Printing and dyeing industry reshuffle accelerates small and medium-sized enterprises face elimination

Since the beginning of this year, the price of dyes in China has been rising, and some products have increased by more than 30%. Industry insiders believe that the rise in the price of dye products is mainly affected by environmental pressure, and small and medium-sized enterprises will be phased out during this period.

Japan Dyeing Association recently announced: with the rise in the price of dyes, dyes discontinued varieties gradually increased. As of the end of October this year, has been fully discontinued or stopped small batch production of dyeing varieties has reached 45. Coincidentally, data show that since the beginning of this year, the average price of dyes in Zhejiang has increased by more than 10%, of which disperse dyes have the largest increase, some products have increased by more than 30%, and the price increase of reactive dyes is second only to disperse dyes.

Dye as a high pollution industry emission reduction pressure will continue to exist, in this grim situation, the future industry integration speed is expected to accelerate, dye prices are expected to rise further.

Dye is a supporting industry in the textile printing and dyeing industry, and demand growth is directly affected by downstream textile printing and dyeing. Public information shows that since 2003, my country's printing and dyeing cloth output has grown by more than 15%, and the average growth rate of clothing output has also been around 15%. The demand growth of domestic printing and dyeing enterprises has also led to a rise in dye consumption. Since 2001, China's dye consumption has increased rapidly at a rate of 15%-20%, and the annual growth rate of dye production has basically stabilized at 15%-20%.

The third quarter report of Zhejiang Longsheng, a leading dye company, showed that its revenue and net profit in the third quarter grew by 48.46 and 98.25 respectively, both higher than the average of the first three quarters. The company pointed out that the significant increase in dye prices occurred after May. The company fully enjoyed the benefits of the increase in dye prices in the third quarter. With the continuous increase in dye prices, the company's performance is expected to further improve.

At present, China's dye production bases are mainly concentrated in Zhejiang, Jiangsu and Shanghai, and the annual output of dyes in these three places accounts for 80%-85% of the country's total. Last year, the output of the top three companies such as Longsheng in Zhejiang accounted for 36% of the total output, and the market share of the top ten companies was 56%.

UnionPay Credit Analysis:

The printing and dyeing industry is second only to the garment industry in the textile industry to create high value-added areas. However, because China's printing and dyeing industry is at the low end of the supply chain in the global industrial division of labor, enterprises generally lack the ability of independent innovation, low product technology and design content, and little difference, which limits the profit growth of printing and dyeing and downstream clothing and home textile industries.

In addition, as an industry with high energy consumption and high pollution, due to the low investment of enterprises in the treatment of printing and dyeing wastewater and the relatively backward printing and dyeing process, the water consumption per unit product of printing and dyeing enterprises in China is about three times that of developed countries, and the recycling rate of wastewater is only 5-8%. Printing and dyeing wastewater accounts for 80% of the national textile wastewater discharge, and the consumption of dyeing and chemical materials is 20-30% more than that of developed countries. In recent years, although the export of printing and dyeing cloth has been increasing year by year, many of them are at the expense of the local environment. Therefore, with the rapid development of production capacity, the printing and dyeing industry is facing greater challenges from resources and environment.

Government to guide the industry to achieve transformation

To this end, since 2006, the government has stepped up its efforts to use various macroeconomic means to promote competition through market forces, realize the survival of the fittest in the industry, and promote industrial transformation. Following the adjustment of the export tax rebate rate of some export commodities in September last year, the state continued to issue the policy of adjusting the export tax rebate in June this year to control the export of "two high and one capital" (high energy consumption, high pollution and resources) products. In July, a new catalogue of restricted commodities in processing trade was announced. The bank deposit account management will be implemented for the textile yarn, fabric and other commodities listed in the restrictions, and in line with China's regional development strategy, the purpose of implementing differential policies for the eastern and central and western regions is to realize the industrial upgrading of processing trade and the gradient transfer of processing trade industries from the southeast coast to the central and western regions.

