In Depth Dialogue, Sun Ruizhe, Vice President Of Textile Association, Which Innovation Contains "Rich Ore"?

The annual profit is expected to exceed 200 billion yuan, and the output value of Enterprises above Designated Size will exceed 4 trillion yuan and export volume will exceed 200 billion dollars.

Since the beginning of this year, the performance of the industry has been vastly different. The enterprises that are properly solved by raw materials are often the winners of the industrial chain.

A viscose manufacturing company has signed a contract with another pulp company for purchasing a pulp company abroad.

Sun Ruizhe, vice president of the China Textile Industry Association, has described a classic joke when describing the investment flow of this year's industry: he has the strength to go up and goes down patiently, and has the courage to walk across the road and cannot follow clearly.

As he has predicted, both the entrepreneurs at the physical level and the investors who are looking for interest export regard upstream resources and downstream terminals as important positions for the industry to be born as "rich mines".

How can upstream innovation ease cost pressures?

"Factor dependence" sequelae

Reporter: at present, the industry is facing the double test of normality and abnormal state. This year's innovation annual meeting puts forward the "demand driven" development mode based on what kind of consideration?

Sun Ruizhe: this concept corresponds to the updated version of the "factor driven" development model in the past.

The industry is getting more and more deeply affected by costs. From this year's perspective, labor costs and raw material costs come one after another. At the beginning of the year, labor cost is the biggest problem facing enterprises. In the second half of the year, the rising cost of raw materials has replaced the labor cost as the main contradiction.

From another perspective, uncertainty is the biggest "devil".

The long-term rise of labor costs is regular, but the change of raw material costs is mixed with the factors of political economy and peripheral capital speculation, and the degree of controllability is relatively weak.

In this unpredictable element environment, blindly relying on factor driving is obviously a great risk.

Reporter: what do you think are the characteristics of labor cost and raw material cost?

Sun Ruizhe: from experience, the textile industry wage rises faster than other industries, the objective existence of scissors difference, there will be a rational process.

According to the statistics of China Textile Industry Association Statistics Center, in the past two years, the per capita wage increase of textile industry has been higher than the average level of manufacturing industry.

In 2009, the per capita wages of the textile industry increased by 15.58% over 2008.

In the first half of 2010, the per capita wage of manufacturing workers increased by 14.9% over the same period last year.

At present, the labor-intensive features of the industry are mainly reflected in clothing, and the more upstream they are, the more intensive and investment intensive they are.

But with the development of scale, increasing employment is an inevitable trend.

At present, the total employment of Enterprises above designated size is 11 million 660 thousand, and it is expected to increase to 23 million people in 2015.

The irrational rise of cotton prices is a concentrated expression of the cost of raw materials this year.

It is beyond belief that the imbalance between supply and demand of China's textile industry has caused the rise in cotton prices.

From the comparison of domestic output and import volume in recent cotton years, we can see that total demand is maintained at around 10 million tons, and cotton imports in 2009/2010 are not the highest.

This is that funds can not find exports in the stock market and the property market, but instead invest in large quantities.

Resource substitution spawned investment in chemical fiber

Reporter: factor resources are the threshold for the industry to go around. Can the industrial chain's own coordination ease the pressure?

Sun Ruizhe: during the "11th Five-Year" period, the growth of chemical fiber was particularly prominent in the whole fiber growth.

The fastest growing polyester fiber in the chemical fiber industry accounts for 45% of the total fiber processing in the world, which is far more than 35% of the total cotton.

At present, the use of chemical fiber in China accounts for more than 65% of the total fiber processing in China.

Cotton prices are soaring this year. Finally, the development of chemical fiber will be formed.

In the past, the output of chemical filament was larger than that of staple fiber, and short fiber was used to replace cotton. There must be a growth trend in the future.

Of course, we also wanted to find cotton substitute in natural fiber, such as bamboo fiber and hemp fiber, but its technological route is not as reasonable as cotton. So far, it can not shake cotton as the dominant position of natural resources.

Reporter: the focus of development is back.

Sun Ruizhe: this trend has actually appeared in Jiangsu and Zhejiang provinces.

According to PCI and other agencies, the world's total output of chemical fiber will reach 54 million tons by 2015, and the current output will be only 40 million tons.

