From May 20th to 25th, the China Cotton Association conducted a survey on the recent operating conditions of processing trade companies, warehousing and logistics companies, and textile companies in the cotton industry. The survey results of nearly a hundred companies show that the epidemic has had a great impact on the production and sales of enterprises, with shrinking orders and shortage of working capital being the main difficulties; it is recommended that relevant departments and financial institutions increase tax reductions and fee reductions, credit support, and reserve cotton rounds. Measures such as imports and cotton planting subsidies have stabilized the cotton market and enhanced industry confidence.
1. Enterprise Investigation
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01 Cotton processing and trade circulation enterprises: Cotton sales progress is slow
From February to March, 80% of cotton trade and circulation enterprises started operations one after another, and the operating rate reached 95%. Judging from the cotton sales progress of processing and trade circulation companies, 10% of companies have completed their sales, 23% of companies have sales progress of more than 80%, 23% of companies have sales progress of 50-80%, and 44% of companies have sales progress Less than 50%. Judging from the cotton business volume, compared with the previous year, 14% of companies were basically the same, 38% of companies dropped by 20%, 38% of companies dropped by 20-50%, and 10% of companies dropped by more than 50%.
The vast majority of companies said that the epidemic has had a greater impact on business operations, mainly including: falling cotton prices leading to losses, insufficient downstream textile demand leading to slowed sales, inventory backlogs, and capital reflows The slowdown leads to increased financial costs and increased loan repayment pressure. In addition to common suggestions such as tax cuts and fee reductions, credit support, and fiscal discounts, 33% of processing companies suggested increasing cotton planting subsidies and increasing support for the mainland to stabilize cotton farmers’ enthusiasm for cotton planting; 24% of circulation and trade companies suggested regulating purchases and storage. Measures to stabilize markets and expectations.
02 Cotton warehousing and logistics companies: business differences are obvious
From this time Judging from the losses that the epidemic has caused to enterprises, there are large differences among cotton warehousing and logistics enterprises. 57% of enterprises said that they have suffered large losses or their operations have been hindered, but 30% of enterprises said that they had no losses or had little impact. Tight storage capacity and inventory reduction coexist, and companies generally say that inventory turnover has been greatly affected. Warehousing and logistics companies believe that the uncertainty of market expectations is the biggest difficulty they currently face, and hope to expand domestic demand, restore production capacity, and increase support for small and medium-sized enterprises.
03 Textile companies: orders dropped sharply
In survey, 95 % of textile companies have started operations from February to March. Judging from the effects of resumption of production, 43% of companies have an operating rate of more than 90%, 10% of companies have an operating rate of 70-90%, and 29% of companies have an operating rate of 50-70%. %, and 18% of enterprises have an opening rate of less than 50%. Compared with the same period last year, the total number of orders since 2020 has only increased for 5% of companies, 36% of companies have seen orders fall by 0-20% year-on-year, 50% of companies have seen orders fall by 20-60% year-on-year, and 9% of companies have seen orders fall by 20-60% year-on-year. Orders fell by more than 60% year-on-year. The decline in foreign trade orders of textile companies is even more obvious, with 19% of companies’ foreign trade orders falling by 0-20% year-on-year, 52% of companies’ foreign trade orders falling by 20-60% year-on-year, and 29% of companies’ foreign trade orders falling by more than 60% year-on-year. Judging from the losses that the epidemic has caused to companies, only 9% of companies believe that the impact is not significant, and 91% of companies indicate that the losses are relatively large, mainly reflected in sharp declines in sales revenue, product backlogs, shrinking orders, etc.
Judging from the two indicators of orders and profit expectations, the surveyed companies are expected to increase the number of new orders and profits by more than 20% in the second quarter. % of enterprises accounted for 14%, 29% and 18% were expected to increase by 0-20% respectively, 14% and 23% were expected to remain the same, 38% and 36% were expected to decrease by 0-50% respectively. , companies that are expected to drop by more than 50% account for 5% and 9% respectively. Currently, 77% of textile companies believe that reduced orders and uncertainty in market expectations are the main difficulties, and 64% of companies have liquidity shortages. Enterprises generally hope to continue to reduce taxes and fees, increase loan support, introduce targeted preferential policies, and wait for the market to pick up; some enterprises also expressed their hope to increase cotton import quotas and expand procurement channels.
II. Policy recommendations
01 First, include cotton and textiles as key supporting industries.
The cotton and textile industries involve 6 million cotton farmers, 20 million textile workers and millions of circulation employees, most of whom are migrant workers and are low-income groups in need of key support. . One-third of China’s textile and apparel industries rely on exports and are the industries most affected by the epidemic. Statistics show that the added value of textile industries above designated size fell by nearly 11% from January to April, ranking second among 17 major industries. The “six guarantees” proposed by the central government put “employment protection” in the first place, include workers in the cotton and textile industries as key groups, introduce temporary relief measures, and provide support in terms of tax exemptions, financing loans, and income guarantees, so that enterprises can Being able to “survive” ensures that practitioners’ income does not drop significantly.
02 The second is to increase support for mainland cotton production.
At present, 85% of my country’s cotton production is in Xinjiang. From the perspective of industrial security, reasonable regional layout, and ensuring the income of mainland cotton farmers, it is recommended to implement “professional warehousing supervision + storage” for cotton in the nine mainland provinces as soon as possible On the basis of the “notarized inspection” policy, we will increase financial support and promote the normalization and institutionalization of policies to stabilize the mainland’s confidence in resuming production.
03 The third is to start the reserve cotton rotation in a timely manner.
Currently my country’s cotton inventory consumptionThe ratio reached 106.3%, the highest value in the past three years. Low consumption and high inventory have put pressure on the industry. It is recommended to improve the rotation mechanism as soon as possible to solve the problems that occurred in the early rotation, not to transfer the burden to enterprises, and to rotate into reserves in a timely manner. Cotton will be put on the market when demand recovers to ensure the stability of the supply chain and boost industry confidence. </p
