
In the January-September period of 2006, the export of textile machinery and equipment maintained the rising trend. The survey on 748 textile machinery manufacturers of China Textile Machinery Association shows that the whole industry de-livered near RMB 3.65 billion yuan worth of products for export, up 17.98 % over the same period of last year, covering 9.87 %of the total production.
According to the customs, by the end of September 2006, the export of textile machinery amounted to US$ 887 million, up39.93 %, registered a growth rate 1.32 percentage points higher than same period of last year. In the January-September period, the export hit new record, already exceeded the US$ 871 mil-lion in the whole year of 2005.
The export of textile machinery and equipment in the first three quarters presents the following features:
a. Knitting machinery are the best sellers
Knitting machinery cover the highest share in the export, followed by dyeing and finishing machinery, and further followed by auxiliary equipment & parts; spinning machinery, chemical fiber machinery, weaving machinery, non-woven machinery and weaving preparation machinery.
b. Solely foreign-funded enterprises are leading exporters, and export from private firms increased rapidly
By ownership of enterprises, solely foreign-funded enterprises rank the first place among exporters, followed by State-owned enterprises and private firms as well as joint ventures, collective-run enterprises and cooperative enterprises.
c. Asia remains the main market for textile machinery imported from China
In the first three quarters of 2006, Chinese-made textile machinery and equipment were sold to 141 countries and regions and Asia remained the leading market. The top ten markets cover 73.57 % of the total export value, while Asia alone covers 63.73 %.
The top 5 export destinations are India, Hong Kong, Pakistan, Bangladesh and Indonesia, which are all located in Asia. India is the fastest-growing market for Chinese-made textile machinery and equipment, ranking the first place. By the end of September 2006, China had exported US$ 207 million worth of textile machinery products to India, increased 76.92 % com-pared with same period of 2005.
d. General trade dominates the export of textile machinery and equipment
In the first three quarters, the export in general trade mode amounted to US$ 680 million, up 46.01% over the same period of 2005, covering 76.72 % of the total export value; the export in the mode of processing trade by using imported materials amounted to US$196 million, up 24.11% and covering22.07 % of the total; the export in other trading modes amounted to US$11 million, covering 1.13 %.
(6) Import of textile machinery increases
According the General Administration of the Customs, the import of textile machinery and equipment in the January-September period of 2006 totaled about US$ 2.92 billion, up 12.82 % compared with same period of 2005. Driven by the demand for high-end machinery and equipment as a result of the upgrading campaign of the textile industry and due to the revaluation of Renminbi, the import of textile machinery rose significantly over the same period of 2005, but the growth rate is far lower than that of export.
a. Knitting, spinning and weaving machinery are the most requested machinery, while import of non-woven machinery, printing, dyeing & finishing machinery and chemical fiber machinery dropped.
The statistics from the General Administration of the Customs, the import of knitting machinery amounted to US$ 791 million, ranking the first place, up 30.05 % over the same period of2005; followed by weaving machinery, which stood at US$529 million, up 17.86 %; printing, dyeing and finishing machinery, US$ 525 million, down 10.11% from a year ago; spinning machinery, US$ 450 million, up 48.10 %, and the import of auxiliary equipment & parts, chemical fiber machinery, weaving preparation machinery and non-woven machinery respectively amounted to US$ 321 million, 226 million, 57 mil-lion and 16 million.
b. Japan and Germany are major suppliers
In the January-September period of 2006, Japan, Germany, Italy, Taiwan and Switzerland are the top five suppliers, whose export of textile machinery to China cover 80.88 % (Table 4)of the total import value.