After that, the state has successively issued a series of policies to promote energy conservation and emission reduction of enterprises, such as "green credit", "green foreign trade", raising the threshold of energy standards, and strict examination and approval system, trying to stop the implementation of enterprises and projects that do not conform to industrial policies and environmental violations from the source, Enterprises that violate environmental protection laws and regulations will be suspended from engaging in foreign trade business activities for more than one year and less than three years as appropriate. It has had a great impact on the printing and dyeing industry, a large number of enterprises that do not meet the regulations have been shut down, and other enterprises have also increased the cost of environmental protection.

Higher exchange rate compresses corporate profits

In addition, in order to curb the excessive growth of investment and prevent the economy from turning from too fast to overheating, the people's Bank of China has raised interest rates five times and raised the statutory reserve ratio nine times since the beginning of this year, which has not only increased the investment cost of enterprises, but also further controlled the investment scale. In order to avoid international trade frictions and reduce unreasonable trade surplus, China has carried out RMB exchange rate reform since July 2005. As of November 23 this year, the exchange rate of RMB against the US dollar has exceeded 7.4. As of November 13, this year, it has appreciated by 5.32. The frequent rise of the RMB exchange rate makes the profits of enterprises shrink due to the appreciation of the RMB in a short period of time from processing to delivery.

Energy saving and emission reduction impact on printing and dyeing industry

Since the beginning of this year, the growth of investment in the printing and dyeing industry has been slow, and since the country implemented a series of energy conservation, emission reduction and other macro policies in April, the growth rate of investment in the printing and dyeing industry has declined significantly since May. From January to June investment began to decline year-on-year, and this trend continues to increase, to January to September printing and dyeing industry fixed asset investment fell by 8.04, compared with the same period last year printing and dyeing industry investment increased by 50.79 in sharp contrast. In the first three quarters of 2007, the actual investment of printing and dyeing enterprises above the national scale was 5.867 billion yuan, while the actual investment of textile industry was 183.637 billion yuan. The fixed asset investment of textile industry increased by 33.13 compared with the same period of last year, and the investment growth of printing and dyeing industry was 41 percentage points lower than that of textile industry. It can be seen that a series of energy conservation and emission reduction policies issued by the state this year have the greatest impact on the printing and dyeing industry, which is far higher than the average level of the industry. The investment in new projects that do not meet the environmental protection standards in the printing and dyeing industry is under control. The state is guiding enterprises to invest limited funds in the construction of advanced productive forces. Focusing on product innovation and increasing the added value of products will be the direction of future investment.

The UnionPay letter advises:

In the face of the new trend of promoting the traditional industrial revolution with intelligence and humanization in the world, as well as the intensification of low-end competition in manufacturing countries in the transnational industrial chain, in today's increasingly scarce resources and deteriorating environment, the printing and dyeing industry relies on "low cost, low price" and other competitive advantages to seize domestic and foreign market share, and the old development model of quantity growth faster than quality improvement can no longer adapt to the new situation. The global competitiveness of the printing and dyeing industry has been severely challenged.

Therefore, the China Textile Industry Association pointed out in the "Eleventh Five-Year" development plan that the "Eleventh Five-Year" will be a critical period for the upgrading of China's printing and dyeing industry. The focus of the entire industry is to transform the extensive growth mode and increase the intellectual property rights in industrial capital. The proportion of technological innovation in the added value of the industry, and the road of brands with relatively high added value, so that China's printing and dyeing industry in the global textile industry value chain position from the lowest end to the two ends of the development.

To sum up, China's small and medium-sized printing and dyeing enterprises are facing the transition period of the industry. The original meager profits have been reduced due to the rising prices of raw materials and the increase of environmental protection costs. The industry structure and market supply and demand are quietly changing under the influence of various factors. The continuous appreciation of RMB makes it more difficult for enterprises. In short, small and medium-sized printing and dyeing enterprises are currently experiencing increased risks of elimination. It is recommended that banks pay close attention to the latest developments in my country's printing and dyeing industry to avoid industry risks.