Cotton Enterprises Affected By Epidemics Are More Difficult. Experts Suggest Strengthening Support To Boost Confidence.

On May 20-25, the cotton association of China carried out a survey on the recent operation of the processing trade enterprises, warehousing and logistics enterprises and textile enterprises in the cotton industry. The survey results of nearly 100 enterprises show that the epidemic has a great impact on the production and sales of enterprises. The shrinking of orders and the shortage of working capital are major difficulties. It is suggested that the departments concerned and financial institutions should increase tax reduction and credit support, and stabilize the cotton market by strengthening cotton rotation and cotton planting subsidies, so as to enhance industry confidence.

I. survey of enterprises

(1) cotton processing and trading enterprises: slow progress in cotton sales

In 2-3 months, 80% of the cotton trade circulation enterprises started one after another, and the operating rate reached 95% at the end of April. According to the progress of cotton sales in processing and trade circulation enterprises, 10% of the enterprises have already sold their sales, 23% of the enterprises have achieved more than 80% sales, 23% of the enterprises have sales progress of 50-80%, and 44% of the enterprises have less than 50% sales. From the cotton business situation, compared with the previous year, 14% of the enterprises were basically flat, 38% of the enterprises dropped 20%, 38% of the enterprises fell by 20-50%, and 10% of the enterprises dropped by over 50%.

The vast majority of enterprises said that the epidemic had a great impact on the operation of enterprises. The main reasons were: cotton prices fell and lead to losses. The textile demand in the lower reaches led to a slowdown in sales, a backlog of inventory and a slow flow of capital, resulting in increased financial costs and increased pressure on repayment of loans. In addition to the common suggestions such as reducing taxes, lowering fees, credit support and fiscal discount, 33% processing enterprises suggested increasing Cotton Subsidy and increasing support to the mainland to stabilize cotton growers' enthusiasm for planting cotton. 24%, circulation trading enterprises suggested stabilizing the market and anticipation by regulating measures such as purchasing and storing.

(two) cotton warehousing and logistics enterprises: business differences are obvious

From the loss that the epidemic has brought to enterprises, there is a big difference between cotton warehousing and logistics enterprises. 57% of the enterprises say that the loss is larger or the business is blocked, but 30% of the enterprises say there is no loss or little impact. There are two situations of tight storage capacity and reduced inventory. Enterprises generally say that inventory turnover has been greatly affected. Warehousing and logistics enterprises believe that the uncertainty of market expectations is the biggest difficulty at present. We hope to expand domestic demand, restore production capacity and increase support for small and medium-sized enterprises.

(three) textile enterprises: a sharp decline in orders

In the survey, 95% of the textile enterprises have been started in 2-3 months. From the effect of the resumption of production, 43% of the enterprises start up to 90%, 10% of the enterprises in 70-90%, 29% of enterprises in 50-70%, 18% of the enterprises opening rate is less than 50%. Since 2020, the total volume of orders has increased by 5% compared with the same period last year, and 36% of the enterprise orders decreased by 0-20% compared with the same period last year. The order of 50% enterprises decreased by 20-60% compared with that of the same period last year, and 9% of the enterprise orders dropped by 60% over the same period last year. Textile enterprises foreign trade orders fell more significantly, 19% of foreign trade orders fell 0-20%, 52% of foreign trade orders fell 20-60%, 29% of foreign trade orders fell 60% over the same period. From the loss that the epidemic has brought to enterprises, only 9% of enterprises think that the impact is not large, and 91% of the enterprises say that the loss is relatively large, mainly in the sharp decline in sales revenue, product backlog and order shrinkage.

From the two indicators of order and profit expectation, enterprises in the two quarter are expected to increase the number of new odd numbers and profits by more than 20% in the two quarter, accounting for 14%. The enterprises that expect to increase 0-20% will account for 29% and 18% respectively. The expected flat share is 14% and 23% respectively. The enterprises expected to decrease by 0-50% account for 38% and 36% respectively. At present, 77% of textile enterprises believe that the reduction of orders and the uncertainty of market expectations are the main difficulties, and 64% of enterprises have a shortage of liquidity. Enterprises generally hope to continue to cut taxes and reduce fees, increase lending support, introduce targeted preferential policies, wait for the market to pick up, and others say they want to increase cotton import quotas and expand procurement channels.

Two, policy recommendations

everything Cotton and textiles will be included in key supporting industries. The cotton and textile industry involves 6 million cotton farmers, 20 million textile workers and millions of circulation workers, and most of them are migrant workers. China's textile and clothing 1/3 relies on exports, which is a big hit by the epidemic. Statistics show that in 1-4 months, the added value of textile industry above the scale dropped by nearly 11%, and the decline was second in 17 main industries. The "six guarantees" put forward by the Central Committee put the "employment protection" in the first place. The cotton and textile industry practitioners were included in the key groups, and temporary relief measures were introduced to support the tax relief, financing loans and income protection, so that enterprises could "survive" and ensure that the income of practitioners did not drop substantially. Two is Increase support for cotton production in the mainland. At present, the output of cotton in China is 85% in Xinjiang. From the perspective of industrial safety, rational regional distribution, and the protection of the cotton farmers' income in the mainland, it is recommended to implement the policy of "professional warehouse supervision + warehouse Notarization" in the nine provinces of the mainland, increase financial support and promote normalization and institutionalization of policies so as to stabilize the confidence of the mainland in resuming production. Three is Timely start storage cotton rotation. At present, China's cotton inventory consumption ratio is 106.3%, which is the highest value in the past three years. Low consumption and high storage make the industry pressure. It is suggested that the rotation mechanism should be improved as soon as possible to solve the problems arising from the early entry, and that the burden should not be transferred to the enterprises, and the cotton reserves should be put into the right time when the demand is restored, so as to ensure the supply chain stability and boost the confidence of the industry.