Among the top ten enterprises in the domestic printing and dyeing industry, the printing and dyeing cloth produced at full capacity throughout the year can circle the earth 2.5 times… Jiangsu Sanfangxiang Industrial Co., Ltd. (hereinafter referred to as “Sanfangxiang”) has had too many problems in its printing and dyeing business brilliant.
However, recently, the company said goodbye to the printing and dyeing business that it has been cultivating for nearly 30 years.
Why did Sanfangxiang let go of its once-proud printing and dyeing business? What reality is the printing and dyeing industry facing today?
Enterprises slim down and shed burden
Today, Sanfangxiang has formed a modern diversified holding group with the polyester industry as its core, new chemical materials, polyester films, textiles and other industries going hand in hand, covering investment, hotels, and international trade.
On July 6, Sanfangxiang issued an announcement announcing that the company had signed an “Old Equipment Dismantling and Transfer Contract” with Zhejiang Dongxiang Industrial Co., Ltd. to sell related equipment in the printing and dyeing workshop to Zhejiang Dongxiang. The transaction price was 20.5 million yuan. This means that Sanfangxiang will completely divest itself from the printing and dyeing business and further focus on the new polyester material business.
In this transaction, Sanfangxiang will sell fixed assets such as machinery, equipment and vehicles in its printing and dyeing workshop. The machinery and equipment mainly include stenter and setting machines, combined deboiling and bleaching machines, reduction soaping machines, hot-melt dyeing machines, pre-shrinking machines, high-speed mercerizing machines, singeing machines, etc.
Sanfangxiang said that the printing and dyeing workshop has currently stopped production and related assets are idle. According to the asset appraisal report issued by Guozhonglian Asset Appraisal Land and Real Estate Appraisal Co., Ltd., as of May 31, the appraised value of the fixed assets involved in this transaction was 20.3751 million yuan, and the final transaction price was 20.5 million yuan.
In fact, the news of the asset sale in Sanfang Lane did not come suddenly. On March 28 this year, Sanfangxiang announced through an announcement that it had decided to suspend production in the printing and dyeing production workshop (for details, see “The production suspension motion was approved by the board of directors, Sanfangxiang officially bid farewell to 30 years of textile printing and dyeing business”).
“As the market environment of the textile industry continues to be sluggish, the prices of printing and dyeing products continue to fall, profit margins are compressed, and the company’s printing and dyeing business continues to be in a state of loss. After years of operation, the existing production equipment in the printing and dyeing workshop is facing equipment aging, rising operating costs, and pressure on safety and environmental protection Increase, poor product efficiency, and inability to meet market requirements.” Sanfangxiang explained the reasons for the suspension of production in the printing and dyeing workshop in an announcement issued in March.
Public financial report data shows that in 2019, Sanfangxiang’s dyeing and finishing cloth output was 60.96 million meters, sales revenue was 425 million yuan, and a loss of 17.68 million yuan; in 2020, Sanfangxiang printing and dyeing workshop’s dyeing and finishing cloth output was 51.37 million yuan rice, with sales revenue of 287 million yuan and a loss of 13.57 million yuan; in 2021, its output will be 52.07 million meters, with sales revenue of 296 million yuan and a loss of 16.97 million yuan.
In terms of revenue share, in 2019, textile business revenue, including printing and dyeing business, accounted for more than 50% of Sanfangxiang’s total revenue, and the revenue scale also reached more than 500 million yuan. In 2020, Sanfangxiang acquired Jiangsu Hailun Petrochemical Co., Ltd., and the revenue of the textile business fell to 331 million yuan, and the revenue ratio fell to 2.03%. Last year, the textile business revenue accounted for only 1.58%.
Printing and dyeing, once the most profitable textile industry, has now become the “abandoned son” of companies like Sanfangxiang, which makes people sigh.
Demand and cost are under double pressure
For Sanfangxiang, divesting the printing and dyeing business is an inevitable choice on the company’s transformation journey, and it is also a reflection of the current difficulties of many printing and dyeing companies.
The economic operation data of the printing and dyeing industry for the first five months of 2022 recently released by the China Printing and Dyeing Industry Association shows that 588 of the 1,684 printing and dyeing enterprises above designated size have suffered losses, with a loss area of 34.92%, a year-on-year expansion of 4.46 percentage points; the total loss of loss-making enterprises was 15.35% billion, a year-on-year increase of 42.24%.
The profits of printing and dyeing companies have dropped sharply. Some companies are struggling to survive, but others have sadly left the industry. Foshan Sanshui Shengjindian Textile Printing and Dyeing Co., Ltd., Shangyu Minsheng Printing Co., Ltd., Shaoxing Dadi Baile Printing and Dyeing Co., Ltd. and other printing and dyeing companies have recently announced bankruptcy and auction information.
