On November 29th, the 11th Member Representative Conference of China Sewing Machinery Association and the 1st Council of the 11th Session were held in Taizhou, Zhejiang. At the meeting, Wu Jiling, vice chairman of the China Sewing Machinery Association, made a keynote speech on "Industry Economic Operation in 2021 and Prospects for 2022", comprehensively analyzed the operation of the industry, focused on the interpretation of the challenges and opportunities facing the development of the industry, and made corporate decisions Play a certain reference value for reference.
In response to the strong request of the majority of industry enterprises, the full text of the report is now published as follows:
2021 is an important year for countries around the world to work hard to get rid of the impact of the epidemic since the outbreak of the new crown epidemic, and the global economy continues to recover. China's economy continues to recover, the international economy is picking up, and the prospects for global economic growth have improved significantly. In the first three quarters, while China's economy was constantly approaching the peak of growth, the European and American economies were unblocked and demand recovered in an all-round way, driving global demand to resonate at the same time. my country's sewing machinery industry ushered in a market climax with a concentrated outbreak of domestic and foreign demand.
Companies in the industry have fully grasped the important opportunities of demand recovery and market rebound, vigorously promoted the increase in production and expansion, and matched domestic and foreign market demands. The economy has achieved restorative medium-to-high-speed growth, and production and exports have exceeded 2018 levels. Economic development has shown steady progress. Good momentum of reinforcement in China.
However, while the economy is recovering, the industry is also suffering from many pressures and challenges such as the spread of mutant viruses, sharp increases in raw materials, difficulty in recruiting, rising labor costs, appreciation of the renminbi, power and production restrictions, tight shipping and rising costs, and the level of corporate profitability continues to suffer. Squeeze, the uncertainty and challenges facing development increase.
Economic performance of the industry from January to September 2021
Strong production power, hitting a new high in recent years
In the first nine months, the whole zero enterprises accelerated the recovery of production capacity, increased production coordination, continued to maintain high-load production, and achieved significant results in a substantial increase in output.
According to statistics from the association's statistics of 100 key complete machine companies, from January to September, the total industrial output value of 100 complete machine companies was 18.904 billion yuan, a year-on-year increase of 67.6%; the output of sewing equipment was 6.79 million units, a year-on-year increase of 77.53%. Among them, 4.78 million industrial sewing machines were produced, an increase of 92.58% year-on-year, and the output increased by 51.5% year-on-year and 17.7% year-on-year.
From the perspective of main varieties, from January to September, the three flat wrapping machines increased by 103% year-on-year, the thick material machine increased by 79% year-on-year, the special machine increased by 51% year-on-year, the embroidery machine increased by 102% year-on-year, and the automatic sewing unit increased by 170% year-on-year.
Domestic sales rebounded sharply, the growth trend was high before and then low
According to the statistics of the industry's 100 complete machines, the domestic sales value of 100 complete machine companies in the first September was about 13.1 billion yuan, a year-on-year increase of 58%. According to estimates from the Association, in the first nine months of the year, my country’s domestic sales of industrial sewing equipment was approximately 2.6 million units, an increase of approximately 60% year-on-year. From the perspective of the growth trajectory of domestic sales, domestic sales have maintained rapid growth in the first half of the year, but since the third quarter, the growth of domestic sales has slowed down significantly, with a decrease of 30% compared to the first half of the year.
Although my country’s clothing exports continued to grow in the third quarter, and the outbreak of the Southeast Asian epidemic promoted the return of foreign orders, the third quarter did not bring a significant boost to the domestic sales of sewing equipment. On the one hand, it shows that the domestic market is gradually becoming saturated; Under the squeeze of rising costs, downstream companies are cautious in expanding their production capacity and are less willing to purchase sewing equipment.
Exports run at a high level, showing great potential
In 2021, my country's sewing machinery exports will continue the recovery growth in the fourth quarter of the previous year. According to data from the General Administration of Customs, my country’s total export of sewing machinery from January to September was US$2.27 billion, a year-on-year increase of 40.8% and an average increase of 17.97% over the two years.
In September, industry exports continued to run at a high level, with monthly exports reaching 252 million U.S. dollars, refreshing the highest monthly export value in recent years. However, with the increase in the export base of the industry last year, the export growth of my country's sewing machinery has slowed down.
