In 2023, the key word for the textile industry is' change '. The international situation is changing, the economic situation is changing, and the textile industry is also changing. Now, the 'once-in-a-century great changes' are still ongoing, and textile workers will face new challenges in the new year.

 

excess production capacity

In 2023, the most commonly heard word among textile workers is' roll '.

 

The market is too crowded, with too much new weaving machine production capacity. There are over 800000 water jet looms, as well as continuously expanding production capacity for jet and knitting. In China, more than 50 billion meters of various fabrics are produced in a year. Although clothing, food, shelter, and transportation are essential needs with a fixed annual demand, the quantity is still limited, and the current production capacity far exceeds the demand.

 

Therefore, the real feeling of textile enterprises is that as long as it is a conventional variety, it is difficult to sell at a price, the profit is very thin, there are too many competitors in the market, and the price is very transparent. Even old customers are useless. As long as the price is high, customers will run away.

 

 

In 2024, the trend of weaving capacity shifting to the central and western regions is far from stopping, and the capacity expansion of some large weaving enterprises has been included in the plan. Overcapacity will not ease, but may continue to intensify.

 

High inventory levels

 

The high inventory of cotton yarn by traders is the Damos sword hanging over cotton spinning enterprises in 2024. Currently, cotton yarn inventory has passively accumulated to historical highs and is waiting to be digested. The domestic weak recovery continues, while overseas is still in a destocking cycle, and there is no sign of a turnaround in European and American orders. Whether the market situation of the cotton textile industry chain can improve in the first quarter may depend on whether the market can quickly digest cotton yarn inventory. Overall, it is expected that domestic cotton prices will continue to experience pressure and bottoming out in early 2024, until there is significant progress in cotton yarn destocking.

 

The impact of cash flow

 

Many textile companies have reported difficulty in collecting payments for 23 years, and it is common to delay payments for one or two months, mainly due to a shortage of funds.

 

Consumers choose to control their consumption under pessimistic economic expectations, resulting in a reduction in the quantity of textile consumption and a decrease in the amount of live water flowing into the market source, leading to a "money shortage" in the textile industry.

 

 

In 2023, during the accumulation stage of the "money shortage" risk, the overall market risk is still controllable. However, after a year of accumulated contradictions, more textile enterprises may fall into a tight financial situation in 2024. Enterprises may be trapped by financial pressure, and holidays and production cuts may become more frequent. We have also seen some companies facing the risk of cash flow disruption, which has had an impact on their operations.

 

Global economic expectations are pessimistic

 

The market expects that the Federal Reserve will stop raising interest rates in 2024 and instead enter a cycle of rate cuts. However, the main stages of economic development in Europe and America are still plagued by inflation. Once the interest rate cut cycle enters, it may lead to the least desirable "stagflation" that people want to see, causing economic development to stagnate again.

 

And in an unfavorable economic environment, many developed countries rely on "eating on their old capital" to survive. However, the old capital is ultimately limited. Once these major economies encounter problems, a chain reaction may occur, leading to a global economic crisis.

 

In addition, economic problems can also have spillover effects, such as the recent Red Sea crisis, which to some extent is also a risk generated by the spillover of economic problems. The probability of various unexpected "black swan" events occurring in the next 24 years is also not small.

 

 

Rapid development in internal competition

 

At the same time as a problem arises, the way to solve it often involves it. The textile market is constantly shrinking, and in order to survive, a large number of textile enterprises are improving themselves in competition, because in the current market, if they do not develop, they are likely to be eliminated. In the fierce competition, the technology of the textile industry is rapidly iterating, exposing some of the long-standing problems of enterprises in the past. The market is constantly evolving, with new products, technologies, and concepts emerging one after another. The market competitiveness of enterprises is rapidly increasing over time.

 

 

Economic work is set, domestic demand continues to recover

Focus on expanding domestic demand and forming a virtuous cycle of consumption and investment. The Central Economic Work Conference will be held in Beijing from December 11th to 12th, 2023.

 

In response to the current economic situation, the meeting pointed out that "further promoting economic recovery and improvement requires overcoming some difficulties and challenges", but at the same time pointed out that "the favorable conditions for China's development are stronger than the unfavorable factors, and the basic trend of economic recovery and long-term improvement has not changed. We need to enhance confidence and confidence".

 

In response to the overall tone of next year's economic work, the meeting called for "seeking progress while maintaining stability, promoting stability through progress, and establishing first before breaking through".

 

The meeting pointed out that efforts should be made to expand domestic demand. To stimulate potential consumption, expand effective investment, and form a virtuous cycle of mutual promotion between consumption and investment. The meeting also proposed specific measures such as "cultivating and strengthening new types of consumption, vigorously developing digital consumption, green consumption, and healthy consumption", "increasing the income of urban and rural residents", and "promoting large-scale equipment updates and trade in of consumer goods".

 

Compared with previous statements, this meeting emphasized the importance of 'potential', 'effectiveness', and' virtuous cycle '. Wen Bin, Chief Economist of China Minsheng Bank, pointed out that this meeting links consumption and investment, which means that policies will no longer stimulate consumption and investment in isolation, but look to the long term, take into account improving the efficiency of market economy operation, strive to achieve a virtuous cycle of mutual promotion between investment and consumption, pursue the policy effect of' 1+1>2 ', and improve the sustainability of domestic demand growth.

 

The meeting called for "planning major measures to further comprehensively deepen reform", "accelerating the construction of a unified national market, focusing on breaking down various forms of local protection and market segmentation", "planning a new round of fiscal and tax system reform, and implementing financial system reform".

 

In Wen Bin's view, accelerating the construction of a unified national market and effectively reducing the logistics costs of the whole society require the improvement of institutional mechanisms that adapt to the construction of a unified national market.

 

This meeting sets the tone for next year's economic work and deploys multiple key tasks. If more policies are implemented, it may stimulate the recovery of domestic demand. The performance of the "Golden Three, Silver Four" in 2024 may be worth looking forward to. If the upstream and downstream of the industrial chain cooperate well, a wave of market trends may be expected.

 

Enhance the 'intelligence content', 'greenness content', and 'gold content'

Chinese textile workers have always coveted the high-end textile industry overseas, but they have always lacked opportunities for breakthroughs. But now the opportunity has come. Recently, four departments including the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Commerce, and the State Administration for Market Regulation jointly issued the "Implementation Plan for Upgrading and Upgrading the Textile Industry (2023-2025)" (hereinafter referred to as the "Implementation Plan"). The Implementation Plan specifies the development goals: by 2025, the R&D investment intensity of textile enterprises above designated size will reach 1.3%, and 70% of textile enterprises above designated size will basically achieve digital networking; Forming 20 globally renowned corporate and regional brands, further enhancing fashion leadership.