As the only supplier and manufacturer of colored yarn in the world with three locations in the east, Xinjiang and Vietnam – Huafu Fashion Co., Ltd. (hereinafter referred to as “Huafu Fashion”) 5 On May 24), an announcement was issued stating that the company’s wholly-owned subsidiary Aksu Huafu Colored Textile Co., Ltd. (hereinafter referred to as “Aksu Huafu”) was included in the entity list by the U.S. Department of Commerce on May 22.
About the company’s subsidiary Aksu Huafu Announcement on being included in the Entity List by the U.S. Department of Commerce
The company is concerned that its subsidiary Aksu Huafu Colored Textile Co., Ltd. (hereinafter referred to as “Aksu Huafu”) has been listed by the U.S. Department of Commerce. It was included in the Entity List on May 22, 2020. The announcement is as follows:
1. The decision made by the US Department of Commerce is an irresponsible act that ignores the facts. We oppose the politicization of the industry.
2. According to the U.S. Export Administration Regulations, any transactions (including export, re-export and even domestic transfer) of EAR-controlled items between listed entities and U.S. exporters are restricted. Akzo Huafu serves the domestic market. Its raw materials, equipment and technology can avoid products originating from the United States. Being included in the entity list will not affect its daily operations.
3. Since its establishment, Akzo Huafu has aimed to not only be a capable enterprise but also a good enterprise, faithfully fulfill its social responsibilities, abide by relevant laws and regulations, adhere to the business code of conduct, and fully respect the rights of employees. It has passed the certification of domestic and foreign social responsibility agencies many times.
Four. We sincerely thank all sectors of society for their attention to this incident and support for Huafu. Only by being a better version of ourselves can we repay everyone’s continued love.
Huafu Fashion Co., Ltd.
May 24, 2020 Japan
Huafu Fashion believes that the decision made by the U.S. Department of Commerce is irresponsible regardless of the facts, and the company opposes politicizing the industry. Since its establishment, Akzo Huafu has aimed to be not only a capable enterprise but also a good enterprise, faithfully fulfill its social responsibilities, adhere to the concept of sustainable development, comply with relevant laws and regulations, abide by the business code of conduct, and fully respect the rights of employees.
Huafu Fashion stated that the company is one of the largest new yarn companies in the world. Its investment in Xinjiang is based on resource advantages such as high-quality cotton, energy prices, and industrial workers, as well as the Belt and Road Initiative to the West. future opportunities for development. The company’s investment and operation in Aksu Huafu has created many jobs and contributed to local economic and social development. Akzo Huafu’s raw materials, equipment and technology can avoid products originating from the United States, and being included in the entity list will not have a substantial impact on the company’s daily operations.
About Huafu Colored Spinning
Aksu Huafu is located in Aksu, Xinjiang No. 37 Huafu Road, Textile Industry City. It was registered with the Aksu Prefecture Industrial and Commercial Bureau on December 14, 2010. The company has a registered capital of 1.46 billion yuan. Its main business is “the manufacturing and sales of textiles and textile equipment, textile technology training, and export of this enterprise.” Textiles and clothing, raw materials, machinery and equipment, instruments and accessories required by imported enterprises, purchase and sale of cotton and linen.”
The reporter previously learned that Huafu Fashion has invested in Xinjiang since 2006, with a total investment of 5 billion yuan, an annual tax of 160 million yuan, 14,700 employees, and currently a total of 80,000 acres of cotton fields. There are more than 30 ginning factories with an annual cotton processing capacity of more than 200,000 tons; 3 dyeing factories with a production capacity of 30,000 tons; 10 spinning mills with 670,000 spindles and a production capacity of 110,000 tons.
According to Huafu Fashion’s 2019 annual report, its total assets are 3.875 billion yuan, operating income is 1.821 billion yuan, and net profit is 187 million yuan.
Li Jie, an analyst at Everbright Securities, believes that in 2019, Huafu Fashion’s overseas revenue accounted for 15% of its total revenue. Overseas income accounts for 33% of the yarn business income. There are also indirect exports, and the network chain business is domestic sales. Since 2019, Huafu Fashion’s performance has been under pressure, mainly due to the impact of the external environment. During the reporting period, Sino-US trade frictions led to a decline in industry prosperity, and expectations for all links in the industry chain were relatively pessimistic, resulting in shrinking inventories. Falling cotton prices were not conducive to companies receiving orders. .
Since 2020, the domestic and foreign epidemics have successively affected the epidemic. At present, the foreign epidemic situation has not improved significantly, there is great uncertainty in external demand, and the pressure on receiving orders in the second quarter is expected to be greater than that in the first quarter. If foreign epidemic prevention and control is effective, the impact of suppressed external demand is expected to gradually weaken. It is necessary to pay attention to the recovery progress of domestic and foreign terminal retail sales.
In Li Jie’s view, Huafu Fashion, as a leader, has strong ability to resist risks and negotiate with customers despite the overall operating difficulties in the textile industry. capabilities and is expected to increase its share after the epidemic is over. And from the companyIn terms of fundamentals, the leading position of colored spinning yarn has not changed. Although gross profit margin and capacity utilization have been damaged in the short term, operating cash flow has improved, indicating that the company has adopted a more cautious strategy. In 2020, while increasing its efforts to expand the domestic market, Huafu Fashion will continue to promote front-end network chains, accelerate the development of back-end network chains, and continue to make efforts in the fields of cotton, cloth, and yarn.
Huafu fashion’s terminal downstream includes internationally renowned brands such as Adidas, Nike, H&M, ZARA, and Uniqlo. In recent years, international Sports and casual apparel brands are operating well. The revenue of two well-known international brands, Adidas and Nike, has maintained a steady upward trend. Adidas’ revenue growth rate has reached 10.76%/17.45%/17.45% respectively in the past three years, while Nike’s revenue growth rate has remained at around 10% in the past four years. .
In the casual clothing market, Uniqlo’s global sales have maintained an average annual growth rate of 15% in the past six years, and its revenue scale has continued to expand. Zara’s parent company is growing rapidly in the Asia-Pacific region, with revenue CAGR reaching 21% from 2015 to 2017. International sports and leisure brands have a high market share in the global apparel market and continue to maintain steady growth, which will help support the company’s increasing order demand. </p
