161 textile companies in Zhejiang Province received notices to suspend production for rectification. Why did this happen? Zhejiang Province is a major textile province in my country. These 161 textile companies account for 35% of the industry’s output value nationwide. Why did they suddenly receive a notice ordering them to suspend production?
The background of the textile industry being ordered to rectify
Not long ago, our country proposed to “reduce energy consumption per unit of GDP by 13.5%” during the “14th Five-Year Plan” period as one of the main binding indicators for economic development. This goal has been lowered compared with the requirements during the “13th Five-Year Plan” period. 1.5 percentage points.
Nine provinces and autonomous regions, including Yunnan, Guangdong, Guangxi, Ningxia, Qinghai, and Jiangsu, have been included in the “red light” first-level warning. The reason is that the energy consumption of these provinces and regions in the first half of 2021 has not only not decreased, but has increased. In addition, although the energy consumption intensity of 10 provinces and regions including Henan, Liaoning, and Zhejiang has dropped, the reduction is not enough and has been included in the “yellow light” level two warning.
Although our country has made specific requirements, there are specific reasons why energy consumption in many provinces and regions has increased instead of falling.
First of all, during the epidemic, the production capacity of many overseas countries was hit, so many high-energy-consuming industries in my country ushered in a blowout period of overseas orders just after the severe epidemic passed. Coupled with the recovery of the domestic economy, the number of orders has also increased significantly, which has strongly promoted the rapid increase in manufacturing production capacity.
Secondly, since 2015, our country has streamlined administration and delegated power, especially the decentralization of project approval rights for some high-energy-consuming industries. The “high-energy-consuming, high-emission” industries are precisely the pillar industries of the economy in many regions. In the economic crisis caused by the epidemic, In the face of damage, many regions have an impulse to simply improve economic figures.
This is the case in Zhejiang Province. Although the level of economic development is not low, traditional high-energy-consuming industries still account for a high proportion of its industrial system. High-energy-consuming industries “use more energy, produce less, and contribute less”, and “non-ferrous metal smelting” The eight major energy-consuming industries such as “steel, steel, building materials and textiles” consume 43% of the energy of the entire society, but only produce 13%. The energy consumption intensity is nearly five times the average level of various industries, so these industries are what we will soon Upgrading and obsolete industries.
The textile industry is one of them.
Why was the textile industry ordered to rectify?
In order to force the adjustment of industrial structure, Zhejiang Province divided all enterprises into four categories: A, B, C, and D based on the standard of “average benefit per mu”. The higher the tax paid by the enterprise, the higher the added value, the greater the social value created, and the longer the budgeted power usage time given by the province will be. To be honest, this move is pretty cool.
Taking a cycle of 10 days as a cycle, Class A enterprises with the highest tax rate and economic added value will receive power resource support from the province with 8 hours of operation and 2 hours of service; and by analogy, Class B companies have 7 hours of operation and 3 hours of service, and Class C companies have 6 hours of operation and 3 hours of service. 4. Class D companies start 4 and stop 6; if a company’s performance rating is below class D, it will be eliminated soon.
The main reason why Zhejiang Province does this is to effectively adjust the industrial structure, reduce the proportion of high-energy-consuming, high-emission, and high-pollution enterprises, and effectively increase the added value of the industry.
Another reason why Zhejiang Province does this is the pressure brought by resources or energy. Zhejiang Province is not a province located in a resource-rich area and has limited resource endowments. It has always relied on external energy input to develop its economy.
Because of this, the cost of energy use in Zhejiang Province has always been much higher than that in major energy provinces such as Shanxi and Shaanxi. Coupled with the significant increase in coal and natural gas prices in the past two years, now Zhejiang’s thermal power companies generate , you will lose 0.15 yuan.
Since the energy industry has already lost money, if the profit margins of other industries using energy in the province are even lower, the economic development of the province will be seriously affected. Therefore, we have to use the above methods to force industrial structural adjustment and industrial technological innovation.
The topic returns to the textile industry. This industry is actually a labor-intensive industry. This industry requires a large amount of cheap labor and has relatively low profit margins.
Normally, labor-intensive industries should not be deployed in the eastern provinces or coastal areas of my country because the local economy is relatively developed and labor prices are high. When labor prices are high, the cost of textile production will significantly increase. The cost of textile industry If it is higher, industry profits will be significantly reduced.
Therefore, labor-intensive industries like the textile industry should now be distributed in the central and western regions of my country where labor prices are relatively low, and have even been transferred to Southeast Asia and India in large quantities.
