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2007-9-12
The interview of Gao Yong, vice president of China National Textile and Apparel Council; president of China Textile Machinery & Accessory Association
The ITMA around the corner attracts people’s attention, so does China’s vigorous and lucrative textile machinery market, different people come to China with different purposes: how to fatten profit margin; how to minimize potential risks; how to dig gold mines and how to protect their cheeses not to be moved…so let’s listen to an authorized voice to figure out the clue for all the questions:
Q: When it comes to the topic of Chinese textile machinery, I guess, you must be peppered with a familiar question: what is the current situation of Chinese textile machinery？
A: According to a survey of 880 companies (machinery and accessories manufacturers), major economic indexes witnessed increments in different degrees for the first five months of this year, hereinto, total output value, revenue for main products, profit margin as well as export mounted up by 31.62%, 27.07%, 57.97%, 42.59%, respectively. Starting from June, an episode added twists and turns to the previous stellar performance: sales of textile machinery especially complete set of cotton equipment shrunk sharply, which can be attributed to the synthetical influences caused by appreciation of RMB, reduction of export rebate, loan rate increase, but l think it was market leverage that does works: the companies with blind investment and poor performance were gradually weaned out. Meanwhile, with years’ expansion, demand for textile machinery has already been saturated, so slowdown in the demand is comprehensible.
In terms of import and export, if last year was a taste of this upwards, then from January to May of this year, our import and export soared by 39.45% and 42.59%, respectively, compared to the same period, which were unwonted for these years.
There is another phenomenon worth mentioning, the market for advanced machinery woos more and more investors whereas low-class equipments struggled to grip the increasingly squeezed profit. So creating more added-value is the global trend and China should aim for this trend.
Q: what leads to trade gap in terms of textile machinery in China?
A: l believe three reasons can explain it, the instant reason is that since 1st, July of this year, part of the imported textile machineries no longer have access to free-tax import, so the companies who planed to purchase equipments scrambled to buy in the first half of this year, which has clear correlation with the bigger import and smaller export;
Secondly, with the transformation and upgrading of this sector, textile companies’ needs do not merely confine to domestic-made machineries but also imported and advanced ones. Under such circumstance, domestic supplier can meet this pursuit, meanwhile, in some cases, domestic-made machineries are far from satisfying customers’ requirements in terms of product structure, quality and stability.
Thirdly, textile machinery is high value-added product and a value-generating field and China has always bean endeavor to do better and profit from it, but there is a gap between China and foreign counterpart, so ushering in foreign product and experience first is par for the course.
Q: How we minimize or eliminate the gap?
A: there are two shifts tailored to improve this problem:
First, the shift from capacity expansion to renovation and upgrading and it will continue to become the trend for this industry, as it will see a demand for technical renovation and upgrading goes up.
Another shift is taking up from setting up new factories to acquiring, merging and re-consolidation so that a growing number of large corporation will appear looking overseas not just for supply; they’re increasingly hunting for demand abroad as well.
In a word, while China is sustaining the world largest consumption market for textile machines, this country is also hoping to expand its market overseas and to become the world’s largest manufacturing base for textile machinery.
We have to memorize that there is no substitute for good research and development teamed up with solid market intelligence. And at the same time we also have to caution that without the strength of a brand to support, lots companies are locked in a battle to cut cost and price faster than their competitors.
Q: what kind of imported machines enjoy the most spacious market in China?
A: the ones with advanced and high value-added technology featuring high-speed, high-efficiency, high-automatic and energy-saving, what’s more, high-class services are cash-generating. Tight weaving machine, blowing-carding unit, automatic winder, combing machine are the cossets in the eyes of Chinese users.
Q: with respect to export, this year without suspense, China's happy songs of export still impress the world. Then what are our major export destinations and what are the advantages of our equipments in these countries or regions, is it only the relatively cheaper price?
A: India, Pakistan and Vienna show their great need of Chinese textile machineries. In the first half of this year, our exported machines to these three countries combined accounted for 40% of the total.
