Analysis of the economic performance of Wuxi textile industry in the first half of 2022

According to data analysis released by the Wuxi Municipal Statistics Bureau, most of the main economic indicators of the city’s textile industry maintained steady growth in t…

According to data analysis released by the Wuxi Municipal Statistics Bureau, most of the main economic indicators of the city’s textile industry maintained steady growth in the first half of the year, but individual indicators remained under pressure. In the first half of 2022, the city’s textile industry achieved a total industrial output value of 88.483 billion yuan, a year-on-year increase of 8.95%, a decrease of 7.18 percentage points compared with the first quarter; the export delivery value was 11.965 billion yuan, a year-on-year increase of 5.36%, and a year-on-year increase of 7.18 percentage points compared with the first quarter. A rapid drop of 11.13 percentage points; the loss of loss-making enterprises was 1.383 billion yuan, a year-on-year decrease of 32.24%; the profit was 1.708 billion yuan, a year-on-year increase of 8.65%. Operating income was 102.846 billion yuan, a year-on-year decrease of 1.06%; finished product inventory was 23.725 billion yuan, a year-on-year increase of 14.74%; employee compensation payable was 5.884 billion yuan, a year-on-year increase of 4.72%.

The completion of various major economic indicators in the first half of the year is detailed in the table below:

Analysis of the production and operation of various textile products

Judging from the output of the city’s main textile industry products in the first half of the year, woolen woven fabrics (woolen) still increased the most, followed by clothing and printed and dyed fabrics. The growth of the above three main indicators benefited from the strong overall clothing export market. Since the current consumption concept of clothing has begun to shift and favor sports, fashion, and lightweight styles in both domestic and foreign demand markets, it is logical that the growth rate of knitted clothing output in our city has always been higher than that of woven clothing from January to June. On the other hand, due to the continued weakness in the domestic demand market and certain foreign consumer categories, the output of chemical fibers, non-woven fabrics (non-woven fabrics), linen, and cord fabrics still maintained a sharp decline after the first quarter. Among them, yarn Hebu’s output growth turned from positive growth of 6.84% and 6.74% in the first quarter to negative growth.

Currently, domestic cotton prices are hovering at low levels due to negative macroeconomic conditions and sluggish domestic basic consumption. Before the stocks of cotton yarn and cloth companies are consumed to a certain extent, downstream companies have reduced demand for replenishment due to fewer orders, and the domestic cotton consumption market is still lacking. Substantial benefits. Since May this year, the main contract of Zheng Cotton has not rebounded in a decent way after oscillating and weakening around 14,000 yuan/ton. This is mainly due to the shrinkage of the downstream market. Although spinning companies are slightly profitable at the current cotton price, sales volume is not high. This in turn suppressed production. Please see the table below for specific data.

A brief overview of the economic operations of various textile sub-sectors in Wuxi City

Judging from the completion of the total industrial output value of the four sub-sectors of the city’s textile industry: textile industry, clothing industry, chemical fiber industry, and textile machinery and textile equipment industry, the current total industrial output value in the first half of the year was 37.363 billion yuan, 25.498 billion yuan, and 21.262 billion yuan respectively. and 4.36 billion yuan. Except for the textile machinery and textile equipment industry, the other three sub-sectors all recorded positive growth; but from the perspective of realizing the two most important indicators of profit and profits and taxes, compared with the certain positive growth of the textile industry and clothing industry Generally speaking, the chemical fiber industry and the textile machinery and textile equipment industry both experienced substantial negative growth. Judging from the data on corporate losses, the textile, clothing, and chemical fiber industries all exceeded 30%, and the textile machinery and textile equipment industry also reached about 9%. There are many loss-making companies. In addition, the increase in the proportion of accounts receivable and finished goods inventory, and the decline in production and sales ratios indicate that various sub-sectors are still facing the same severe market situation. See the table below for specific data:

Several main issues and perceptions reflected by enterprises under the current situation

1. The impact of the US “Xinjiang cotton ban” on the decline of the export market in the second half of the year and even in the future.

Relevant measures are recommended: At present, cotton imports are traded based on quota quantities. Can a green channel be given to export companies to provide certain quotas, so that clothing export companies can import cotton exclusively for export orders, which is in line with foreign legal requirements? Avoid losing customers; government departments actively communicate and negotiate with relevant countries and international organizations to ensure that the legitimate interests of enterprises are not infringed; the effect of this US bill will have a greater and more serious impact on the textile economy. It is hoped that the government will introduce corresponding incentives for foreign trade export enterprises Policies to resolve this crisis, such as tax relief and bank credit support. Ensure that the exchange rate remains within a reasonable range and encourage exports. Strengthen control over the shipping market and keep freight rates within a reasonable range. Increase support for interest-free and low-interest loans for technological transformation projects. Encourage physical enterprises to accelerate their intelligentization process and digital transformation, provide them with necessary financial support, and substantially reduce their burdens; if most enterprises encounter similar things and do not understand the operating procedures or how to deal with them, they need to add relevant content. Training and case analysis help companies cope with crises, etc.

2. RMB cross-border settlement and VAT refund issues such as domestic freight for exported goods and third-party testing fees.

The government actively promotes the implementation of various policies to “stabilize foreign trade and promote development” and encourages export companies to use RMB for settlement. This can not only expand the influence of China’s foreign trade in the world, but also effectively preventEuropean and American countries impose restrictions and sanctions on China’s exports. However, in the actual settlement process, the operating procedures are complicated and the State Administration of Foreign Exchange does not have clear operating guidelines, which causes great difficulties for export companies to conduct RMB settlement.

In order to enhance the competitiveness of China’s export commodities in the international market, taxes and fees corresponding to the cost of export commodities incurred in China can be refunded after export. However, in actual operation, the value-added tax on the domestic freight of exported goods (i.e., the domestic freight from the finished product factory to the port) and service fees such as third-party testing cannot be deducted from the domestic output or the retained tax refund according to tax regulations. Resulting in increased tax costs. This is a long-standing problem for foreign trade export companies after the business tax to value-added tax reform in 2013.

Enterprises recommend making cross-border RMB settlements more convenient and formulating clear and convenient operating guidelines for the settlement process. For the value-added tax on domestic freight and third-party testing and other service fees for exported goods after the tax-to-VAT reform, the government can introduce policies related to tax refunds or deductions for domestic sales.

3. The issue of credit insurance quota and premium subsidies for exports to the United States.

The largest market for China’s textile exports is Europe and the United States. Affected by Sino-US trade relations, Sinosure is not very willing to underwrite exports to the United States, and its premium subsidies are not high. The government’s premium subsidy ratio for corporate export credit insurance to Europe and the United States is far lower. The proportion of subsidies to emerging markets will have a negative impact on the long-term and stable development of exports to European and American markets. It is hoped that the government will coordinate with Sinosure to increase the insured amount and premium support for exports to the United States, and include Xinjiang-related bill matters in the insurance coverage.

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Author: clsrich