During the "12th Five-Year" period, a very important problem in the large-scale development of China's chemical fiber industry is whether chemical fiber super Imitation cotton technology can become an alternative technology, and fundamentally solve the shortage of cotton resources. The industry "12th Five-Year" plan put forward that a large quantity of chemical fiber replacement varieties should be released, and the scale of the formation and scarcity of resources will be reduced. This is bound to change the existing raw material pattern, and the return of pricing power is not a dream hard to achieve.

Reporter: is chemical fiber as an alternative resource, is it also facing the problem of its upstream elements?

Sun Ruizhe: China's chemical fiber production is the world's first, but also in line with the Chinese people's habits.

But judging from the two major branches of synthetic fiber, synthetic fiber and man-made fiber, there is a problem of relying on scarce resources.

Synthetic fiber is slightly better, and the amount of oil from the petroleum refined into synthetic fiber accounts for only 0.8% of the total oil. Artificial fiber is made from natural fiber as raw material to form cotton lint and pulp.

Their former roads are cotton and timber respectively. The current output is not enough to support the back-end capacity. We must be vigilant against the hidden dangers of industrial safety brought about by the upgrading of foreign resources.

How can the downstream innovation operate the business pattern?

The next 20 years will be the golden age.

Reporter: since the financial crisis, the industry has been committed to expanding domestic demand.

Sun Ruizhe: from the national strategy, domestic demand must be an important support for economic development.

Take the developed countries, the United States and the developing countries India as an example, the proportion of their domestic sales value is more than 92% and 88% respectively, and China is close to 82% this year.

Over the past two years, we have a deep feeling that sales of Enterprises above designated size are steadily improving in the domestic market.

There is a big gap between China's major family and personal consumption level and foreign countries. This gap is also an important direction for Chinese people to improve their living and expand domestic demand, and will surely bring opportunities to the industry.

In the first three quarters of this year, the retail sales of clothing market increased by 25.4% compared with the same period last year, and the retail sales volume increased by 12.3%, which is enough to confirm this judgement.

From the perspective of the main consumption population, from 2010 to 2025, the 20 to 59 year old age group will undertake the end point of industrial consumption upgrading.

China's textile industry will also have a golden period of 10 to 20 years.

Another opportunity is urbanization. The urbanization rate in China last year was 46.59%. It is expected to reach 65% in 2030, that is, to increase the number of urban population by more than 300 million, which means a huge increase in consumption potential.

Settle down to analyze consumption diversification

Reporter: extending to the downstream is a process of slow work and meticulous work. What kind of consumption upgrading trend should enterprises grasp?

Sun Ruizhe: what we call industrial concentration is actually a causal relationship with the development of the domestic market.

The convergence of quality industries to high-quality industries will create a number of domestic brands with more market discourse power, which in turn will further enhance industrial concentration and concentration.

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With the growth of income, consumption upgrading must be a general trend.

China's definition of the middle class is rather vague, and the formation of the middle class must be the most important part of consumption.

McKinsey has made statistics, including more than 10 emerging countries, including China. At present, the middle class consumption already includes nearly 2 billion people, spending nearly 6 trillion and 900 billion dollars per year.

In the next 10 years, this figure will reach US $20 trillion, which is two times that of the US.

The change of consumption concept will also stimulate consumption upgrading.

The survey shows that consumers in both Shanghai and Beijing are willing to spend a few more money on clothing with the concept of environmental protection.

For some brand operators, if we sink the heart to analyze the market, analyze the population structure and analyze the consumption structure, there will be an unexpected harvest.

Mode update to get commercial acceleration

Reporter: in the existing mode of self renewal is difficult to achieve, how to use the injection of new models to obtain acceleration?

Sun Ruizhe: China's business environment still has a lot of room for improvement. It has created a rapid growth of China's retail industry, and the growth rate is much higher than that of other countries.

Especially in rural areas, the consumption infrastructure is not perfect, and the lack of modern retail stores in rural areas restricts product penetration and consumption expenditure.

In the past, I once said that "wholesale market retail" brought great space to urban consumption in the first tier cities. On this basis, the trend of "shopping centralization" appeared again.

In addition, online shopping of textile and clothing products ranks first, surpassing the digital home appliance industry.

China Textile Information Center and national textile development center once had a demand survey of textile and clothing products. The result shows that our consumption level has strong desire to choose online shopping.

