China Knitting Industry Association: Analysis Of The Economic Operation Of The Knitting Industry In 2022

In 2022, the evolution of the world will accelerate, the international economic and trade environment will be turbulent, and domestic sales will be less vigorous due to the repeated outbreaks of the epidemic. In the face of complex and severe domestic and international situations, China's textile industry withstood the impact of multiple unexpected factors and showed strong development resilience. In 2022, 36000 enterprises above designated size in China's textile industry will achieve a main business income of more than 5200 billion yuan, a profit of more than 200 billion yuan, and a profit margin of 3.9%. In 2022, China's textile and clothing exports reached a new high of 340.95 billion US dollars, up 2.5% year on year.

Under this situation, China's knitting industry as a whole is operating under pressure, the growth rate of production and sales has slowed slightly, the profitability has declined year-on-year, and the export scale has hit a new record. In general, in 2022, China's knitting industry withstood the pressure and actively responded, maintaining stability and development. Looking forward to 2023, although the international environment is still complex, with the active domestic market and the improvement of the industrial chain, the future development of the industry has both challenges and opportunities.

　　 01

　　 The growth rate of production and sales has slowed down, and the proportion of knitted clothing has slightly increased

According to the statistics of the National Bureau of Statistics, the main business income of enterprises above designated size in the knitting industry will decline by 2.58% year on year in 2022, significantly slowing down compared with the growth rate of more than 5% in the first half of the year (Figure 1). Among them, the main business income of enterprises above designated size of knitted fabrics increased by 1.16% year on year, 2.24 percentage points lower than that of the first three quarters; The main business income of enterprises above the designated size of knitted clothing decreased by 4.76% year on year, with a growth rate of 7.15 percentage points lower than that of the first three quarters.

Although the growth rate of industry revenue in 2022 has slowed down year on year, from the data of the past five years, it still remains at a relatively stable development level, with an average annual growth rate of 1.34% of industry revenue in the past five years. At the same time, the growth rate of operating costs of enterprises above designated size in the knitting industry has basically kept pace with the operating revenue, and the fluctuation is smaller than the change of operating revenue, which shows that the industry's ability to absorb cost fluctuations has been growing, and it is committed to maintaining the stable operation of the industry in the process of development. (Figure 2)

In addition, according to the statistics of the National Bureau of Statistics, in 2022, the cumulative production of knitted clothing of enterprises above designated size will decline by 2.24% year on year; The proportion in the total clothing output reached 62.13%, an increase of 2.08 percentage points over the same period in 2021. With the continuous improvement and development of the functionality of knitted fabrics, knitted clothing has become more and more popular with consumers in recent years, and has constantly expanded the field of clothing. Even under the epidemic situation, there are many consumption highlights of knitted clothing, such as sports fitness, and the rise of small outdoor sports lifestyles such as urban camping, frisbee, ice and snow with social attributes, which strongly stimulate the demand for outdoor knitted sports clothing.

　　 02

Profits have declined year on year, and industry development resilience has emerged

Influenced by multiple factors beyond expectations, the base in 2021 is relatively high, and in 2022, the profits of enterprises above industry scale will decline year-on-year. In 2022, the total profit of enterprises above designated size in the knitting industry will decline by 10.82% year on year; It accounted for 15.59% of the total profits of textile enterprises above designated size nationwide, and the amount accounted for 3.06 percentage points higher than that in 2021. Among them, in 2022, the total profit of enterprises above designated size of knitted fabrics will decline 9.76% year on year; The total profit of enterprises above designated size of knitted apparel fell 11.45% year on year.

