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    China’s nonwovens and technical textile industry bounces back

    Industry News | November 1, 2009 | By:

    Industry adjustments, government action and product innovation kept China’s textile industry solvent in the first half of 2009, in spite of a decline in exports due to the global economic crisis. While the outlook for China’s textile industry for all of 2009 is not a cause for wholesale optimism, China Nonwovens & Industrial Textiles Association (CNITA) has identified four types of textile enterprises that have fared well, providing a measure of hope during an uncertain economy. Entering 2009, China’s macroeconomy showed some improvement, including an expansion in the scale of loans and an increase in the purchasing managers’ index (PMI). The Chinese government increased the ratio of tax refunds on exported textiles and apparel by three times and introduced a series of structural adjustments and revitalization plans for textile industries. These policies have stimulated China’s textile economy, which at midyear appeared to be bouncing back. Compared with other parts of the textile industry, nonwovens and technical textiles are recovering more quickly.

    China’s successes

    After researching industrial clusters and aspects of large- and medium-scale enterprises, CNITA found that four types of enterprises were successfully weathering the global economic storm of late 2008 and early 2009.

    > The first type includes those enterprises already having relatively complete industrial chains. For example, Fujian Xinhua Co. Ltd., Jinjiang City, Fujian Province, has its own polypropylene (PP) bottle recycling line, PP fiber production, nonwovens production and processing ability. The local bag, luggage and shoe industries are strong and sales channels are steady. Companies that fall in this category can expect some increase in sales in 2009.

    > Enterprises having relatively high technologies comprise the second type. Xiamen Savings Environmental Industrial Co. Ltd., Xiamen City, Fujian Province, whose materials for filter bags are all P84, aramid, polyphenylene sulfide (PPS) and other high-performance fibers, has solved the technical problems of processing these fibers and succeeded in producing high-quality products. Even in an economically difficult time for many industries, the company is maintaining a relatively high profit ratio.

    > Enterprises with innovative products make up the third type of textile manufacturer CNITA found to be experiencing growth. For Shandong Tongda Island New Materials Co. Ltd., Changyi City, Shandong Province, its research and development on synthetic leather (for basketballs, shoes, car interiors and other products) resulted in new clients and increased sales in both domestic and overseas markets. Hubei Huanfu Plastic Products Co. Ltd., Hanchuan City, Hubei Province, uses spunbond composite with film to produce protective clothing and insulating felt, which are in great demand in the international market. The company’s 2009 sales goal is $10 million (USD).

    > The fourth type of successful enterprise includes those businesses favored by the double pull of government policies and consumer demand. In the first half of 2009, consumer demand drove the sales volume of cars in China to nearly seven million, an increase of almost 18 percent over 2008, breaking the record for previous years in the first half. Businesses producing textiles for cars had so many additional orders that their workforce frequently worked overtime to meet demand. With the reappearance of the HIN1 (swine flu) virus, companies producing masks, protective clothing and other hygienic and medical usage products had enough orders to generate vigorous production and sales volumes. Since the end of 2008, new government policies have resulted in investment in infrastructure projects, which is having a direct and positive effect on future production of geosynthetics.

    The domestic market

    Among the three main economic pull factors—exports, investment, consumption—the positive effects of the first two on the industry had stopped by mid-2009 and consumption had slowed. The nonwovens and technical textile industries, however, were affected to lesser degrees.

    From January to May 2009, China’s nonwovens and technical textile industries grew 28 percent over 2008. Compared with a growth rate of only 12.5 percent in January and February 2009, the industry saw a large increase in the first half of the year. During this period, the gross profit margin for nonwoven and technical textile manufacturers was just above 13 percent, with a profit margin of 4.5 percent. For upscale nonwoven manufacturers, industrial output increased 7.6 percent, the value of new products increased nearly 2 percent, assets almost 12 percent, revenue nearly 6 percent, and total profits increased 16 percent. Upscale nonwovens decreased in the value of manufactured products exported, a decline of 9 percent, and in number of employees, which declined one-half percent.

    In the first half of 2009, exports of technical textiles totaled 649,000 tons, a decrease of 3 percent from 2008, while exports of nonwovens decreased 4 percent. By mid year this decline was slowing, and the industry appeared to be turning for the better. The volume of coated fabric exports had gone up, while exports of cord fabrics and other specialty technical usage textiles continued to decline.

    Compared with apparel and home furnishings, technical textile manufacturers rely less on exporting. Those that do rely on worldwide demand have adjusted production and sales projections accordingly. Additionally, with a more predictable domestic market for technical textile end products, some manufacturers have seen a turn for the better since March.

    Investment in the domestic nonwovens industry brought its slowdown to a halt. From January to May, total investment increased 47.5 percent over 2008. During the same period, there were 134 projects, an increase of 25 percent, including 83 new start-up projects, an increase of almost 30 percent. By the end of May, there were 24 finished projects, an increase of nearly 85 percent, which made up 18 percent of the total.

    For a positive second half of 2009, CNITA’s analysis suggests that the industry must continue a course of independent innovation, structural adjustments and expanded textile applications, while focusing requirements from textile revitalization plans on developing the technical textiles industry and speeding up implementation of technical improvement projects.

    Translated by Flora Xu, IFAI’s China representative. Reprinted/adapted with permission from China Textile News.

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