Wujiang textile industry V-shaped reversal

After experiencing a period of low labor costs, overcapacity, loss of orders, and meager profits, Wu Jiang explored in the passive and active transformation. In less than three years, local companies turned from a negative overall profit to a profitability of 18%.

Qi Qi

Although the macroeconomic environment is still grim, for Wu Qi, deputy head of Suzhou Wujiang District, this year is a year that can be a little relieved.

"Since the end of last year, our textile industry has begun to pick up, and this year has been fully improved." Wu Qi said to the "First Financial Daily" reporter at the 2016 China Wujiang Investment and Trade Fair in October. He skillfully reported several data: "This year Wujiang's general public budget revenue has increased by more than 13%, and the tax ratio (tax revenue accounted for the proportion of general public budget revenue) exceeded 90%, which is the best in the past five years. In the past two years, the amount of tax paid by leading enterprises has risen sharply, the fundamentals of enterprises are very good, and the growth is relatively healthy."

The tax ratio is an indicator used to assess the quality of economic development. The higher the tax ratio, the more the government's money comes from the economic behavior of enterprises and individuals, the more it can prove the vitality and competitiveness of growth.

Wu Jiang, a region with a textile industry as a pillar industry. As the country's textile heavy land and the country's largest chemical fiber fabric gathering area, Wujiang in the south of Suzhou has more than 5,000 textile weaving enterprises, with an annual spinning capacity of nearly 5 million tons, annual weaving capacity of 20 billion meters, dyeing and finishing capacity of 5 billion meters. There are 20 national textile development bases, which are the regions with the largest number of “textile national brands” in the country.

It is such a region that relies on the textile industry and gathers small and medium-sized enterprises. It has experienced a period of low labor costs, overcapacity, loss of orders, and low profit margins. In the passive and active transformation and exploration, it gradually stepped out of the “mire pool” and began to actively The upward trend. This is a transformational sample of the traditional textile industry. It is not a full-fledged reality but also has the vitality and light of regional and corporate transformation.

Going to the high end of the value chain

Wujiang's Shengze Town is called China's largest textile production base and is a national-level silk spark-intensive area. The local production of chemical fiber silk accounts for one tenth of the country.

In the 2016 briefing session of the textile industry transformation and upgrading of Wujiang High-tech Zone (Shengze Town) in late October, Zhao Zeguan, deputy secretary of the Party Committee of Shengze Town, told the reporter of China Business News that the transformation of the local textile industry began in 2014. of. In the textile towns that experienced a lot of investment at that time, there was a significant overcapacity.

“There were nearly 140,000 water jet looms in the whole town. In fact, they all produce low-end products. The price itself is only 1~2 yuan/m. There used to be about 10% profit, but it has been since the year before. There is no profit or even negative profit." Zhao Juguan told reporters that many orders began to flow to lower-cost places such as Southeast Asia and Africa.

In this new situation, the Shengze Town Government is determined to begin its transformation. “No transformation can't be done.” Zhao Juguan said, “The town government began to require companies to produce fabrics with a price of at least 5 yuan a meter, and through a series of incentives to encourage enterprises to eliminate backward production capacity, transformation and upgrade to produce higher value-added products. ”

Zhao Juguan said that after more than two years of hard work, the local textile companies' current profit margins have changed significantly. He provided the first financial reporter with such a data: "In the first half of this year, the average profit margin of industrial-scale enterprises in our entire town reached 18%. This is only an average figure. Some enterprises have already produced 50 yuan. The cloth of the meter has a higher added value."

According to official data released before, in the first 11 months of 2015, the profits of enterprises above the scale of Shengze increased by 113.9% year-on-year, the tax revenue of key enterprises with tax revenue of over 1 million yuan increased by 20.52%, and the industrial electricity consumption increased by 3.2%.

Hengli Group is the largest enterprise in Shengze Town and the largest weaving enterprise in the world. The general manager of the company, Guo Yujun, told the "First Financial Daily" reporter that the gross profit of the company's textile products has reached 26%. The main reason for the increase in profitability is “production by mass and new product guidance and raw material changes”. According to Guo Yujun, the company now has more than 500 new products on the market.

What followed was the enhancement of Shengze's financial resources. In the first half of this year, the town's full-caliber fiscal revenue reached 2.973 billion yuan, a year-on-year increase of 22.09%.

30 billion intelligent transformation, the introduction of imported machinery

In May 2015, the State Council officially issued the "Made in China 2025", clearly proposing to promote the textile intelligent manufacturing process, accelerate the research and development of textile new materials, and strengthen the basic capabilities of the textile industry. According to the data of the National Bureau of Statistics, the main business income of China's textile industry in 2015 reached 707.3 billion yuan.