In terms of industry profit margin, the profit margin of enterprises above knitting scale will be 4.78% in 2022, down 0.44 percentage points from 2021. The profit margin of enterprises above designated size of knitted fabrics was 4.76%, 0.58 percentage points lower than that in 2021; The profit rate of enterprises above designated size of knitted apparel was 4.78%, 0.36 percentage points lower than that in 2021. On the whole, after the double squeeze of rising costs and weak demand, the industry profit margin in 2022 will decline from the high level in 2021, but it will remain at the level of 2019, reflecting the strong industrial development resilience of the knitting industry. (Figure 3)

From other major business indicators, the asset liability ratio of enterprises above knitting scale in 2022 will be 56.12%, down 0.46 percentage points from 2021. Three fees accounted for 6.84%, down 0.67 percentage points year on year; Among them, the financial expenses decreased significantly, down 60.86% from 2021, further promoting cost reduction and efficiency increase (Table 1). The turnover rate of total assets is 1.48 times/year, slightly lower than that of the same period in 2021. The operating costs of enterprises above designated size per 100 yuan of operating income increased slightly compared with that of enterprises above designated size (Table 2).

　　 03

The export scale has reached a new high, and the future growth pressure is high

According to the statistics of China Customs, the export of China's knitting industry in 2022 will be 114.841 billion US dollars, accounting for 33.68% of the total export of textiles and clothing nationwide, with a year-on-year growth of 4.8%. Among them, the export volume of knitted fabrics was 23.898 billion US dollars, up 3.5% year on year; Exports of knitted clothing and accessories reached 90.942 billion US dollars, up 5.3% year on year. Since 2013, the export volume of the knitting industry has exceeded 100 billion dollars for the fourth time, and the export scale has reached a new record. The export volume of the industry in 2022 increased by 27.58% compared with 2019 before the epidemic. (Figure 4)

Behind the high growth rate of industry exports, the number of exports fell back, but the price factor played a strong supporting role. In 2022, the export price of knitted fabrics will increase by 5.05% year on year, and the export volume will decrease by 1.53% year on year; The export price of knitted clothing and accessories increased by 6.06% year on year, and the export volume decreased by 0.70% year on year. (Figure 5)

——From the perspective of annual trend, influenced by multiple factors such as the conflict between Russia and Ukraine, the energy crisis in Europe, and the tightening monetary policy of the Federal Reserve, global consumption demand has weakened, and textile and clothing consumption demand in developed countries such as Europe, the United States and Japan has begun to weaken. Since August 2022, the growth rate of China's textile and clothing exports has slowed significantly, and the knitting industry is also facing greater pressure to maintain export growth. In December, China's export of knitted products was 8.907 billion US dollars, down 15.44% year on year and up 5.12% month on month. Among them, the export of knitted fabrics was 1.631 billion US dollars, down 28.09% year on year; The export of knitted clothing and accessories was 7.276 billion US dollars, down 11.97% year on year. The export of the industry is under great pressure.

——From the perspective of major export markets, the export value of China's knitting products to the United States in 2022 will be 22.07 billion US dollars, down 0.45% year on year, accounting for 19.22% of China's total exports of such products in the same period, with a growth contribution rate of -1.89%; The total export volume to the ten ASEAN countries was 20.417 billion US dollars, up 15.08% year on year, accounting for 17.78%, with a growth contribution rate of 50.88%; Exports to the EU region reached US $17.54 billion, up 7.48% year on year, accounting for 15.27%, with a growth contribution rate of 23.21%; Exports to Japan reached US $7.838 billion, up 0.76% year on year, accounting for 6.82%, with a growth contribution rate of 1.12%. Exports of knitted products to the United States, ASEAN, the European Union and Japan totaled US $67.864 billion, accounting for 59.09% of the total, with a total growth contribution rate of 73.32%. (Figure 7)

After the RCEP agreement came into effect, dividends began to show. According to the statistics of China Customs, in 2022, China's exports of knitted products to the RCEP region totaled US $34.945 billion, up 10.16% year on year. Among them, the amount of exports to Australia increased significantly by 12.39%.

