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In 2020, driven by the demand for epidemic prevention materials, China's industrial textile industry has experienced a round of rapid growth, accumulating a large base for the development of the industry in 2021; at the same time, with the changes in the global epidemic situation, the demand for epidemic prevention materials has dropped significantly, and the revenue and profit growth rate of masks, protective clothing and related raw and auxiliary materials industry has been significantly corrected in 2021, leading to a decline in the growth rate of major economic indicators of the whole industry.

1. industry overall demand and production decline

According to the association's survey of member companies, 40% of the companies said that domestic and foreign market demand has declined to varying degrees. In the first half of the year, the domestic and international market demand indexes were only 49.0 and 43.4, both in the contraction range. The demand index of the international market is only 31.4 and 34.8, which is at the lowest level in the industry. In areas with little correlation with epidemic prevention materials, the demand showed a more obvious recovery trend, such as the demand index of thread tape and lining cloth reached 69.9 and 60.0 respectively, and the demand index of textiles for transportation reached 57.1.

Due to the decline in demand, the operating rate of enterprises has generally declined. According to the survey, 27.5 percent of enterprises said they were able to produce at full capacity, 36 percent said their capacity utilization rate was around 80 percent, 18.8 percent said their capacity utilization rate was around 60 percent, and 17.6 percent said their capacity utilization rate was less than 40 percent.

Significant adjustment in the operating conditions of the 2. industry

According to the National Bureau of Statistics, from January to May 2021, the industrial value added of enterprises above the scale of China's industrial textiles industry fell 11.9 percent year-on-year, but if the epidemic factor is removed, the industry's industrial value added still grew by an average of 15.2 percent over the two years. The operating income of enterprises above designated size in the industry reached 117.51 billion billion yuan, a year-on-year increase of 0.3 percent, the total profit was 7.02 billion billion yuan, a year-on-year decrease of 54.5 percent, and the profit margin was 6.0 percent, a year-on-year decrease of 7.2 percentage points. Although the growth rate of the industry's operating income and total profit has been greatly reduced, the profit level is still in a relatively ideal state compared with the same period in history, and is only lower than that of chemical fiber and textile machinery in the current textile industry.

Enterprises have a more rational understanding of the current adjustment. According to the association's research, nearly 16% of enterprises said their profits fell by more than 50%. A further survey of 65 enterprises whose profits fell by more than 20% shows that 40% of enterprises believe that this is a normal adjustment for the rapid growth of the industry in 2020, and it will take 1-2 years to get out of the current adjustment period.

In terms of areas, the operating income and total profits of non-woven enterprises above designated size decreased by 7.7 and 67.8 respectively from January to May compared with the same period last year, and the profit margin was 6.2, down 11.5 percentage points from the same period last year; the operating income and total profits of enterprises above the scale of ropes, ropes and cables increased by 24.6 and 43.6 respectively compared with the same period last year, and the profit margin was 4.2, an increase of 0.6 percentage points compared with the same period last year; the operating income and total profit of enterprises above the scale of textile belt and cord cloth increased by 28.2 and 198.0 respectively, and the profit margin was 5.7, an increase of 3.3 percentage points; the operating income and total profit of enterprises above the scale of awning and canvas increased by 37.4 and 63.3 respectively, and the profit margin was 6.2, an increase of 1.0 percentage points; the operating income and total profits of enterprises above the scale of other industrial textiles in which medical and health, filtration and geotechnical textiles are located decreased by 10.3 and 53.5 respectively compared with the same period last year, and the profit margin was 6.0, down 5.6 percentage points from the same period last year.

In terms of cost, the interviewed enterprises generally reported that the price of raw materials changed greatly in the first half of the year, and the raw material price index of the industry was 77.1, which was in a rapidly rising range. The accounts receivable of enterprises also increased by a large margin. From January to May, the accounts receivable of enterprises above the industrial scale increased by 21.8, which was much higher than the income growth. The labor cost of enterprises continued to grow, but the growth rate was moderate. Two thirds of enterprises said that the labor cost increased in the first half of the year, and 27% of enterprises said that the increase was more than 10%.

3. investment cautious, focus on tapping existing capacity

Nearly 40% of the enterprises surveyed have projects under construction, 8% said they have canceled or postponed planned investment projects, while the rest have no investment projects. Among the investment projects under construction, 64% involve the upgrading and transformation of existing equipment, 44% involve the construction of factory buildings, and 17% involve environmental protection transformation. Despite the rapid expansion in 2020, 16.7 percent of companies still report insufficient capacity, mainly in the fields of filtration, safety protection, thread belt, industrial felt and nonwovens. The heat of investment in different fields reflects the great differences in the market structure within the industrial textile industry, reflecting the strong anti-risk ability of the industry.

4. exports of epidemic prevention materials drop sharply

According to customs data, from January to May, my country's chemical fiber nonwoven protective clothing (including medical protective clothing) exported US $1.43 billion, a year-on-year decrease of 34.5; unlisted textile products (including masks) exported US $6.01 billion, a year-on-year decrease of 75.1.%.

The export of non-epidemic prevention materials reflects the strong momentum of recovery. Nonwovens, special yarns, threads, ropes, ropes, cables and their products (products in Chapter 56 of the General Classification of Customs Commodities) were worth 3.52 billion US dollars, up 46.4 percent year on year, of which exports of nonwovens were 2.04 billion US dollars, up 54.9 percent year on year, and exports were 627000 tons, up 52.2 percent year on year. Exports of industrial textiles (products in Chapter 59 of the General Classification of Customs Commodities) amounted to 3.5 billion US dollars, up 38.0 percent year.

Difficulties and challenges facing the 5. industry

As for the main problems currently facing the industry, 50.4 per cent of enterprises believe that the market demand is declining and orders are insufficient, and this part of enterprises mainly come from enterprises in the epidemic prevention material industry chain. The second major problem faced by enterprises is that due to the basic stagnation of global travel for epidemic prevention and control, enterprises cannot participate in foreign exhibitions and visit international customers, thus facing resistance in opening up the international market. 37.8 per cent of enterprises said employment difficulties, it is difficult to recruit qualified workers, and the turnover rate of front-line workers is high; in addition, the substantial increase in international freight has also brought great trouble to the export of enterprises.

In terms of the external challenges faced by enterprises, the rapid rise in raw material prices is a common problem; 52.4 per cent of enterprises believe that excessive expansion of production capacity has caused excessive competition in the industry and downward pressure on product prices. Enterprises are generally optimistic about the competition from low-cost countries. Enterprises have strong confidence in their own innovation ability, product quality and customer relationship, and are confident to participate in global competition.

6. full-year forecast

Enterprises are more cautious about the industry's full-year operation expectations, according to the association's research, the full-year order index of the interviewed enterprises is basically consistent with the first half of the year and in the contraction range, the revenue index and profit index compared with the first half of the year slightly improved but still hovering near the line. The impact of the sharp decline in demand for epidemic prevention materials on the industry will be further revealed in the second half of the year, the industry's operating income growth rate is expected to decline throughout the year, the decline in profits will also expand, the industry's profitability level will return to normal but will continue to maintain a leading level in the textile industry, and operating income and profits will be higher than the pre-epidemic level.