Regardless of the size of the company, many printing and dyeing operators are currently feeling pressure.
“Business is not as good as before. Workers used to have one day off a week, but now they have two days off. Our orders this year are at least 1/3 less than before the epidemic.” Deng Chaxiang, general manager of Jiangsu Kuanhua Textile Co., Ltd. Very anxious.
“We are now in the information age, and customers have a clear grasp of information. If we raise prices, they can find lower quotes elsewhere.” Deng Chaxiang told a reporter from China Textile News that the company had also tentatively He raised the price, but the other party refused. “A customer handed me a quotation form from another company and told me that if we could accept this price, we would be the first choice. I saw that their quotation was 5% lower than ours. In the end, we could only Reluctantly sacrificing profits and reluctantly accepting orders.”
The relevant person in charge of Shaoxing Bailiheng Printing and Dyeing Co., Ltd. also revealed that the market this year is not satisfactory. “Currently, it is not difficult to book shipping space, but shipping costs are high. Moreover, the price of raw materials is high, and the price of natural gas is also rising. The company is in a state of loss every month. Now there is less cake, but there are more textile printing and dyeing factories sharing the cake. , some colleagues had to close their workshops.”
Zihong TextileShu Hongzhi, general manager of the Co., Ltd., said frankly that due to the epidemic, the market has not been good this year, and the price of raw materials has increased significantly, which has affected the company’s orders. “The company barely maintains an operating rate of about 70%, and maintains basic operations at a loss every day. We hope we can survive this period, stabilize our employees, and shoulder our social responsibilities.”
The China Printing and Dyeing Industry Association mentioned in the “Brief Analysis of the Economic Operation of the Printing and Dyeing Industry from January to May 2022” (hereinafter referred to as the “Brief Analysis”) that in the first half of this year, the operating pressure of printing and dyeing enterprises increased. First, consumer demand in the domestic market is weak and terminal demand is insufficient. Secondly, since this year, the prices of natural gas, steam, electricity and other energy sources, the prices of cotton yarn and other raw materials, and logistics and transportation costs have increased significantly, and corporate profit margins have been squeezed. This is also an important reason why industry profitability is facing greater pressure.
Reshuffle the cards and bring new opportunities
Based on the current market situation, Deng Chaxiang predicts that more companies may suffer losses in the second half of the year, and industry reshuffle is inevitable.
Shu Hongzhi believes that the current difficult situation in the printing and dyeing industry may seem like an abnormal phenomenon, but in fact it conforms to certain rules. “It is not that the printing and dyeing industry has experienced glory. When the industry was prosperous, you could make a lot of money just by registering a company, and you often had to work overtime to complete orders.” He said, “But now it seems that the situation at that time It is inconsistent with the laws of the market. When industry companies can make money with their eyes closed, it means that the market is not yet mature. Because a mature market should reflect the healthy survival of the fittest.”
“Every year in the past few years, I have heard that more than a dozen of our local counterparts have gone bankrupt.” Shu Hongzhi knew that this was actually a process of the market reshuffling the printing and dyeing industry. He believes: “It is reasonable for Sanfangxiang to divest its printing and dyeing business. In a downward cycle where competition intensifies and profits are diluted, pioneers in the printing and dyeing industry tend to have heavier burdens and greater risks, and are more likely to fail than small and medium-sized companies. Down.”
However, challenges and opportunities always coexist. Under the accelerated situation of survival of the fittest in the market, industry mergers and reorganizations and the concentration of superior resources will form a new main line for the development of the printing and dyeing industry.
Recently, many places across the country have issued relevant policies to guide companies to “work together to stay warm.” A mobilization meeting for the transformation and upgrading of the textile industry held in Lanxi City, Zhejiang Province encouraged corporate strategic reorganization, professional integration, and resource sharing. Shishi, Fujian is an important printing and dyeing town. As early as February this year, the Office of the Shishi Municipal People’s Government issued the “Several Measures to Further Promote the High-Quality Development of the Industrial Economy in Shishi City” to encourage and guide advantageous printing and dyeing enterprises to implement mergers and reorganizations, and successfully file economic reports. Mergers and reorganizations of enterprises will be rewarded at 5% of the merger and acquisition amount.
The China Printing and Dyeing Industry Association pointed out in a brief analysis that overall, since the end of April, the national and local governments have intensively introduced a package of policies and measures to stabilize the economy, maintain growth, and promote development. The policy effects gradually emerged in May. As the domestic epidemic prevention and control situation improved, the national logistics transportation and supply chain gradually repaired, and the manufacturing PMI returned to the expansion range in June. Positive factors for the continued improvement of the economic operation of the printing and dyeing industry are accumulating.
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