However, since the global COVID-19 epidemic in 2020, the economies of Southeast Asia and India have been severely affected by the epidemic due to poor management and control. A large number of low-end manufacturing orders have returned to my country’s major export manufacturing provinces such as Zhejiang and Guangdong. Due to the surge in orders in these areas in a short period of time, the textile industry, which was already on the verge of being eliminated, suddenly “returned to glory” and began to prosper again.
However, the full order volume and expanded production capacity have not changed the current situation of the local textile industry with high energy consumption, serious pollution and ultra-low profit margins. Even under the premise of capacity expansion, the “involution” of the textile industry has become increasingly serious, and profits have become even thinner.
If you compare a set of data, it will be clear at a glance.
In the first eight months of 2021, my country’s textile industry salesRevenue was 1.6 trillion yuan, a year-on-year increase of 14%; operating costs were 1.42 trillion yuan, a year-on-year increase of 15%; the textile industry achieved a total profit of 64 billion yuan, a slight increase of 2.2% year-on-year. It can be clearly seen that the cost increase rate of the domestic textile industry is significantly higher than the turnover growth rate, especially significantly higher than the profit growth rate.
Therefore, industries like this are typical backward production capacities, which should be clearly transferred out and gradually eliminated. Because of this, there was a situation where Zhejiang Province ordered 161 textile industries to suspend operations for rectification as given at the beginning of this article.
The current situation of my country’s textile industry
In fact, the domestic textile industry has long been in the stage of industrial transfer. The reason is that profits are too low. In the domestic environment of pursuing the quality of economic development, such inefficient and energy-consuming industries are concentrated in Zhejiang, which has started industrial upgrading early. For provinces, it really shouldn’t be the case.
In fact, it is quite difficult to operate the domestic textile industry because competition in the industry is too fierce. If domestic textile companies want to maintain their original customers and markets, not only are they unable to raise prices, but while upstream raw materials and downstream freight are increasing in price, domestic textile products are still cutting prices, and some textile companies are even lower than cost. Sales at low prices only rely on the 13% export tax rebate to make up for profits. Calculated in this way, the profit margin can only be maintained at around 5%, and all the money earned every day is hard-earned money.
For example, in the downstream transportation link, due to the current pressure on foreign trade shipping, the freight rate of foreign trade shipping has increased significantly when the number of containers is not large. Take the trans-Pacific route between China and the United States as an example. Before the outbreak, the freight for transporting a standard container from my country’s Shanghai Port to the United States was about US$1,500. However, the freight in 2021 once reached US$25,000, a 16-fold increase. Such a surge in freight costs has seriously eroded the profit margins of the textile industry.
Therefore, we can no longer be the world’s factory in such a thankless way, and we can no longer work for overseas upstream and downstream companies as a “good guy”. The hard work is ours, but the money is earned by others. This is not okay!
Therefore, we must take advantage of the window period brought about by the relatively good economic growth today to force industrial structural adjustment through reasonable and effective means, change the backward sales model and development ideas that focus on volume, and change to a strategy of improving quality. .
Of course, we all know that transforming and upgrading an industry does not happen overnight, and it will definitely not happen overnight in a short period of time.
From market demand to raw materials, from product quality control to printing and dyeing, design and other aspects, the industrial chain is very long and complex. Transformation and upgrading must make the entire industry change systematically, and cannot just force one point to change. But we must start acting now, because every time the industry upgrades, there will not be much time and opportunities reserved in the era. If we fail to catch up, we may miss the entire era.
Enlightenment
In fact, the situation faced by the textile industry is a microcosm of the current situation of many domestic industries in our country. We must not be deceived by the illusion of a surge in orders for low-end industries.
Due to the impact of the epidemic, many foreign countries with a large number of cheap labor forces, such as India and Southeast Asian countries, have been severely affected by the epidemic, and the production capacity of low-end industries has been greatly reduced. Some low-end or backward industries in our country suddenly have a significant increase in market share, and a large number of them have been launched. Corresponding industries that have long been eliminated.
As my country’s economic level has improved significantly, the cost and price are low when compared with India, Vietnam and Cambodia. To be honest, the price is a bit low. What’s more important is that doing so without recognizing the situation and direction is harmful to the future development of the entire industry. This way of drinking poison to quench thirst is unacceptable, and it is not conducive to the sustainable development of the entire industry and the improvement of the country’s overall strength.
Our good situation comes from hard work, so we should not waste it easily.
</p