From the perspective of major export markets, our industry’s exports along the “Belt and Road” increased by 50.6% in the first September; exports to the top three markets such as Vietnam, India, and the United States increased by 34.4%, 77.2%, and 31.7%; to Pakistan and Bangladesh , Malaysia, Uzbekistan, UAE and other markets have doubled their exports, and their exports to Brazil, Turkey, Indonesia, Cambodia, Nigeria, Mexico and other markets have increased by 50%.
Significantly improved benefits and increased cost pressure
In 2021, with the expansion of production and overall revenue growth of industry enterprises, economic benefits will improve significantly. According to the statistics of the industry's 100 complete machine companies, in the first September, the industry product sales revenue was 18.308 billion yuan, a year-on-year increase of 38.41%, and the profit was 1.166 billion yuan, a year-on-year increase of 33.89%.
However, due to the rapid increase in manufacturing costs such as raw materials, the profit margin of the industry has declined, and the profit growth rate is lower than the revenue growth rate. According to the statistics of 100 complete machine companies in the industry, the profit rate of the industry in the first September was 6.37%, down 3.27% year-on-year, and the main business cost of the company increased by 42% year-on-year.
From the perspective of leading companies in some industries, due to rising costs and the base of the same period last year, the growth of single-quarter revenue in the third quarter of the company generally slowed down, operating costs increased sharply, profits generally fell year-on-year, and profits fell by an average of nearly 50%.
The situation in the fourth quarter and the forecast of economic indicators for the whole year of 2021
Situation in the fourth quarter
1. The global economy is showing a slowdown.
At the end of the third quarter, signs of a global economic slowdown have been fully revealed. The pressure of China's economic slowdown has increased, and the economic growth of the United States has fallen short of expectations. The manufacturing index of the Eurozone, Japan, South Korea, and the BRICS has dropped significantly. In October, the International Monetary Fund lowered the global economic growth rate by 0.1 percentage point.
2. Downstream demand is relatively weak.
In the third quarter, the prosperity index of my country's textile industry dropped significantly, and garment export orders fell month-on-month. In the first nine months, apparel investment only maintained a low growth rate of 3.1%, and the demand for sewing equipment was relatively sluggish; key markets such as Vietnam were unblocked due to a large number of migrant workers. Returning home, the lack of labor in clothing, shoemaking and other industries is close to 50%, and the resumption of work and production is expected to gradually normalize until early next year.
3. The impact of the new crown epidemic continues.
Recently, the epidemic situation in my country has spread more frequently. Most countries have liberalized restrictions to choose to coexist with the virus, which has caused the epidemic to rebound again. Some countries have tightened epidemic prevention measures again, and the impact of the epidemic will continue.
4. External challenges are still great.
The current global supply chain disruption, shortage of shipping resources, and high ocean freight rates have not been significantly alleviated. Increased global inflation and soaring energy prices will lead to a decline in purchasing power and demand. The recovery of the global economy and supply chain is slower than expected.
Forecast of the main economic indicators of the industry in 2021
1. Regulatory revenue: 35 billion, a year-on-year increase of 33%. The overall revenue is better than 2018, a record high in the past six years.
2. Industrial machine production: 9 million units (including inventory), a year-on-year increase of 45%. The production capacity of key enterprises has increased significantly, the industry's production throughout the year has maintained a high level of operation, and the total output of industrial machines has exceeded the level of 2018, which is the highest point of development in the past ten years.
3. Domestic sales of industrial machines: 3.2 million units, a year-on-year increase of 39%. Domestic sales increased significantly in the first half of the year, and gradually slowed down in the second half of the year. Domestic sales were generally better than 2019, but they have not yet returned to 2018 levels.
4. Industry exports: USD 3 billion, a year-on-year increase of 30%. The industry’s annual export volume is expected to exceed US$3 billion for the first time, a record high. It is estimated that the export volume of industrial sewing machines is close to 4.8 million units, a year-on-year increase of 28%, a record high.
Industry economic development outlook in 2022
Opportunities and challenges facing the industry in 2022
Looking forward to 2022, the industry faces both opportunities and challenges.
