The textile industry is a consumer goods manufacturing industry with a long industrial chain and a high degree of marketization. The number of small, medium and micro enterprises and private enterprises accounts for more than 95% of the entire industry. In recent years, the textile industry has been operating basically stably, but the development environment has faced a significant increase in various risk and challenge factors, and the problems of difficult and expensive financing have long existed. While further promoting transformation and upgrading, maintaining an overall stable leverage ratio is not only an important aspect for the textile industry to implement national risk prevention tasks, but also an inevitable requirement for the industry to promote high-quality development. Since 2020, in the process of actively responding to the impact of the COVID-19 epidemic, enterprises have significantly improved their awareness of asset risk prevention and control, and the industry’s asset and liability levels are generally within a reasonable range.
►The industry’s asset and liability levels are at a reasonable level range, showing a steady and slightly rising trend
Since 2020, the asset-liability ratio of the textile industry has generally remained within a reasonable range of less than 60%, showing a slight upward trend. According to data from the National Bureau of Statistics, from January to June, the asset-liability ratio of the country’s 33,000 enterprises above designated size was 56.4%, which was roughly the same as the same period last year, a slight increase of 0.4 percentage points from the first quarter of this year. The asset-liability ratio of the textile industry has not increased significantly. On the one hand, it is related to the fact that the country has introduced a number of policies to ease the financing pressure of small, medium and micro private enterprises. On the other hand, it is also related to the current lack of market demand, which has led to a decline in corporate investment scale and a reduction in debt demand. .
The asset-liability ratios of most links in the industrial chain remained the same or decreased compared with the same period last year, and the debt-to-liability ratios of a few industries increased. Among them, the asset-liability ratios of the hemp textile, wool textile and textile machinery industries increased rapidly, reaching 55.8%, 58.6% and 57.9% respectively, which were 5.6, 1.9 and 1.3 percentage points higher than the same period last year. The asset-liability ratio of the home textile and cotton textile industries dropped significantly, which was 1.3 and 0.8 percentage points lower than the same period last year respectively. Although the asset-liability ratio of the chemical fiber, filament weaving and printing and dyeing industries has remained the same or declined compared with the same period last year, it is still higher than 60%. There is a certain degree of operational risk pressure and requires attention.
Figure 1: Changes in the asset-liability ratio of the textile industry (enterprises above designated size)
Data source: National Bureau of Statistics
Figure 2: Textile in the first half of 2020 Changes in asset-liability ratios of various sub-sectors
Data source: National Bureau of Statistics
►The survey situation of key enterprises is basically stable, and the second quarter is better than the first quarter
In the first quarter of 2020, due to the impact of the COVID-19 epidemic, the production and operation activities of textile enterprises were hampered, and profits declined sharply. In addition, the cost burden of water, electricity and other expenses and employee wages is high, and financing channels are restricted. The problem of tight capital chains of enterprises has become prominent. Debt is used to stabilize operations, so the asset-liability ratio has increased. According to the survey results of the China Textile Federation in the first quarter, only 75.1% of the companies with asset-liability ratios in the reasonable range below 60%, and 39.9% of the companies with asset-liability ratios below 50%, respectively, have declined from the survey results in the fourth quarter of 2019. 6.1 and 15.9 percentage points. 28.3% of companies reported that their asset-liability ratio had increased, and the proportion increased by 19.2 percentage points compared with the fourth quarter of 2019 survey.
Entering the second quarter, with the steady progress of resumption of work and production, corporate business activities have accelerated their recovery. The survey results show that in the second quarter of 2020, 77.5% of the companies surveyed had an asset-liability ratio lower than 60%, and 46.4% had an asset-liability ratio lower than 50%. The proportions increased by 2.4 and 6.5 percentage points respectively from the first quarter; only 13.2% had an asset-liability ratio lower than 50%. % of enterprises reported an increase in debt ratio.
In terms of enterprise size, the asset and liability levels of small and medium-sized enterprises are higher than that of large enterprises. In the second quarter, the proportion of large, medium and small enterprises with an asset-liability ratio of less than 60% was 80% respectively. %, 76.9% and 74.2%, respectively, and 81%, 72.7% and 73.8% in the first quarter. From the perspective of the industrial chain structure, the capital and technology-intensive cotton textile, printing and dyeing and textile machinery industries have relatively high asset and liability levels, reflecting that the number of surveyed companies with asset-liability ratios higher than 60% accounted for more than 20%; the terminal home textile industry The number of surveyed companies with asset-liability ratios exceeding 60% accounted for a relatively high proportion, reaching 30.3%, an increase of 0.7 percentage points from the first quarter.
Figure 3: Survey of asset-liability ratios of key textile enterprises
Data source: China National Textile and Apparel Federation Industrial Economics Research Institute
Participate in the survey on the causes affecting changes in corporate asset-liability ratios (multiple choices available) Key enterprises reported that “increases and decreases in accounts receivable” and “unclear market expectations, fluctuations in investment in production capacity expansion and technological transformation” are the main reasons. According to the survey results, the proportion of companies choosing these two items in the first quarter was 54.9% and 34.7% respectively; in the second quarter, the numbers were 44.7% and 37.9% respectively. In addition, “limited financing channels” is also the main reason for the fluctuation of asset-liability ratio. The number of companies choosing this option accounted for 15.2%, an increase of 1.3 percentage points from the first quarter.�
According to statistical data and surveys of key enterprises, the leverage ratio of the textile industry is basically stable at this stage, and operational risks are generally controllable. However, it is worth noting that due to the impact of the epidemic, the financing needs generated by textile companies are more based on short-term liquidity needs of a bailout nature such as paying workers’ wages, rather than for the expansion of long-term production and operation activities. There is a certain degree of mismatch between the steadily rising asset-liability ratio and economic activity that is significantly lower than in previous years, suggesting a certain degree of asset risk. Under difficult circumstances, it is recommended that enterprises pay close attention to the security of their capital chains, stabilize their leverage ratios, continue to improve their comprehensive management levels, and enhance their development resilience against downside risks. Since 2020, the asset-liability ratio of the textile industry has generally remained within a reasonable range of less than 60%, showing a slight upward trend. </p