Sun Ruizhe: "Cost Orientation" Of Textile And Clothing Should Give Way To "Value Orientation"

"China textile industry The era of big imports and big exports has passed, and the era of high growth of China's consumer goods exports will end. " Recently, Sun Ruizhe, vice president of China Textile Industry Association, said that based on this trend, the transformation of textile and clothing industry from "cost oriented" to "value oriented" is irreversible.

For a long time, "cost orientation", as the core competitiveness of the textile and clothing industry, has achieved“ made in China ”We have made great progress all the way. Now, as the gray haze of the financial crisis gradually dissipates, China's textile and clothing industry has also started a new round of self-examination and value exploration.

"We know the origin of the industry before we do it, the end of the industry after we start it, and the change of the industry after we set things." Sun Ruizhe said that we should have rational and accurate knowledge and action for different stages of industry development. In his opinion, from the macro trend of China's textile and clothing industry to the micro operation of every textile and clothing enterprise, three keywords, "forward-looking", "persistent" and "flexible", will become the dominant values that determine its sound development.

Forward looking -- going farther and farther“ low cost ”Times

The comparative advantage of labor cost, once the "core competitive advantage" of China's textile and clothing industry, was envied by other textile and clothing producing countries. However, unfortunately, under the development environment of China's textile and clothing industry, "low cost" and "high added value" seem to have no logical causal relationship. At the same time, the era of "low cost" is fading away, which also makes China's textile and clothing industry is bound to find new competitive tools to ensure that it becomes the first choice on the shelf.

A series of data are proving that the gradual departure of the "low-cost era" is not groundless.

"At present, China has entered the range of general increase in labor costs." Sun Ruizhe told reporters that since this year, many provinces and regions have raised the minimum wage standard, with an average increase of about 17%. Undoubtedly, the continuous rise of labor costs will further increase the pressure on enterprise operations.

"Resources have become a realistic and serious problem. The high price of raw materials cannot be changed." Sun Ruizhe also said that due to the combined effect of the shortage of cotton and other raw materials, the pursuit of funds in some markets, the rising cost of cotton planting and other factors, the cost of raw materials in China's textile industry has shown a rapid upward trend since this year.

"The cost of fuel and power and the cost of transportation also continue to rise." Sun Ruizhe added, "From January to April 2010, the purchase price index of fuel and power of industrial enterprises rose 23.6% year on year, 0.1 percentage point higher than that of the first quarter. The continuous high price of production factors has become a prominent problem in the operation of the industry at this stage."

It is an unavoidable fact that the main contradictions of China's textile and clothing industry under the new economic conditions have become prominent - if these contradictions are not resolved and diluted in time, the pressure of rising labor costs is tantamount to re watering salt on the fluctuating consumer demand.

However, Sun Ruizhe also believes that the passing of the low-cost era does not make it worse for all textile and clothing enterprises. This is also the phenomenon of "industrial concentration" that he mentioned on many occasions - large-scale enterprises with sales of more than 100 million yuan, 300 million yuan and 500 million yuan accounted for 56.5%, 33.8% and 24.7% of the industry in 2003, and 63%, 42% and 33% of the industry in 2008, respectively.

The strong are stronger, and the weak are out. The industrial development is spiraling with a slightly cruel and realistic tone.

This judgment is also confirmed by CICC's "measurement of static sensitivity"——

According to statistics, enterprises with low net profit margins are relatively affected by wage increases. Processing textile and garment enterprises with low profit margin and high labor costs will see their profits decline by more than 20% when their wages rise by more than 20%. However, the performance of vertically integrated production mode and competitive enterprises with product development, energy conservation and emission reduction is relatively less sensitive to labor costs. In addition, domestic brands have strong ability to raise prices, while export manufacturing enterprises are difficult to raise prices quickly.