(1) The international economy is expected to continue to recover.
The International Monetary Fund predicts that the global economy will grow by 4.9% in 2022, and the WTO predicts that the volume of global merchandise trade will grow by 4.7% in 2022. This forecast indicator is still based on an optimistic judgment on the continued economic recovery as the epidemic continues to ease. China's economy still has strong development resilience. GDP is expected to grow by 5.6% in 2022. Although the United States has very serious inflation, the lag effect of the previous rounds of fiscal assistance, coupled with the just passed 1.2 trillion US dollars infrastructure plan, and its manufacturing replenishment There is sufficient willingness, consumer demand is still strong, and economic growth still has room for development; Japan plans to launch a 79 trillion yen large-scale economic stimulus plan from the end of 2021 to fully promote economic recovery and growth.
On the whole, the global economy will continue to recover in the post-epidemic period in 2022. Countries are expected to increase stimulus after the economic slowdown hits bottom. Various trade and output activities are expected to be very active in the second half of 2022. International demand will be fully released, bringing strong support to the steady and sustainable development of the industry.
(2) There is still room for development in market demand. Mainly manifested in five aspects:
First, the export prospects are generally promising.
In 2021, our industry’s exports to 75% of countries will grow positively, exports to 22% of countries will double, and exports to 38% of countries will grow by more than 50%. It is expected that the inertia of industry export growth will continue until the first half of 2022. ; At the same time, Sino-US relations are expected to tend to ease. The Regional Comprehensive Economic Partnership Agreement will come into effect next year. The supply chain of clothing and footwear will be further transferred and adjusted to neighboring countries and regions close to the European and American markets, bringing new opportunities for the export of sewing equipment. .
The second is the release of the Vietnam epidemic unblocking dividend.
Vietnam is the industry’s largest export market. The Vietnamese government proposes that GDP growth of 6-6.5% in 2022 will accelerate economic recovery in all directions. The decline in exports from our industry to Vietnam in the third and fourth quarters of this year has left a certain gap. It is expected that its demand will be in It will be released soon next year.
Third, replenishment of downstream industries in Europe and the United States stimulates demand.
Downstream brands such as European and American clothing, footwear and boots are affected by supply chain interruption and shortage of shipping resources. Empty inventory, replenishment demand and rising consumption demand will promote the concentrated release of orders in downstream industries and a strong rebound in production. According to McKinsey's forecast, if the epidemic continues to ease, the global textile and apparel industry is expected to return to the level of 2019 in the third quarter of 2022.
Fourth, the lagging demand for overseas sewing equipment distribution is released.
Affected by the epidemic, shipping and price increases, overseas sewing equipment distributors have delayed the release of demand, and there is still room for replenishment.
Fifth, my country's investment in clothing and other regulations is expected to gradually increase.
my country's clothing industry has been at a low level of investment for two consecutive years. With the country's policy of expanding domestic demand, the downstream industry will accelerate the development of smart manufacturing, especially after the epidemic. Investment in clothing and other industries is expected to continue to improve in 2022. (For example, the home textile industry sets 2022 as a special year for the promotion of intelligent manufacturing, and a series of measures will be taken to promote the equipment upgrade of home textile enterprises.)
(1) The development of the epidemic is still uncertain.
Judging from the trend of the global epidemic in 2021, with the increase in vaccination rates, the overall global epidemic is easing in repeated fluctuations, and the infection rate, severe illness rate and mortality rate have decreased significantly, and the confidence of countries in defeating the epidemic has increased. However, most countries currently choose to coexist with the epidemic in the development model, which will extend the duration of the epidemic to a certain extent and create conditions for the virus to continue to mutate. The recent emergence of the B.1.1.529 super mutant virus in South Africa has the spreading power of Videlta and It is more toxic, causing global panic and travel restrictions. The effectiveness of existing vaccines remains to be verified. As the effectiveness of the vaccine weakens, the epidemic is expected to continue to recur in the first half of next year.
However, with the increase in the vaccination rate of booster vaccines and the emergence of new crown virus oral drugs, the global new crown epidemic is expected to be significantly alleviated or even come to an end in the second half of next year. The global economy will enter a post-epidemic era, economy and life. The full restoration of normalization of various activities such as commerce, trade, and commerce has faintly seen the light.