There are four reasons render the boom:
First and foremast, our textile machinery manufacturing level took a stride in terms of function and quality, so our textile equipments now are cost effective with a strong competitive edge.
Secondly, foreign manufacturers invest in building factories in China, in some sense; reversing our relatively weak performance in printing after processing machine and knitting machinery, so product exported took on variety.
Thirdly, China's textile machinery products’ matching capability becomes more international. The domestic-made auxiliary mechanism and accessories exports to other countries even some of the world's leading textile machinery manufacturers also buy our spare parts as their main gears.
Fourth, as India, Pakistan, Bangladesh and other countries’ textile industry are developing rapidly; demand for textile machinery market provides a good opportunity for China's textile machinery enterprises.
Q: At present, Chinese government encourages “saving energy and reducing discharge”. Will it exert any influence in manufacture and import?
A: if it does, those influences are mostly positive, for it can urge China to accelerate upgrading of industrial structure and make greater efforts to sift out those companies not up for slandered, in this case, less is more, and it requires companies concerned to pay more attention to producing advanced machines so as to enhance our overall competitiveness. At the same time, the need of advanced machines up for standard stipulated in the policy “saving energy and reducing discharge” is incentive which results in more import from advanced countries.
In a word, high-efficiency, high-speed, automatic-oriented and saving energy and reducing discharge is the goal for our next stage. As long as sticking to the philosophy-speeding up technical renovation, we can adapt ourselves to evolving demand and breed our own market.
Q: Recently, adjustment in import tax policy was echoed by different fields: textile machinery companies contemplate how to fatten their profit margin from this, whereas import equipment agent worried whether their cheese is possible to be moved, however, textile companies rack their brain to figure out how to digest the increased cost, in this case, what’s your opinion about this?
A: For quite a long time, domestic-made machineries and their counterparts have been in unfair competition, because of the tax-free of imported whole machines which deeply undermined in-house machines’ strengths, however, according to new policy, tax for imported key accessories of super jet weaving machine and automatic winder should be refund, which can be transferred as national capital, then be mainly used as fund for R&D of new product and renovation, from another angle, it can reduce cost for lots of companies, especially, state-owned ones;
For textile companies, removal of tax-free policy will increase 6%-8% in terms of cost. But they can make max usage of the advantages of imported equipment to develop high value-added product to digest, meanwhile, sustainable high-quality product itself is on increment.
For those import agents, this adjustment doesn’t cast too much pressure on them, owing to china’s huge demand, but they confess that some minor adjustments are underway.
So China’s textile machinery industry is expected to be rosy in the healthy direction!
Q: this year is the second year of the 11th five-year plan, what’s your expectation of China’s textile machinery industry for this period?
A: During the 11th five –year plan period, the investment in R&D will be enlarged to target approximately 3% of the total sales income, and even 5% of the sales totals in some important enterprises. The number of in – house R&D results and patents will be increased year by year to enforce IPR protection. Efforts are to be made to speed up training of innovative personnel and train the in – service technical people in turns to increase the number of technical personnel in percentage. Various R&D, and engineering experimental centers and pilot bases are to be established to speed up the formation of national – level technology center.
By 2010, China’s machinery industry will have supplied domestic textile mills with the important machines, more than one – third of which measure up to the world advanced level at that time, and the machines from in – house R&D technology will take up more than 50% of the total machines supplied; the export of textile machines will take up more than 30% of the total industrial output value at that time; and the digital control ratio will be over 10% in the textile machinery building skill.
As requested by international benchmaking, the manufacturing sector should include information technology, smart control, and science –oriented, environment – friendly and globalize standards. By 2010, Chinese textile machinery sector will be able to be placed in the leading ranks of the world textile machinery building industry.
Life is rich in philosophy, so we have to resort to philosophy methods to ponder over things in evolving society, to discover challenges and experiences in good times; to find new dimension of thinking and hopes in hardship…
china textile By Shang Lin’aiyi
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