In 2020, the production, sales, exports and investment of China’s industrial textile industry soared, driven by the global demand for pandemic prevention materials, and the economic benefits of the industry was significantly improved. In 2021, the newly invested capacity of the industry will be gradually released, and the demand for pandemic prevention materials will return to normal. It will take time for the global market to recover amid the COVID-19 pandemic, and the industry development will face many uncertainties and risks. In order to timely and accurately grasp the industry situation and provide targeted advice to companies, industries and government departments, China Nonwovens & Industrial Textiles Association has carried out online survey in spring.
Analysis of surveyed companies
As of March 2nd, a total of 389 valid questionnaires have been collected. From a regional perspective, the surveyed companies basically cover the main producing areas of China’s industrial textiles. In terms of industry distribution, 23.2 percent of the surveyed companies are engaged in the production of masks, 12.85 percent of companies are engaged in the production of protective clothing, 6.43 percent of companies are engaged in the production of disinfectant wipes, and 66.24 percent of companies are not engaged in the production of pandemic prevention materials.
In terms of scale, 12.08 percent of the surveyed companies have annual sales revenue of more than 1 billion yuan, 7.46 percent of companies have sales revenue of between 500 million and 1 billion yuan, and 33.68 percent of companies have sales of between 100 million and 500 million yuan. In addition, 9.51 percent of companies have annual sales revenue of less than 20 million yuan. Therefore, the geographical, industry and scale distribution of the surveyed companies is reasonable.
Business review in 2020
Regarding business operations in 2020, 60 percent of the surveyed companies said that their operating income and profits have increased to varying degrees, of which 20 percent of the companies said that the growth rate exceeded 50 percent, and nearly 30 percent of the companies said that the growth rate exceeded 10 percent but less than 50 percent; 20 percent of the companies said the above two indicators were basically the same; the remaining 20 percent of the companies said that their income and profits had declined to varying degrees, of which about 7 percent of the companies said that the decline was more than 20 percent.
Industry operation in Jan.-Feb. 2021
From January to February 2021, due to the continued demand for anti-pandemic materials, the overall operation of the industry will be better than that of the same period in previous years. The surveyed companies are more satisfied with the operation of the first two months, and 13.4 percent of the companies think that the current operation is very good, more than half of the companies think that the operation is relatively good, and nearly 1/3 of the companies think that the operation is average.
Companies generally said an increase in orders, with the domestic order index at 66, but the international order index at 57. 37.89 percent of the surveyed companies said that the company has relatively stable and continuous orders, and nearly 10 percent of companies have orders in hand for production for more than three months, 18.04 percent of companies have orders in hand for production within 3 months, 27.06 percent of companies have orders in hand for production within 1 month, and 7.73 percent of companies have orders in hand for production within half a month. (Note: The indexes in this report take 50 as the threshold, higher than 50 indicates that the index is in the rising range, and the higher the index, the higher the growth rate).
Benefiting from the initiative of stay put for the Spring Festival across the country, the company’s resumption of work and production in 2021 was significantly better than in previous years. As of the end of February, nearly three-quarters of the surveyed companies indicated that almost all workers had arrived for work on time, and 16.49 percent of the companies indicated that about 75 percent of their workers had already arrived. 38.92 percent of the surveyed companies have reached full capacity, 34.28 percent of the companies have recovered 80 percent of their production capacity, 16.24 percent of the companies have recovered to 60 percent, and about 10 percent of the companies have recovered less than 40 percent.
Since 2021, the price of main raw materials has risen. With a raw material price index of 81, 70 percent of the companies surveyed said that the price of raw materials has risen to varying degrees, and nearly 30 percent of companies said that the increase was more than 10 percent. The labor cost of companies has continued the upward trend over the years, with a labor cost index of 74. The rise in raw material costs and labor costs have led to a rise in the prices of companies’ products to varying degrees. The price index of company finished products is 63, which is lower than the index of raw material prices and labor costs.
The impact of overseas markets on the industry
In this survey, the surveyed companies scored the company’s dependence on overseas markets, with 0 indicating very low and 10 indicating very high. The average score of the surveyed companies’ dependence on overseas markets is 4.1, which is in a low range. In terms of different fields, filtration and separation textiles, transport textiles, geotextiles, building and construction textiles, paper-making textiles, textiles for synthetic leather, and special textiles have a low degree of dependence on overseas markets, mainly for the domestic market; while medical and hygiene textiles, protective and safety textiles, threads, ropes and belts, etc. have a high degree of dependence on overseas markets, but the scores are all lower than 6. The dependence of nonwovens on overseas market is at the average level of the industry.