(2) External challenges are still complex and changeable. Mainly manifested in three aspects:
One is the continued high prices of bulk commodities.
Epidemic factors have led to a misalignment of supply and demand, coupled with global central banks releasing water, global inflation and energy crises have intensified, causing commodity prices to continue to rise. As the global industrial chain and supply chain gradually return to normal, it is expected that commodity prices will only be available in the second half of next year. Obviously relieved. Therefore, industry manufacturing costs will continue to run at a high level for a period of time.
Second, the impact of shipping and exchange rates continues.
Factors such as tight shipping resources, high shipping rates, and strong RMB exchange rates are expected to have a sustained impact on the economy and import and export trade for a period of time in the future. The profitability of foreign trade apparel companies will hardly improve, and the willingness to invest in equipment and the ability to sustain development will be weakened. , Our industry's exports, costs, demand, etc. will also face certain impacts.
Third, there are hidden global financial risks.
At present, the financial systems of various countries are relatively fragile, and inflation and debt soaring problems are more serious. The Federal Reserve will gradually begin to implement a debt-purchasing tightening plan to curb high inflation, and even initiate a rate hike next year. The United States has gradually withdrawn from quantitative easing, central banks of various countries have gradually tightened their policies, and market liquidity has been significantly tightened, which will have a potential impact on economic recovery.
Industry Economic Development Trends in 2022
Based on the above analysis, it is expected that the overall recovery of the international economy in 2022 and the strength of the market rebound will not be as strong as in 2021. In the first half of 2022, the global economy will still have large uncertainties and downside risks. It is most likely to be in a bottoming and rebound cycle after the economic slowdown. In the second half of the year, as the epidemic eases significantly and the economic stimulus policies of various countries are quickly launched, the global The economy is expected to enter a strong recovery again.
In summary, the economic development of the industry in 2022 will show four trend characteristics:
(1) The industry economy has contracted and gradually returned to normalization.
In 2022, the epidemic rebound dividend will gradually come to an end. The industry as a whole will enter a recovery and normalization development after a phased recovery. The excess capacity will be gradually adjusted. Based on the high base effect of industry growth in 2021 and the weakening of the market rebound, the industry 2022 The overall economic development in the year is down from 2021.
(2) The domestic market has declined significantly.
The domestic market in the first half of next year is not very optimistic. In the second half of the year, with the recovery of apparel companies and the continuous recovery of the global economy, it is expected to usher in a rebound. However, with the slowdown of China’s export dividends, the reduction in foreign trade orders such as clothing, the lack of motivation for small and medium-sized apparel companies to purchase equipment, and the high supply of domestic sewing equipment In terms of characteristics, the domestic market for sewing equipment is generally full of challenges and faces continuous downward pressure.
(3) The foreign market is relatively stable.
In 2022, the industry's exports are generally improving. With the continued easing of the foreign epidemic, the resumption of production and confidence in foreign countries, orders will continue to return overseas, and the overseas sewing equipment market will continue to maintain relatively stable development. We see that the domestic market will gradually reach saturation in 2021 after more than half a year. We expect that the international market will gradually face saturation pressure in the second half of next year after nearly 15 consecutive months of restorative growth. Therefore, with the increase in the base number last year and the continuous increase in market saturation, the export of the industry throughout the year may gradually return to normal, and the overall export may be flat or even slightly lower than the previous year.
(4) Domestic mid-to-high-end demand is expected to gradually release.
With the deepening of the national dual-cycle strategy, the successive introduction of policies and measures to expand domestic demand to boost consumption, and the intensification of recruitment difficulties, in the post-epidemic period, downstream enterprises in clothing, home textiles, and footwear will accelerate their digital and intelligent transformation and upgrading. And the construction process of smart factories, it is expected that high-quality sewing equipment, automated and intelligent sewing units, sewing production lines and complete sewing solutions will gradually usher in the market recovery. Therefore, in 2022, enterprises should shift their focus of development from focusing on the growth of quantity, to actively focusing on the improvement of quality and efficiency, and to focusing on technological innovation, product quality and the improvement of added value.
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