At the beginning of the Chinese New Year in 2020, the COVID-19 epidemic is showing a rapid and serious spread. The industrial textile industry is affected by the epidemic situation due to the different industry sectors, regional distribution, and industrial structure of the sub-sectors. The non-medical and health engineering cluster enterprises have a large adverse impact, and the third-party operating companies serving cluster companies are affected, and medical and health-related companies received unexpected benefits.
1. Impact of the epidemic on the resumption and operation of industrial clusters
According to the recent policy released by the country and the feedback from the survey report on the epidemic situation of the cluster industry issued by the association on March 2, 2020, the 7 questions and answers raised, compared with the normal year, the proportion of delayed start-up companies in the cluster? Operating rate? Delay in resumption
affects total corporate income? As a percentage of the total in 2019? Impact of delayed resumption on 2020? Impact of delayed resumption on industries in the region? Impact of delayed resumption on investment? What are the pros and cons of enterprises’ delay in resumption? Is the specific reason for the company’s delayed start due to raw materials, equipment, personnel or other?
The analysis of these data can reflect the following situations:
1.1 Impact of resumption of work. At present, the operating rate of enterprises in the cluster has reached more than 96%. For example, the operating rate of clusters in Youxi, Changxing and other places is 100%; in Xiantao area, is 90%. Compared with normal years, the delayed resumption enterprises accounted for more than 98%. Among them, the medical and health enterprises resumed work earlier, and the supply of raw materials affected by the resumption and transportation basically returned to normal. Spunbond, meltblown, spunlace and downstream enterprises have strong production demand and are expected to exceed 2019 output values.
1.2 Delay in resumption affects the company’s annual income by 6%, and the employee attendance rate of the company is affected by isolation factors of 80%.
1.3 There are more investments in the medical and health fields.
1.4 At present, the main problem is that raw materials and downstream demand are not synchronized, and there is still a certain impact. Secondly, some non-local employees have not arrived, and the production capacity has not been fully released.
2. Positive impact of the epidemic on industrial cluster companies
In response to the COVID-19 epidemic, the General Office of the State Council issued an emergency notice on January 29, 2020 on organizing the production resumption and scheduling of key material production enterprises for epidemic prevention and control; notice of the National Development and Reform Commission, the Ministry of Finance, the Ministry of Industry and Information Technology on February 7, 2020 on the role of government reserves in supporting the response to the shortage of supplies and increasing production and supply; February 7, 2020 Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology, People’s Bank of China, National Audit Office issued an emergency notice on winning the prevention and control of the epidemic and strengthening the key guarantees for enterprises to support the epidemic prevention and control.
In accordance with the relevant requirements of the Ministry of Finance and the State Taxation Administration’s Announcement No. 8 of 2020 on the “Relevant Tax Policies on Supporting the COVID-19 Epidemic Prevention and Control”, the specific scope of medical emergency protection materials in the list of key protection materials for epidemic prevention and control was determined. A list of key protection materials (medical emergency) for the prevention and control of the epidemic was formed. Among them, the main raw materials of protective products belong to the industrial textile industry, and the importance of the industry is very prominent.
2.1 Environmental emergency monitoring field
With the COVID-19 epidemic prevention and control has become increasingly severe, on January 31, the Ministry of Ecology and Environment issued the “Emergency Surveillance Plan for the Response to the COVID-19 Epidemic”. During the epidemic prevention and control, the emergency early warning monitoring of the air and surface water environment, the application of air filtration and liquid filtration in hospitals and other units, especially the monitoring of water quality in drinking water sources are the focus of work. It mainly involves the fields of air filtration and liquid filtration in our industry. Related clusters, such as Zhejiang Tiantai and Jiangsu Funing, etc. These clusters are mainly for the production of filter materials, and the improvement of environmental quality cannot be separated from their products.
2.2 Protective supplies raw materials
With the in-depth development of the COVID-19 epidemic, medical supplies and their raw materials continue to be scarce. Relevant clusters such as Hubei Xiantao, Hubei Pengchang, Zhejiang Changxing, Zhejiang Xialv, Zhejiang Yiwu, Jiangsu Zhenzhou, Zhejiang Xiaojiang, Shandong Changle, and Jiangsu Rudong, some of which produce meltblown nonwovens are key materials for masks, SMS spunbond nonwoven is the main material for the production of protective clothing, and the spunlace nonwoven is the main raw material for disinfecting wet wipes.
3. The negative impact of the epidemic on industrial cluster enterprises
The epidemic has greatly impacted small and medium-sized private enterprises represented by catering, tourism, and manufacturing industries. Similarly, certain types of non-protective products cluster enterprises are facing severe challenges to varying degrees.
3.1 Engineering enterprises in the cluster
Due to the impact of the epidemic, delaying the resumption of work due to the requirements of the local government for the engineering enterprises will directly affect the project’s overall construction period. At the same time, the shortage of labor and materials and related and cost increases caused by the epidemic will cause a significant increase in costs.
3.2 Operational enterprises of service production in the cluster
Service companies are mainly small and medium-sized enterprises, and the industry’s professional characteristics are prominent. At present, labor costs and logistics costs have doubled. In the face of the current epidemic, the overall ability to resist risks is not strong, which is greatly affected by the shutdown of the service enterprises.
3.3 General-purpose equipment manufacturing enterprises in the cluster
Equipment-manufacturing enterprises are labor-intensive enterprises. In order to prevent the epidemic from spreading, most general-purpose equipment-production enterprises have stopped working. These manufacturers face the risk of capital shortage.
3.4 Overcapacity of enterprises in the cluster after the epidemic
As of February 28, 2020, there is still a shortage of medical masks, and the production capacity of masks will continue to expand in the short term. Proper adjustment of the industrial structure will help meet market demand. However, because masks are not daily necessities, the market demand for masks will stabilize after the epidemic is over, and small companies will have weak anti-risk capabilities, suddenly adjust the industrial structure or cause backlogs of inventory and take up cash flow. Medical protective clothing and isolation clothing also face this problem.
4. The main strategic recommendations for the response
The epidemic crisis has caused a greater impact on our industry. Overall, the positive impact is greater than the negative impact. How to transform the crisis of the industry into an opportunity for the development of the industrial textile industry and promote the transformation and upgrading of the industry is worthy of in-depth consideration during the epidemic.
4.1 Short-term response recommendations
In the short term, the negative impact of the epidemic on the industry is most fundamentally the funding problem and the shortage of personnel. Cluster enterprises can solve the short-term capital working capital problem through factoring of accounts receivable, loan borrowing, and appropriate increase in exports. Survival during the epidemic is victory.
4.2 Medium-term development recommendations
The epidemic situation has promoted the standardization of the industry in many fields, and even the construction of the national reserve system. The future depth and breadth of these sub-industries will be required to upgrade. Therefore, enterprises in the cluster industry should regard the epidemic crisis as an opportunity for the upgrading and development of the industry.
4.3 Long-term strategic strategy
At this stage, more than 90% of the national enterprises are small, medium and micro enterprises. Due to the influence of the competitive environment, it is difficult for the development of enterprises to be supported by continuous innovative technologies. After the epidemic, it is necessary to speed up the process of industrial mergers and acquisitions and reorganization, followed by the establishment of national emergency reserves, intensified acquisitions, taking into account storage and capacity release, and the third is to improve the industrial chain supporting and form a self-perfected larger industrial cluster. This is an issue that local governments and enterprises need to consider in advance.
(Source: China Nonwovens & Industrial Textiles Association)