"In fact, the maintenance of competitiveness does not depend on the rise of labor costs, but on whether the cost can be steadily increased and adapt to the gradual adjustment of the enterprise." Sun Ruizhe gave the reporter the conclusion that the business attributes, operation mode, research and development ability, bargaining level of the enterprise... These detailed indicators, all of which determine that it follows the trend of the low-cost era, In other words, they are doing extremely difficult confrontation.

Adhere to -- based on the development potential of the domestic market

McKinsey predicts that in 2025, China will become the world's third largest consumer market after Japan and the United States.

When looking at the contribution rate of the domestic market to the whole industry, Sun Ruizhe also uses the "support" of industry development to describe his optimistic outlook for the domestic market.

Statistics from China Textile Industry Association show that the average annual growth rate of domestic sales output value of textile industry above designated size from 2005 to 2009 is significantly higher than that of 19.99% during the Tenth Five Year Plan period, reaching 3.08 percentage points.

"Based on the data from January to February 2010, the domestic sales output value increased by 30.35% year-on-year, 23.72 percentage points faster than the same period last year; the proportion of domestic sales continued to increase to 81.24%, 2.04 percentage points higher than the same period last year." Sun Ruizhe said.

Sun Ruizhe predicted that by 2030, China's textile and clothing market capacity will grow at an average annual rate of at least 10%. In terms of increment, the urbanization rate has steadily increased, and the potential consumption capacity of rural residents has been gradually released. The proportion of urban and rural residents is approaching 50:50. The overall increase of income level and urbanization rate will bring about the improvement of consumption ability and change of consumption concept. He also suggested that textile and clothing enterprises should avoid "piling up" in the first tier cities and pay more attention to the domestic second and third tier markets.

"China's textile and clothing industry is about to enter the next golden decade." Sun Ruizhe judged that "whoever can grasp the opportunity of booming domestic demand market will become the final winner."

Flexibility -- rationally grasp the market pulse of "effective demand"

In fact, in Sun Ruizhe's opinion, although the domestic market is full of gold, it is not for every enterprise to find it. Only a rational insight into the pulse frequency of "effective demand" can flexibly respond to the rapidly changing market competition.

Before making a detailed analysis of "effective demand", Sun Ruizhe found such a phenomenon that many goods in China's department stores far exceed the prices of similar products in European, American and Japanese department stores. The high commodity prices have largely suppressed the consumer demand of residents, and the high-quality and inexpensive products represented by Chinese made products are difficult to benefit domestic consumers.

"After the financial crisis, the consumption bubble was continuously filtered along with the wealth bubble. It is the business problem of restraining consumption that has promoted rational consumption in the reverse direction," said Sun Ruizhe.

So, what is the real "rational consumption"? Where does the base point of so-called "rationality" exist?

Sun Ruizhe believes that the basic point of finding rational consumption lies in the consumption and fashion culture based on China's national conditions. In his eyes, "popular fashion and popular function" will be the "mainstream demand" of China's textile and clothing consumption in the future. It is this "mainstream demand" that can effectively stimulate the continuous consumption power and obtain the real feedback from the broad consumer market.

Specifically, the mainstream appeal of "fashion popularization and function popularization" has three meanings: first, consumers are eager for products with excellent design, reasonable quality and low price; Secondly, responsible consumers pursue environment-friendly, green and healthy lifestyle; Finally, it is the loyalty of wise consumers to CSR brands.

In Sun Ruizhe's view, a rational grasp of the market pulse of "effective demand" will not only help textile and clothing enterprises to tap the gold consumer market, but also lead to a collective face change in China's textile and clothing industry. Only by comprehensively and accurately grasping the "effective demand" and the demand drivers behind it, can Chinese textile and clothing enterprises leapfrog "from scratch" The stage of tangible innovation, the stage of repeated coolies at the low end, the stage of single enterprise competition with partial breakthroughs, the stage of "from disorder to order" mode competition, the stage of smart acquisition led by the high end, and the stage of integrated innovation of the supply chain with overall development.