——From the perspective of category breakdown, in 2022, except that the exports of underwear, home clothes and children's clothing declined slightly compared with the same period, the main categories still maintained a high growth rate on the basis of the high base in 2021. Among them, knitwear is the largest export category in the knitting industry, with an export value of 22.497 billion US dollars in 2022, accounting for 19.57% of the export of knitted clothing and accessories, up 7.32% year on year; The export of knitted shirts shows a trend of rapid growth, with the export volume reaching 29% of the shirt export, and the proportion of exports continues to increase. The knitting industry has made significant progress in knitting technology of woven fabrics. (Table 3)

——From the statistics of major provincial customs in China, Zhejiang, Guangdong and Jiangsu still rank the top three in terms of export volume of knitted products. In 2022, the export volume will be US $31.767 billion, US $17.241 billion and US $15.987 billion, with year-on-year growth rates of 7.85%, -7.83% and -1.59% respectively. In 2022, Xinjiang and Hunan, among the top ten export regions in terms of export volume of knitted products, will grow significantly, with year-on-year growth rates exceeding 50%. The export volume of Xinjiang Uygur Autonomous Region was 3.522 billion US dollars, up 89.28% year on year; The export volume of Hunan Province was 2.65 billion US dollars, up 54.88% year on year. (Table 4)

　　 04

Insufficient domestic demand power, and the consumption heat needs to be improved

Influenced by multiple factors such as poor logistics and consumer confidence, the domestic consumer market as a whole has shown a weak demand trend since 2022. According to the data of the National Bureau of Statistics, the total retail sales of consumer goods in 2022 will be 43973.3 billion yuan, down 0.2% year on year. Among them, the total retail sales of clothing, shoes and hats, knitwear and textiles amounted to 1300.3 billion yuan, down 6.5% year on year. At the same time, the national online retail sales in 2022 will reach 13785.3 billion yuan, an increase of 4.0% over 2021, of which clothing products will grow by 3.5% (Figure 8). In the case of the overall contraction and decline of the clothing market, sports outdoor clothing shows a trend of rising against the trend. It is reported that one hour after the "11.11 Carnival" of Vipshop in 2022, the sales of sports sweaters will increase by 87% year on year; The sales of running clothes on Tmall platform increased by 45.2% over the same period in 2021. At the same time, with the improvement of women's self-awareness, bra categories are diversified. Comfort and quality have become the priority factors for women consumers to consider when purchasing bras at this stage. The new brands, such as Jiaonei, Ubras and NEIWAI, represented by the underwear without steel rings, sizes and marks, will be among the top sellers of Tmall's Double 11 underwear stores in 2022.

According to the statistics of the National Bureau of Statistics, the domestic sales output value of enterprises above designated size in the knitting industry will decline by 3.22% year on year in 2022, accounting for 75.53%, slightly narrowing compared with 2021. From the customs import data, in 2022, China's imports of knitted fabrics, knitted garments and accessories totaled US $5.089 billion, down 12.40% year on year. Among them, the import of knitted fabrics was 908 million US dollars, down 20.8% year on year; Imports of knitted clothing and accessories reached 4.181 billion US dollars, down 10.3% year on year.

In conclusion, China's knitting industry will maintain stability and development in 2022 under the complex internal and external environment. Looking forward to 2023, with the continuous optimization and adjustment of epidemic prevention policies and the implementation of various national policies to stabilize growth, especially the introduction of the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), the domestic economy is expected to recover. In terms of overseas markets, the IMF has lowered the forecast value of global economic growth in 2023 from 2.9% to 2.7%. It is expected that countries accounting for about 1/3 of the global economy will experience economic contraction this year, and the global consumption capacity and willingness are being impacted. Based on the above factors, the domestic market of the knitting industry is expected to experience rapid growth in 2023, while exports are facing downward pressure due to the contraction of external demand and the high base effect. Enterprises need to focus on their main business, attach importance to technology and innovation, keep pace with the times, and actively respond to new situations and changes.

(Source: Secretariat of China Knitting Industry Association)