However, we should also note that China’s exports of masks, protective clothing, and isolation gowns in 2020 exceed USD 60 billion. Especially after May 2020, the proportion of overseas orders of mask and protective clothing companies is very high, and the demand for overseas pandemic prevention materials is very high. The changes will have a greater impact on the operations of these companies.
Forecast for 2021
Regarding the development in 2021, the confidence index of the surveyed companies reached 71. 67.78 percent of the companies expressed optimism about the development of the whole year. In terms of fields, companies in the fields of filtration and separation textiles, geotextiles, building and construction textiles, reinforcement textiles, paper-making textiles, threads, ropes and belts, and special textiles are more optimistic about their business expectations in 2021; while medical and hygiene textiles and nonwovens companies, which have experienced rapid growth in 2020, are more cautious in forecasts for the full year in the face of slowing demand for anti-pandemic supplies.
From the perspective of company scale, large companies are more optimistic about the industry’s forecast for the whole year. Enterprises above designated size with annual sales revenue of less than 100 million yuan are the least optimistic about the situation for the whole year. Specific to individual indicators, the annual domestic order index of the surveyed companies was 69, and the international order index was 67, both slightly higher than the levels of the previous two months; the annual production index was 70, the income index was 71, and the profit index was 63.
Business confidence is also reflected in fixed asset investment intentions. 63.66 percent of the surveyed companies said they have new investment plans in 2021, mainly focusing on capacity expansion, upgrading of existing equipment and building new plants. The companies with investment plans are mainly in the field of medical and hygiene textiles and nonwovens.
For the current difficulties faced by companies in the process of operation, labor shortages, difficulties in overseas market expansion, and declining market demand are the three most selected by companies. Difficulties in procurement of raw materials and accessories and shortage of funds are also issues that companies have reported more frequently.
Regarding the external challenges faced by companies, the problems reported by companies are mainly concentrated in the sharp fluctuations in raw material prices and the excessive industrial capacity. while the difficulties in recruiting workers, the exchange rate fluctuation of RMB and the decrease in the demand for pandemic prevention materials are also the most common problems reported by companies.
Faced with a complex environment and fierce competition, the competitive advantages of the surveyed companies are mainly concentrated in innovation capabilities, customer relationships, product quality and management teams. About 20 percent of the companies each believe that they are in a growing segment and have a cost advantage.
Conclusion and suggestion
On the whole, the industrial textile companies participating in this survey are relatively satisfied with the operating conditions from January to February 2021 and have high confidence in the operating conditions for the whole year.
China’s industrial textile industry is not highly dependent on the international market, and the COVID-19 has had a relatively large negative impact on the international market demand for non-pandemic materials. With the widespread vaccination of the COVID-19 vaccine worldwide, the pandemic will be alleviated to a certain extent globally. The demand for pandemic prevention materials will drop sharply, and the demand for non-pandemic prevention materials will rise. Relevant companies should reasonably adjust market expectations, speed up the adjustment of product structure and the development of new products.
Due to the global loose monetary policy, optimistic expectations in the post-pandemic era, and some accidental factors, raw material prices will rise sharply in 2021. Short-term large fluctuations in raw material prices will cause problems for the operation of companies, but in the long run, the entire industry chain will share the pressure of rising raw materials.
Currently, some meltblown nonwovens and mask production lines have been withdrawn from the market, and it is expected that more such production will be withdrawn as the pandemic eases further. The new capacity of spunbonded and spunlaced nonwovens will be gradually released in the next two years. The industry needs to continuously expand new markets and new applications, adjust the capacity expansion, and reduce the impact of large-scale capacity increase on the industry.
As China’s workforce shrinks and the younger generation becomes less willing to engage in manufacturing, difficulty in recruiting and high labor costs will be common problems faced by the entire manufacturing industry. On the one hand, companies should strengthen the intelligent transformation of production lines, reduce the number of general workers and reduce labor intensity; on the other hand, they should strengthen the training of employees, continuously improve the working conditions and benefits of employees, and enhance the attractiveness of companies to workers.
Industrial textiles are a technology-oriented industry, and the product performance, quality and cost advantages formed through technological innovation are the key to companies to win in the fierce market competition. Companies need to strengthen technological innovation and professional talent training, vigorously promote the upgrading of intelligent manufacturing and green manufacturing, complement the weak links of the industry, and enhance the independent controllability of the supply chain.