Industry Release: Brief Analysis Of Economic Operation Of Printing And Dyeing Industry In The First Three Quarters

Since 2024, the lack of momentum for world economic growth, the continuation of geopolitical conflicts, and the deepening of domestic structural adjustment have brought new challenges, but the continued release of macro policy effects and the accelerated development of new quality productivity have formed new support for the smooth operation of China's national economy. In the first three quarters, China's GDP grew by 4.8% year on year, ranking first among the world's major economies. Although the national economy in the second and third quarters fluctuated slightly, it was generally stable and progressive. In this context, China's printing and dyeing industry continued to recover its development trend. The output of printing and dyeing fabrics in the first three quarters kept growing, the export scale of major printing and dyeing products continued to expand, the main economic indicators showed a recovery trend, and the industry's profitability improved significantly. At the same time, it should also be noted that the current domestic and international market demand is still insufficient, the export pressure of the printing and dyeing industry is gradually emerging, the growth rate of major economic indicators tends to slow down, the industry's loss surface is still high, the profit differentiation of different enterprises is obvious, and the foundation for the recovery of the industry economy needs to be further consolidated.

1、 The production situation weakened in the short term, and the growth rate of output fell back

According to the data of the National Bureau of Statistics, from January to September 2024, the output of printing and dyeing fabrics of enterprises above designated size in the printing and dyeing industry will be 41.622 billion meters, with a year-on-year growth of 2.94%, and the growth rate will fall 1.04 percentage points from the first half of the year. In the third quarter, the overall production situation of the printing and dyeing industry weakened. The output of printing and dyeing fabrics in that month was less than 5 billion meters, and the average monthly output decreased by more than 10% compared with the second quarter. Month by month, the printing and dyeing industry entered the traditional off-season in July and August, the production orders of enterprises decreased, and the startup rate declined, but the monthly output still achieved a small increase year-on-year; In September, the orders for autumn and winter fabrics increased, and the production of enterprises improved. In September, the output of printing and dyeing fabrics of enterprises above designated size was 4.898 billion meters, up 3.64% month on month. From the demand side, the domestic sales of textiles and clothing in the third quarter weakened and the growth slowed down, which restricted the production of the printing and dyeing industry. From January to September, the retail sales of clothing, shoes and hats, knitwear and textiles of units above the designated size increased slightly by 0.2% year on year, and the online retail sales of clothing goods increased by 4.1% year on year, with growth rates falling 1.1 and 2.9 percentage points respectively from the first half of the year.

2、 Export growth continued to slow down, and foreign trade pressure gradually emerged

According to the statistics of China Customs, from January to September 2024, the export volume of China's eight major categories of printing and dyeing products will be 24.19 billion meters, an increase of 2.44% year on year, and the growth rate will drop 0.29 percentage points from the first half of the year; The export value was 22.721 billion US dollars, a slight decrease of 0.01% year on year, and the growth rate dropped 0.74 percentage points compared with the first half of the year; The average export unit price was 0.94 US dollars/meter, a year-on-year decrease of 2.39%, and the decrease was 0.44 percentage points higher than that in the first half of the year. In the first three quarters, the export of China's main printing and dyeing products showed a trend of increasing quantity and decreasing price. The growth rate of export quantity gradually fell back from the high growth at the beginning of the year to the current low growth level. The cumulative growth rate of export amount continued to slow down, and in September turned to negative growth. The average export unit price hit a new low in the same period of nearly a decade, and the decline is still expanding. The industry's exports are facing greater competitive pressure.

Weak external demand is an important reason for the industry's export pressure. Since this year, although the inflation rate of major developed countries has shown a downward trend, and the monetary policy of Europe, the United States and other countries has gradually shifted from tightening to easing, the vitality of global trade is still weak, the manufacturing PMI index is still in the contraction range, and the overall recovery strength still needs to be improved. On the whole, the international market's demand for China's textiles and clothing shows a weak recovery trend. From January to September, China's textile and clothing exports totaled US $222.41 billion, up 0.5% year on year, down 1.0 percentage point from the first half of the year, of which clothing exports totaled US $118.11 billion, down 1.6% year on year. At the same time, under the trend of industrial transfer, the increase of printing and dyeing capacity in Southeast Asia, South Asia and other regions has formed direct competition for China's printing and dyeing products export, further increasing the pressure on foreign trade in the industry.

ASEAN is the main export market of China's printing and dyeing products. The export performance of China's printing and dyeing industry to ASEAN in the first three quarters was significantly better than the overall level. From January to September, China's eight categories of printing and dyeing products exported 5.723 billion meters to ASEAN, an increase of 8.77% year on year, 6.33 percentage points higher than the total export growth, accounting for 23.66% of the total export; The export unit price was 1.20 US dollars/meter, a slight decrease of 0.02% year on year, 13.40% higher than the average export unit price. The export growth to ASEAN has driven the export of RCEP member countries with ASEAN countries as an important part to perform well. From January to September, China's eight categories of printing and dyeing products exported 6.104 billion meters to RCEP member countries, up 7.94% year on year, with an export amount of 7.20 billion dollars, up 7.65% year on year.