c. Solely foreign-funded enterprises are top importers
By ownership, all kinds of enterprises but collective-run have increased their import of textile machinery in value term, in which, cooperative enterprises and private enterprises registered the highest growth rate. Textile machinery imported by solely foreign-funded enterprises as direct investment amounted to US$ 958 million, up 11.39 %, covering 32.87 % of the total import value; import by State-owned enterprises amounted to US$ 664 million, up 9.93 %; private enterprises, US$ 587 million, up 60.52 %; joint ventures, US$ 454 million, up 3.58 %; collective-run enterprises, US$173 million, down 38.20 %; cooperative-run enterprises, US$ 79 million, up 122 %.
d. Imported textile machinery mainly go to the east China
Jiangsu, Guangdong, Zhejiang, Shandong and Shanghai are the top 5 importers. Among the top 10 importers, the import of Tianjin, Beijing, Hebei, Shandong, Shanghai and Fujian dropped greatly. In the same period, all 29 provinces and municipalities in Mainland China imported certain textile machinery, among which, Qinghai, Jilin, Gansu, Ningxia and Shanxi achieved thehighest growth rate compared with 2005.
e. Most of the textile machinery are imported via general trade and foreign investment covers big share
The import of textile machinery and equipment via general trade amounted to about US$1.54 billion, up 13.26 % year-on-year, making up 52.73 % of the total import value.
2. Prospects of Textile Machinery Market in 2007
(1) The Environment for the Development of Textile Machinery Industry in 2007
a. Micro control
All the micro-control policies implemented in 2006 will continue to be effective in 2007. The micro-control policies have an important feature: i.e. making constant improvement and regulations in accordance with practical situation, suiting remedy to the case and adopting various policies and means, including both monetary policies and financial policies, both economic means and legal means and necessary administrative measures. The following micro policies will influence the developing trend of the textile economy:
l) approval and examination system for strictly controlling new projects;
2) deregulation of export refund rate; 3) policies on strengthening therole of finance and credit in the economy.
b. Textiles export, trade protectionism and trade disputes
It is reported that in early October 2006, the Commission of European Union received an application on initiating anti-dump-ing investigation on linen fabric exported from China. It is predicted that EU Commission will soon launch anti-dumping investigation on Chinese linen exporters and this will be the first anti-dumping investigation on Chinese-made textile products since Sino-EU Agreement on Textiles was signed. If EU decides to levy anti-dumping duties, Chinese enterprises will be unable to export linen fabric to EU in at least five years. Just before this, the United States has initiated an anti-dumping investigation on Chinese-made polyester staple fiber involving a value of about US$ 100 million. In addition, Chinese textile enterprises face the com- petition from both developed and developing nations.
c. The change of geographical structure: the textile industry is moving westward
In 2006, the investment in fixed assets is increasing rapidly. At present, the textile industry is centralized in the eastern areas along the coast. Some coastal regions, such as Zhejiang, Shandong, Jiangsu and Guangdong provinces cover the principal part of the production, processing capacity, export and profit. Facing increasing pressure of raw materials, labor and land re- sources as well as stricter requirements on environment protection, it is inevitable for the textile industry to move from the eastern areas to middle and western areas. The rich labor and industrial resources in the middle and western areas will lay solid foundation for the textile industry to accomplish re- structuring process.
(2) Forecast on the demand on Chinese textile machinery market in 2007
a. Market outlook
In 2007, the textile machinery market will center on meeting the need of the textile industry which is now undertaking technical reform aimed to cope with new situation through improving competitiveness of textile enterprises, readjusting product mix and upgrading product quality.
b. The current situation of textile machinery market
The present situation of textile machinery market is described in details in the 11~ "Five-year Plan" outlined by China National Textile and Apparel Council for the entire textile industry and that outlined by China Textile Machinery Association for the textile machinery sector.
c. The changing demand on market
Technologically inferior, high energy-consuming and labor-intensive products will cover less market share. In contrary, high-performance, energy-saving and less labor-intensive products will dominate the market; the market is moving towards the middle and western areas; the export of textile machinery will continue to grow; private-run and foreign-funded enterprises will be major buyers of textile machinery; and enterprises will continue to focus on price competition.
