March 25， Industrial Park Working Committee of China National Textile and Apparel Council organized an online podcast meeting to discuss the current situation over there, Xinjiang, China’s largest far-west region, where long staple cotton is most famous and the fast investment growth in spinning industry is an equally significant eyecatcher. Mr. Xieqing, Deputy Director of Industry and Information Technology Department of Xinjiang Uygur Autonomous Region and Mr. Yang Xiaodong, Deputy Director of Economy and Technology Development Zone of Korla City, Xinjiang from public sector and some companies from private sector were at the podcast.
Mr. Wang Xiaobo, executive vice president of Korla Fiber Company of Xijniang Zhongtai Textile Group stated that its fiber company produced 91,300 tons of viscose fiber, and 51,400 tons of spun yarn with sales income for 458 million Yuan at production/sale ratio at 75.5% from January to February. As most of its clients, weavers, knitters, and garment manufacturers, are located far away in east and south of the country, where their own productions have not bounced back to the level before the outbreak of COVID-19, the company got a high level of inventory for its viscose fiber and yarns, which led to a decision to scale down its production to balance the inventory scaling up. As a consequence, The less output you have, the more cost you encounter in managing production on account of utilization efficacy. If the sales continue to slide down, the company comes under pressure not only in keeping production costs, but also in paying bank loans as recycling rate of receivables slows down, making business more difficult.
What Mr. Wang said is true of the situation that many businesses are facing now in the industrial park where Korla Fiber Company is seated. According to Mr. Liu Qin，Chief of Economic Development Division of Economy and Technology Development Park in Korla City, the first two months of this year witnessed a slowdown in industrial output value and yarn production with the big companies in the industrial park, like Zhongtai Textile and Litai Silk Road, getting stuck in business growth, actually a freefall by 30% and 60% respectively, as affected by the global pandemic. The companies in the park mostly produce fiber and yarns that are raw materials for the downstream production, those fabric and apparel manufacturers are largely in the provinces that were hit hard by the coronavirus infections. It will take some time before full recovery of production out there, so business orders from those clients are not projected to curve up immediately. The orders drop, low price for fibers and yarns, piling up inventory, financial troubles, labor cost rise etc. are crippling the businesses.
Mr. Yang Xiaodong, Deputy Director of Economic and Technological Development Zone in Lorla city, introduced to the podcast attendees that , the industrial park also has its own downstream manufacturers who are also in predicament because the business orders from international clients are quite a problem when foreign trade is impacted most. Mr. Su Jianjun, Honorary Chairman of Shandong Dezhou Hengfeng Group, said its Group invested in a modern spinning mill with 1 million spindles in Caohu Industrial Park in Korla City, 85 percent of the capacity are already started up with workers coming back to the mill on March 16, and the production/sale rate is 100% because its clients already effected a full payment for the yarns prior to the Spring Festival. But the new orders are not just as promising for the reason that the clients are considering to take advantage of possible cotton price drop and wait and see what’s in store when market changes with coronavirus fading away.
The podcast is successful in that it links China’s sparsely-populated Far-West to the commercially-prosperous provinces where they have common business interests, even though the new orders from some clients are kept in suspension for more favorable situation to come. The Industrial Park Working Committee of CNTAC is now facilitating supply-demand matchmaking between different manufacturing clusters and parks at national level to boost business with confidence in walking onto the land of hope out of mire.