Fabric enterprises "rise" under the sound of expectations
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In early 2010, a reporter reached out to Yang Bin, the manager of Xintang Zhicheng Weaving Factory in Zengcheng, Guangdong, aiming to understand how fabric companies were recovering from the financial crisis. At that time, Yang shared a concern—not about the volume of fabric orders, but about rising raw material prices. A year later, the reporter reconnected with Yang, and he reflected on 2010 with a clear sentiment: "This year’s soaring raw material prices hit the industry harder than the financial crisis."
At the start of the year, the textile sector was full of uncertainty. Everyone was watching closely, hoping for positive signs. The good news was that domestic fabric companies consistently offered optimistic responses. For many, 2010 could be summed up with one word—“up.†Yang Bin described it as “shuffling,†while Xu Guanghui Group’s Executive Director Huang Guanghua used “restructuring,†and Guangdong Yanhua Ying called it “volatility.†But ultimately, the theme of the year remained “up.â€
Looking back at the issue of raw material prices, Yang Bin noted that over his years in the textile business, price trends had always been unpredictable. This year, however, the surge in raw material costs left fabric businesses in a difficult position. Denim fabric prices, for example, rose by as much as $10 per meter, with an average increase of around $7 per meter. Despite this, Yang said that current profit margins for fabric companies were under significant pressure.
Yang recalled that in September, cotton yarn prices spiked sharply, prompting many companies to buy in anticipation of further increases. October continued the upward trend, and by November, everyone was waiting to see what would happen next. Yan Huaying echoed these sentiments, stating that price hikes had a major impact on customers. Traditionally, December is peak season, but some small and medium-sized clients were delaying orders.
Huang Guanghua observed that many SMEs were forced to shut down this year, including some foundry companies that had worked with Xu Rong. According to him, factors like rising raw material costs, RMB appreciation, stricter energy-saving regulations, and higher labor costs all contributed to the challenges. Some issues were long-standing within the industry, while others were driven by government policies aimed at restructuring.
To survive, Huang said, Xu Rong invested tens of millions in upgrading its facilities over the past two years. However, many SMEs lacked the resources to do the same. With stricter energy-saving standards, many smaller companies found themselves at a disadvantage.
Given the theme of “up†in 2010, the industry also focused on “anti-rise†strategies. For example, Ningbo Sogo Suo Ke Textile launched new initiatives like the “Fitting Mirror†and “China Pavilion Museum.†Wuxi Natural Textile introduced “pulp-free technology,†which helped knitwear companies enter a new phase of development.
Huang Guanghua emphasized the importance of a complete supply chain system, from raw materials to finished garments. His company has more than 10 such systems, allowing them to provide tailored services to different customer groups. With over 200 major global clients, many of them rely on Xu Rong for their production processes.
“The future belongs to supply chain competition,†Huang concluded. “Whoever can control the supply chain will gain a strong foothold.†This idea has become widely accepted in the industry. Yang Bin referred to it as “deep extended development,†or “one-stop shopping.†Though each company uses different terms, they all follow the same principle.
Yan Huaying recalled how the Fashion Fabric market has evolved rapidly. Ten years ago, a print might last three months, but now new versions are released daily. To keep up, her company tracks trends from Italy and France, collaborates with suppliers like Hyosung (South Korea), Xiamen Xianglu, and Hengli Chemical Fiber, and works closely with domestic designers to develop products in six cycles a year.
While the “up†trend brought both challenges and opportunities, companies became more cautious in predicting 2011. Based on past cotton price fluctuations, Yang Bin believed the situation could be even worse. Domestic denim prices had already risen by about a third, putting pressure on apparel companies when placing orders. Additionally, the cost advantage previously held by foreign markets was shrinking.
Despite this, Yan Huaying remained optimistic about the domestic market, planning to focus more on collaborations with local brands. She noted that foreign buyers were increasingly coming to China due to raw material volatility. Another reason for optimism was the rapid growth of domestic apparel brands, which she saw as a promising market.
Yang Bin, though still concerned about the export market, acknowledged that working with Itochu in Japan had been beneficial. He realized that only high-end products could offer real profit potential. While companies continue to assess domestic and international markets, the focus for 2011 remains on “management.â€
Huang Guanghua shared a story about how Xu Rong’s management approach impressed the China Federation of Trade Unions during a speech. After visiting the plant and talking to workers, union leaders were deeply impressed, leading to Xu Rong winning the “May Day Labor Medal†in 2010.
Ultimately, improving management and building a strong supply chain will be key for domestic fabric companies to overcome ongoing challenges.