Another interesting phenomenon is that in the past, China's textile and clothing brands were encircling the market by the countryside, and now they are marching towards the first tier cities and the central cities.

We are also thinking that men's wear and casual wear have great potential in the two or three line cities. How can women's clothing find good support in first tier cities and central cities?

How can capital innovation help upgrade industries?

Convergence of economic circles to reshape the right to speak

Reporter: this year's innovation annual meeting invited many famous financial personages to participate in the discussion of industry topics. What's the purpose?

Sun Ruizhe: to enhance the overall position of the textile industry, on the one hand, we must make good products, and on the other hand, we should enhance the attention of all levels of society.

Especially for some misreading, it is necessary to rebuild the image with the help of various activities in the industry.

For example, in the past, the outside world always had a bad ability to resist risks. But from the average profit margin of textile industry in recent years, it was 3.97% in 2008, 4.04% in 2009 and 4.55% in the first three quarters of 2010.

The pace of steady improvement has fully demonstrated that industrial concentration has brought about comprehensive strength against external changes.

Historically, the textile industry has several critical stages of development.

In the age of highly planned economy, clothing starts from light industry and goes to textile industry, and the industrial efficiency brought by industrial matching capability becomes an important part of "comparative advantage".

This is why the emerging countries in the periphery are hard to shake our position.

According to the specific data, China's textile and clothing exports this year amounted to 200 billion US dollars, India is US $17 billion, Vietnam's total GDP is only tens of billions of dollars, and the absolute amount of difference is enough to prove that we can not surpass the advantage.

Looking at the growth rate and ignoring the base number, it creates unnecessary panic.

The strategic thinking of absorbing capital market

Reporter: can we see the investment potential of the industry through the sharp eyes of the capital operated hawk?

Sun Ruizhe: investors with strategic vision are optimistic about two kinds of goals: first, the resource enterprises that can bring relative advantages to the whole industrial chain; two, the relatively mature brand enterprises with terminal channels.

Next, we will focus on their market share, technology leadership and business operation in their respective segments.

Some PE are more concerned about whether they can enter the listing link. Once the enterprise enters this link, they will arbitrage and withdraw.

There are, of course, some strategic investors who are concerned about medium and long-term investment returns.

This is probably the external force that we most want to get close to and get the new thinking of industrial development.

Reporter: how many companies are there in the industry now? How difficult is it to operate?

Sun Ruizhe: China's future capital market must be a bull market rather than a bear market.

This year, more than 10 companies listed in the industry did not dilute the value of the whole plate.

It is understood that there are at least 100 queues waiting to be listed.

At present, the first is the cumbersome examination and approval procedures, which may cause enterprises to lose some good market intervention points, and the two is the lack of capital operation experience.

The scale of enterprises and the ability to allocate funds are gradually maturing.

Empirically speaking, "technology" is a crucial language, but it is not the most accessible language in the capital market.

Enterprises should pay attention to technological innovation, and at the same time pay attention to the innovation of business models. The expectation of capital market to post market earnings ratio is often higher than the expectation of existing sales volume.

Industrial upgrading should not be leapfrogging.

Reporter: in the past, the investment in the "third industry" was heated by the once heated industry. What is the progress now?

Sun Ruizhe: before that, the proportion of China's third industry was too low.

In fact, the third industry in western countries is more important than that because they have a good grasp of the leading role of the second industry.

If China abandonment of the second industry at the present stage and develop the third industry, can it grasp the global resources quickly?

Take India as an example, at present, industry accounts for only about 25% of GDP. On the contrary, the service industry has taken up half of the entire economy.

Especially in the field of information technology services, and even become the backstage Office (back-office) of European and American enterprises.

But recently, India's economic policy is changing. For example, the government has begun to stress the importance of manufacturing industry to solve the employment problem in India, and adopt a more open attitude to encourage foreign investment.

So far, no developing country has been able to bypass the path of industrialization and directly enter the ranks of developed countries.

For such a large country with large agricultural population such as India, it is facing the reality test.

Analysis of China's leading economic sectors, such as Zhejiang, Jiangsu, Guangdong, Shandong and other industrial GDP composition is not hard to find, the proportion of the second industry is higher than the national average level, and the proportion of the third industry is gradually improving.

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The third industry, including producer services, finance, logistics, pportation and so on, is closely related to the second industry.

Industrial upgrading and pformation is a gradual process and should not be developed by leaps and bounds.