What Reason? 161 Textile Enterprises in The Main Location Of Zhejiang Textile in China Were Ordered To Stop Production!

what reason? 161 textile enterprises in the main location of Zhejiang textile in China were ordered to stop production!

161 textile enterprises in China's Zhejiang Province received a notice to suspend production for rectification. Why is this happening? Zhejiang Province is a major textile province in my country. These 161 textile enterprises account for 35 percent of the national output value of the industry. Why did they suddenly receive a notice to stop production?

The background of the textile industry being ordered to rectify

Not long ago, China proposed to reduce energy consumption per unit of GDP by 13.5 percent during the "14th Five-Year Plan" period as one of the main binding indicators for economic development. This target is relatively lower than the requirement during the "13th Five-Year Plan" period. 1.5 percentage points.

Nine provinces and regions including Yunnan, Guangdong, Guangxi, Ningxia, Qinghai, and Jiangsu were included in the "red light" first-level warning, because the energy consumption of these provinces in the first half of 2021 has not decreased, but has increased. In addition, the energy consumption intensity of 10 provinces including Henan, Liaoning, and Zhejiang has decreased, but the decrease is not enough, and they have been included in the "yellow light" second-level early warning.

Although China has made specific requirements, there are specific reasons for the rise in energy consumption in many provinces.

First of all, during the epidemic, the production capacity of many overseas countries was hit, so many high-energy-consuming industries in China ushered in a blowout period of overseas orders just after the severe epidemic. Coupled with the recovery of the domestic economy, the number of orders has also increased significantly, which has strongly stimulated the rapid increase in manufacturing capacity.

Secondly, since 2015, China has streamlined administration and delegated powers, especially the project approval power of some high-energy-consuming industries, and the "high-energy-consuming, high-emission" industries are precisely the economic pillar industries in many regions. In the case of damage, many regions have the urge to improve the economic figure alone.

This is the case in Zhejiang Province. Although the level of economic development is not low, traditional high-energy-consuming industries still account for a relatively high proportion of its industrial system. Eight high-energy-consuming industries such as steel, building materials and textiles consume 43 percent of the energy of the whole society, but only produce 13 percent , and the energy consumption intensity is nearly 5 times the average level of each industry, so these industries are the Upgrading and phasing out industries.

The textile industry is one of them.

In order to force the adjustment of industrial structure, Zhejiang Province divides all enterprises into four categories: A, B, C, and D according to the standard of "efficiency per mu". The higher the tax paid by the enterprise, the higher the added value, the greater the social value created, and the longer the budgeted electricity consumption time given by the province. To be honest, this trick is pretty awesome.

Taking 10 days as a cycle, the A-class enterprises with the highest tax rate and economic added value will be given power resource support for 8 stops and 2 in the province; and so on, the B-class enterprises open 7 stops and 3 stops, and the C-class enterprises open 6 stops. 4. D-class enterprises open 4 and stop 6; if a company's performance rating is below D-class, it will be eliminated soon.

The reason why Zhejiang Province does this is mainly to effectively adjust the industrial structure, reduce the proportion of enterprises with high energy consumption, high emission and high pollution, and effectively increase the added value of the industry.

Another reason for Zhejiang Province to do this is the pressure brought about by resources or energy. Zhejiang Province is not a province located in a resource-rich area, and its resource endowment is limited. It has always relied on external energy input to develop its economy.

Because of this, the cost of energy use in Zhejiang Province has always been much higher than that of major energy provinces such as Shanxi and Shaanxi. In addition, the price of coal and natural gas has risen significantly in the past two years, so now the thermal power companies in Zhejiang Province generate electricity per kilowatt hour. , will lose 0.15 yuan.

Since the energy industry has already lost money, if the profit rate of other industries using energy in the province is lower, the economic development of the province will be seriously affected, so it is necessary to force the industrial structure adjustment and industrial technological innovation through the above-mentioned means.

The topic goes back to the textile industry, which is actually a labor-intensive industry that requires a lot of cheap labor and has relatively low profit margins.

Normally, labor-intensive industries should not be located in the eastern provinces or coastal areas of my country, because the local economy is relatively developed and labor prices are high. Higher, the industry profits will be significantly reduced.

Therefore, labor-intensive industries such as textile industry should now be distributed in the central and western regions of my country, where labor prices are relatively low, and have even been transferred to Southeast Asia and India in large quantities.

However, since the global COVID-19 epidemic in 2020, the economies of Southeast Asia and India have been severely affected by the epidemic due to poor control, and a large number of low-end manufacturing orders have returned to my country's Zhejiang and Guangdong, which are major export manufacturing provinces. In these areas, due to the large increase in the number of orders in a short period of time, the textile industry, which was already on the verge of elimination, suddenly "returned to the light" and began to flourish again.

However, the full order volume and expanded production capacity have not changed the status quo of the local textile industry's high energy consumption, serious pollution and ultra-low profit margins. Even under the premise of capacity expansion, the "involution" of the textile industry has become more and more serious, and profits have become even more meager.

A set of data, everyone can compare it, it will be clear at a glance.

In the first 8 months of 2021, the operating income of my country's textile industry was 1.6 trillion yuan, a year-on-year increase of 14 percent ; the operating cost was 1.42 trillion yuan, a year-on-year increase of 15 percent ; the textile industry realized a total profit of 64 billion yuan, a year-on-year increase only slightly. 2.2 percent . From this, it can be clearly seen that the speed of the domestic textile industry's cost increase is significantly higher than the turnover growth rate, especially significantly higher than the profit growth rate.

Current Situation of China's Textile Industry

In fact, China's textile industry has been in the stage of industrial transfer for a long time. The reason is that the profit is too low. In the domestic environment of pursuing the quality of economic development, such inefficient and high-energy-consuming industries have gathered in Zhejiang and started industrial upgrading early. For the province, it really shouldn't.

In fact, the difficulty of operating the domestic textile industry in China is not small, because the industry competition is too fierce. If textile enterprises want to maintain their original customers and markets, not only will they not be able to raise prices, but with the rising prices of upstream raw materials and downstream freight, the prices of domestic textile products in China are still falling, and some textile enterprises are even lower than the cost price. Sales, only rely on the 13 percent export tax rebate to make up the profit, so comprehensively, the profit rate can only be maintained at about 5 percent , and every day is hard-earned money.