From the perspective of major export countries, the total export volume of China's printing and dyeing industry to the top ten countries in terms of export scale reached 10.254 billion meters, accounting for 42.39% of the total export volume. Among them, the export scale to Vietnam, Bangladesh and Brazil achieved double-digit growth, and the export to India and the Philippines also achieved a small increase. Vietnam and Bangladesh are important textile and clothing exporters in the world. Supported by domestic macroeconomic improvement, preferential tariff policy support from developed economies in Europe and the United States, and accelerated recovery of local textile and clothing industries, Vietnam and Bangladesh's textile and clothing trade has improved significantly, driving their demand for printed and dyed fabrics in China to maintain a rapid growth. As a populous country and its unique advantages in entrepot trade in North America, Brazil's demand for China's printing and dyeing products has gradually increased. The export of China's printing and dyeing industry to Nigeria, Russia, Pakistan and other countries has shown a significant downward trend, of which the export volume to Pakistan has declined by more than 40%. The main reason is that Pakistan's energy cost will rise significantly in 2024, the competitiveness of textile products in the international market will decline, and the demand of local textile and clothing enterprises for China's printing and dyeing fabrics will significantly reduce. In the first three quarters, among the top ten countries in terms of export scale, only the export unit price of products to Vietnam and Myanmar increased slightly, while the rest of the countries showed a downward trend, with the Philippines, Pakistan and other countries declining significantly. Due to insufficient market demand and the gradual release of local printing and dyeing capacity, the export of China's printing and dyeing industry is under further pressure, and trading price for volume has become a common strategy for stable development of enterprises.

3、 The operating efficiency remains low, and the operating efficiency is significantly improved

According to the data of the National Bureau of Statistics, from January to September 2024, the three fees of printing and dyeing enterprises above designated size accounted for 6.87%, a year-on-year decrease of 0.08 percentage points, of which cotton printing and dyeing enterprises accounted for 6.72% and chemical fiber printing and dyeing enterprises 7.72%; The turnover rate of finished products was 13.69 times/year, down 1.61% year on year; The turnover rate of accounts receivable is 8.06 times/year, a year-on-year decrease of 0.85%; The turnover rate of total assets was 0.99 times/year, up 4.09% year on year. In the first three quarters, the main operating quality indicators of the printing and dyeing industry were repaired compared with the first half of the year, but the overall level was still low. Affected by insufficient demand, competition in the domestic and foreign markets intensified, the sales cost of enterprises increased, and the turnover rate of finished products declined. From January to September, the sales expenses of printing and dyeing enterprises above designated size increased by 11.49% year-on-year, 3.38 percentage points higher than the growth rate of operating revenue.

According to the data of the National Bureau of Statistics, from January to September 2024, the operating revenue of printing and dyeing enterprises above designated size will reach 235.386 billion yuan, up 8.11% year on year; The total profit was 10.565 billion yuan, up 44.65% year on year; Cost profit rate was 4.83%, 1.26 percentage points higher than that of the previous year; The sales profit margin was 4.49%, up 1.14 percentage points year on year. The number of loss making households of 1789 printing and dyeing enterprises above designated size was 613, with 34.26% of the loss, an increase of 2.24 percentage points year on year; The total loss of loss making enterprises was 2.598 billion yuan, down 9.80% year on year. In the first three quarters, the business income and total profit of the printing and dyeing industry achieved rapid growth, of which the total profit reached the highest level in the same period in recent years, an increase of 8.18% over the same period in 2019. However, the growth rate of operating revenue and total profit showed a gradual decline overall due to the impact of the "low base at the beginning and high base at the end" of the same period last year. It should be noted that the loss of the printing and dyeing industry in the first three quarters has still expanded year on year, indicating that although the industry's profits have improved significantly overall, there are significant differences in the market competitiveness of different enterprises, and the differentiation of enterprise profitability has intensified.

Looking forward to the fourth quarter, the printing and dyeing industry is still facing many risks and challenges, but generally speaking, the industry has a foundation and conditions to achieve stable development. First of all, the world economic situation is still complex. Although global inflation continues to fall, the cycle of interest rate reduction in major economies has just started, and the driving role of economic growth and the support role of demand recovery are still insufficient; Secondly, geopolitical tensions have long-term interference with the efficiency of international trade, which may affect the prospects of global economic growth; In addition, the potential tariff increase policies of the United States and Western countries will further accelerate the adjustment of the global textile industry chain supply chain, and the export of China's printing and dyeing industry may be under further pressure.

Under the complex and severe situation, the national level has intensively introduced and strengthened the implementation of various policies to stabilize growth, providing fundamental support for the industry to continue to recover. Especially in late September, the Political Bureau of the Central Committee held a meeting to accelerate the launch of a package of targeted incremental policies, which enhanced market confidence, improved market expectations and stimulated market vitality. From the perspective of some leading indicators, the economy in the fourth quarter has shown some positive changes. For example, in October, the prosperity level of China's manufacturing industry rebounded, and the PMI index returned to the expansion range. In October, China's textile and clothing exports grew 1.5% year-on-year, 1.0 percentage points higher than that in September. With the continued efforts of stock policy and incremental policy, China's economy will continue to recover, the consumption potential of the super large domestic demand market is expected to be continuously released, and the foundation for the economic recovery of the printing and dyeing industry will be further consolidated and improved.

(Source: China Printing and Dyeing Industry Association)