What is behind the Opposite Trends of China-Shengze Textile Indexes

According to the monitor of Chinese Department of Commerce-Shengze Silk Chemical Fiber Index (“Shengze Index”), Shengze 50 indexes closed at 1150.72 points in March, 2012, up 107.65 points and the growth reached 10.32% compared with February. However, the monthly confidence index was weak and went lower in Shengze and the overall confidence index on market was 112.47 points in March, dropped 4.16 points compared with February.

As the Dow Jones Index of the textile market, what exactly caused the opposite direction of 50 Indexes and Confidence Index?

At present, the atmosphere of textile market still stayed at slack season. Parts of textile manufacturers were under much pressure of high inventory, unsmooth capital circulation, atrophic domestic demands and insufficient foreign demands etc. The degree of market confidence was on the low side. The terminal demands of the textile market were insipid after the Spring Festival, the orders of weaving factory reduced relatively and the production and marketing was sluggish. In addition, the conventional chemical fiber fabric was the first to be affected. Because the products were simple and easy to repeat, low-end, cheap and with low added value, they were lack of market competitiveness and it was easier to ignore in the current cold market. Now the inventory of grey fabric reached more than 2 months of some manufacturer and the inventory pressure of conventional fabric was great, such as polyester taffeta, pongee and taslon and so on. The selling price was frequently changed in order to boost sales. Although the manufacturers received orders, the profit space was seriously squeezed under the pressure of three big mountains, which including raw material cost, labor costs and channel cost. The reality is that no matter the manufacturers run the orders or not, the profit is barely there. The marketers looked down upon the aftermarket and their operations turned to be cautious. So the market confidence index tended to be weak on the whole in March.

However, 50 indexes could break through adversity and rebounded back. It has a certain increase among the average total sales, average sales volume, average total wages and average purchased amount of raw materials in March. Among which the average total sales in March rose 104.3742 points compared with last month, the growth was about 27.35%. In addition, the average sales weight increased slightly 7.406 points, while the growth was only 1.31%. From this we could learn that the gap of growth was great between the average total sales and the average sales weight, which showed that the demand of comparatively expensive high-class fabrics was great in the market in March. This type of fabric was the product with high added value, high investment and high return. Moreover, “50 Index” is collected from the leading enterprises in Shengze market. These enterprises pay more attention to break through the tradition, innovate, research and develop high value-added products, through different ways to improve the substantial competitiveness in the market.

Pushed by science, technology and innovation, the medium and high-end fabrics produced by them have strong sales in the market. Along with environment friendly fabric became the current consuming trend on market, and the textile enterprises launched a new round of research and development boom for the environmental protection fabrics, and copper ammonia and flax all became the most popular research object of enterprises. In addition, some textile enterprises did not satisfied with the conventional chiffon fabrics, so they put investment and labor to the after-finish treatment and make every effort to chase the novelty. For example, Wujiang Hongcheng Textile and Finishing Co., Ltd. developed diamond process through coating and printing, made it fell smooth, thin texture and transparent, which had good permeability and drape. As for the performance, it was better than ordinary hot-stamping and printing chiffon, which has stronger fastness, more comfortable and better glossiness than before.

In addition, “50 index” enterprises pay more attention to the development with innovation and transformation. Under the support of relative encouragement policy issued by the government, their pace of the transformation was upgraded. From equipment upgrade to products research, the government comprehensively pushed the enterprises to go further. It improved the equipment level and core competitiveness of the enterprises and helped them to become the leaders of textile enterprises in Shengze.

At present, there are still a lot of uncertainties in the macro side. Unfavorable factors include slow recovery of market economy, shrank demand in the terminal market all reflect that the urgency of transformation for the enterprises. Meager profit situation requires the enterprises to improve and upgrade themselves. Only by the technology and product innovation that the enterprises can win more orders, so as to break the dilemma of low-profit and solve the problems fundamentally.