In addition to developing new products and increasing the added value of products, Wujiang's local textile companies have also begun to implement “machine substitution” in large quantities, and integrate automation and informationization to achieve intelligent weaving.

“The number of workers in the textile industry has been reduced by at least one-third. The company uses a large number of robotic arms.” Zhao Juguan said, “For example, in the workshop of vortex spinning, you can hardly see workers. If you use the original scale, you can achieve a certain output. It takes about 2,000 people, but now 500 people are not there."

Guo Yujun said that the Hengli Group's textile factory began to promote intelligent weaving from the end of 2013. “In the past nine months of this year, the output value has increased by 35%. The machine can be operated 24 hours after the substitution, and the error rate and stability are all available. Improvements can also make products more closely follow the rhythm of market changes, and production efficiency has increased by 7%."

In the workshop of the chemical fiber factory of Hengli Group, the reporter saw a large number of robotic arms. The spokesman of Hengli Group Co., Ltd. said that the software systems of these robot arms are independently developed by the company. In terms of R&D investment, Hengli Group's R&D investment in the textile sector accounts for approximately 2.5% to 3% of the annual output value.

According to Zhao Juguan, in order to promote the transformation and upgrading of Shengze industry, the equipment purchase amount of the town will reach 30 billion yuan within 3 to 5 years. At present, the water jet loom in Shengze Town has been reduced to 110,000 units, of which 90,000 are low-end water jet loom. The operating rate of these loom is about 80%, and the overcapacity is more serious. The town plans to compress the water jet loom to more than 80,000 units in three to five years, and most of the 80,000 units are replaced by high-end water jet loom.

Zhao Juguan told the "First Financial Daily" reporter that the effect of the planned purchase of 60,000 high-end water jet looms will definitely be better than the effect of the original 80,000 looms. "So, the output of 60,000 high-end machines. It is about the same as the previous 80,000 units, but the output value will increase by about 30% compared with the original 80,000 units."

Shengze Town, which specializes in holding textile briefings in Shanghai, is also looking forward to obtaining more information and resources from Shanghai, attracting textile machinery enterprises to settle in Shengze and cultivate the development of the local textile machinery industry. Currently, local textile machines rely mainly on imports.

Financing problems remain to be solved

However, in the process of building new capacity and upgrading equipment, enterprises will inevitably encounter financial problems. How can textile enterprises that have previously been meager profits and are classified as traditional industries go through this hurdle?

Wu Qi told the reporter that the most common problem for enterprises is financing difficulties and financing. "Although from the central government to the local governments, financial institutions are required to invest money in the real economy, but this problem has not yet been fundamentally solve".

Therefore, in addition to giving certain support funds from the aspects of intelligent transformation, the local government has also set up a platform for cooperation between government and enterprise banks to create the most suitable investment and financing environment for SMEs. “The government is more about creating an environment that encourages enterprises to transform and upgrade. It is not suitable for interfering with corporate decisions.” Wu Qi said.

Zhao Juguan told reporters that compared with a few years ago, banks’ lending to textile companies must have been reduced. “Although the bank is very encouraged to introduce new machines, it is still tightening overall.” According to his estimation, about one-third of banks are tightening loans, which has caused some enterprises to have financial difficulties.

Zhao Juguan said: "From 2014 to 2015, there were about 36 companies that closed down due to tightening loans." According to the number of 2,500 companies in Shengze Town, the number of enterprises that closed down accounted for 1.44%.

Create a financial town and logistics town

For the long-term economic development, Wu Jiang, which is mainly engaged in manufacturing and private enterprises, has recently begun to actively develop the service industry.

On October 17, 25 projects including Wujiang “Financial Town” started construction, with a total investment of about 28.3 billion yuan. Wujiang “financial town”, the financial town of Suzhou Bay, was initiated by 12 institutions including Legend Holdings, Greenland Financial Holdings, CITIC Group and Soochow Securities, and hopes to build a professional eco-finance community, wealth and asset management cluster.

In addition to the financial town, Wujiang Taihu New City has also created a new industrial carrier such as Suzhou Bay Science Park and Software Park. Wujiang Pingwang Town has used the advantage of geographical location to build a logistics town, namely Suzhou Zhonghao International Logistics Technology Park.

Fang Xianshi, deputy mayor of Wujiang Pingwang Town, told the “First Financial Daily” reporter that although Pingwang Town wanted to build a logistics technology park, logistics was only a means, and the ultimate goal was to achieve the flourishing development of modern commerce. At present, the logistics town has introduced the company's logistics infrastructure giant Gloss, which has a total investment of about 55 million US dollars.

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