Fabric enterprises "rise" under the sound of expectations

As early as the beginning of 2010, a reporter reached out to Yang Bin, the manager of Xintang Zhicheng Weaving Factory in Zengcheng, Guangdong. The purpose was to understand how fabric companies were recovering from the financial crisis. At that time, Yang Bin pointed out a concern: it wasn't the volume of orders that worried him, but the signs of rising raw material prices. A year later, the reporter contacted Yang again. Reflecting on 2010, he shared his feelings: "This year’s soaring raw material prices hit the industry harder than the financial crisis." At the start of the year, many fabric businesses were trying to figure out what “up” meant—what they had experienced and what they hoped for. Despite the challenges, domestic fabric companies consistently provided positive responses. For many, the word “up” summarized the year, with some describing it as “shuffling,” while others like Xu Guanghui Group’s Huang Guanghua used “restructuring,” and Guangdong Yanhua Ying called it “volatility.” Ultimately, the theme of 2010 could not be separated from the word “up.” Looking at the issue of raw material prices this year, Yang Bin noted that, after years in the textile business, he had never seen such unpredictable trends. With raw materials surging, fabric companies found themselves in a difficult position. Denim fabric prices, for instance, rose by as much as $10 per meter, with an average increase of about $7 per meter. Yet, despite these price hikes, profit margins remained under significant pressure. Yang Bin recalled that in September, cotton yarn prices soared, prompting many companies to buy in anticipation of further increases. October continued the bullish trend, with everyone watching closely. Yan Huaying shared similar concerns: “Price hikes have significantly impacted our customers. Traditionally, December is the peak season, but now even small and medium-sized clients are delaying orders.” Huang Guanghua observed that many SMEs were forced to shut down this year, some of which had previously partnered with Xu Rong. He attributed this not only to rising raw material costs but also to the appreciation of the yuan, stricter energy-saving regulations, and increasing labor costs. Some issues, he said, were long-standing in the industry, while others were driven by new regulatory measures aimed at restructuring. Xu Rong invested tens of millions in upgrading its facilities over the past two years, but many SMEs lacked the resources to do the same. “With higher energy-saving and emission standards set by the government, it has become a fatal blow for many SMEs,” Huang said. The theme of 2010 was inseparable from the word “up,” and so was the need for “anti-rise” strategies. In response, companies like Ningbo Sogo Suo Ke Textile launched initiatives such as the “Fitting Mirror” and the “China Pavilion Museum.” Wuxi Natural Textile introduced “pulp-free technology,” helping knitwear manufacturers enter a new development phase. For Huang Guanghua, the key to surviving the rising costs was having a “complete supply chain system.” From raw materials to yarn, fabric, and garments, each link in the chain was divided into specialized groups, allowing Xu Rong to offer tailored services to different customer segments. With over 200 major global clients, many brands rely on Xu Rong for their entire production process. “Future competition will be about the supply chain,” Huang concluded. “Whoever controls the supply chain can gain a solid foothold in the market.” This concept has become a consensus among fabric companies. Yang Bin described it as “deepened development” or “one-stop shopping.” While the terms may vary, the practice remains the same. Yan Huaying recalled that 10 years ago, Fashion Fabric trends changed every three months, but now they update daily. To keep up, her company collaborates with more than 10 trend agencies in Italy and France, and partners with leading raw material suppliers like South Korea’s Hyosung, Xiamen Xianglu, and Hengli Chemical Fiber. They also work closely with domestic designers, dividing the year into six product development periods. Despite the “up” in costs, companies are looking for profit opportunities amid the challenges. Based on past experiences with cotton prices, Yang Bin believes 2011 may be even tougher. “Domestic denim fabric prices have already risen by about a third. With such high costs, apparel companies will be more cautious when placing orders.” While Yan Huaying remains optimistic about the domestic market, she notes that foreign markets are more price-sensitive, with smaller profit margins. Most foreign brands still source fabrics domestically, and she sees strong potential in the growth of Chinese apparel brands. Although Yang Bin is more focused on the export market next year, his experience working with Itochu in Japan showed him that only high-end products can generate real profit. While companies continue to evaluate domestic and international markets, one common focus this year was “management.” Huang Guanghua shared a story from 2010: a company executive spoke at the China Federation of Trade Unions about Xu Rong’s management style, which sparked interest among union leaders. After visiting the plant, they were impressed by the team’s dedication and awarded Xu Rong the “May Day Labor Medal.” In conclusion, improving management has become essential for domestic fabric enterprises to overcome ongoing challenges.

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