Breaking the high cost era

Interview with President of China Chemical Fiber Industry Association Duan Xiaoping

The 18th China International Chemical Fiber Conference will be held on September 6th in Xiaoshan, Zhejiang. At present, how do we look at the complicated and changing industry situation? How should the chemical fiber industry upgrade and develop in the era of high costs? What are the highlights of this year's conference that are different from the past? These have become the focus of attention in the industry. On the eve of the meeting, this reporter interviewed Duan Xiaoping, president of the China Chemical Fiber Industry Association.

Looking back at high profits is not an industry norm

Duan Xiaoping believes that China's chemical fiber industry has undergone two stages of development. The first stage is the seller's market stage. In this stage, the supply of chemical fiber products is in short supply, and as long as the enterprise has a market for the project, it will not be sold out. Therefore, there is no pressure for enterprises to save energy, reduce energy consumption, transform and upgrade, and independently innovate. With the expansion of production capacity, the chemical fiber industry has entered the second stage - the stage of scale development. In order to enhance their competitiveness, enterprises have become an inevitable trend of large-scale development. Hengyi, Rongsheng, Far East, Hengli, Shenghong and other large-scale chemical fiber companies are the development results of this stage. On the one hand, large-scale development has increased the competitiveness of enterprises, made China's chemical fiber industry appear a number of large-scale enterprises with global competitiveness, and improved the textile industry chain, on the other hand, it also made most chemical fiber companies make money, and sometimes even Exorbitant profits.

Duan Xiaoping specifically pointed out that in the past two years, with the rapid growth of domestic demand for chemical fiber, the production capacity of chemical fiber has increased significantly. Low-risk, high-return investment leads to high market investment enthusiasm. This shows that the development of the chemical fiber industry in the previous two years was irrational.

Looking at the rational mindset to adapt to the current situation

Duan Xiaoping believes that the chemical fiber industry has now entered a third stage of development—the stage of brand development. At this stage, the construction of corporate branding and product branding has become the development direction of the company, and regional branding has also become an industry development trend. He suggested that enterprises should increase brand building while complying with energy saving and consumption reduction and independent innovation and development.

The current economic operation of the chemical fiber industry is grim. From the chemical fiber industry data, we can see that China's total profit of chemical fiber decreased by 50.12% year-on-year from January to May this year.

How to look at the 50.12% figure, Duan Xiaoping believes that first, profits have started to decline since the fourth quarter of last year, indicating that the chemical fiber industry has entered a period of cyclical adjustment. This is not difficult to find from "looking back." It is precisely because of the irrational investment in the previous two years that production capacity has begun to be released in large quantities. If demand growth slows down, there will be an oversupply situation. Second, the sharp drop in profits indicates that the industry is returning to rational development. The profits of the first two years may have led the bosses to believe that chemical fiber companies should do so. "Now the profits have been drastically reduced, and companies are certainly not adapting." Duan Xiaoping suggested that companies should adapt to the current profitability of the industry and put it right.

In the current difficult situation of the chemical fiber industry, Duan Xiaoping’s two words may be the best answer to the current confusion and concerns of the company.

“The problem of the entire economic situation cannot be solved by an industry.” The pressure facing the chemical fiber industry is not just an industry issue, but is a common problem faced by the country’s macroeconomy. Duan Xiaoping pointed out that the weakening demand in the international market and the slowdown in the growth of domestic market demand have caused a relative decline in the demand for domestic downstream textile end products, which has led to a phased imbalance in upstream chemical fiber production. “Solving the problem cannot be expected to be a breakthrough in the chemical fiber industry.” Duan Xiaoping told enterprises to make long-term preparations. At present, we must focus on rational investment and control the pace of development.

“The risk of the entire industry cannot be borne by one industry.” One manifestation of the slowdown in global economic growth is the decline in prices of various raw materials, and chemical fiber raw materials are no exception. Downstream textile companies are worried that the price fluctuations in chemical fiber will bring losses to themselves. What's worse is that market competition has further pushed down chemical fiber prices. The large amount of chemical fiber inventories has caused the high cost of capital for chemical fiber companies. The risks in all aspects of the textile industry chain have been weighed on raw materials, and chemical fiber companies have become “big heads”.

To this end, on June 25th, the Chemical Fibre Association organized major domestic polyester filament production companies to hold market talks. The chairman of each company participated in the meeting and reached a consensus on stabilizing prices. The effect of this meeting was significant, and then the price trend of polyester filaments in the country remained stable. Yang Shibin, President of the Knitting Association, thanked the Chemical Fibre Association for this purpose because the stability of raw material prices has enabled downstream companies to restore confidence and facilitate production. Duan Xiaoping said that this move of the Chemical Fiber Association is to solve the problem borne by an industry in the entire industry, which is beneficial to the operation of the entire textile industry.

How to deal with the current economic situation, Duan Xiaoping pointed out that the chemical fiber industry and enterprises should actively develop industry self-discipline, stabilize market order, adjust investment decisions, focus on promoting mergers and acquisitions, encourage enterprises to use current opportunities, increase R&D investment, and strengthen brand building. And marketing, improve product added value and comprehensive competitiveness.

In the long run, it is difficult to conceal the tendency of stage imbalances.

At present, the contradiction between grain and cotton disputes and land disputes between urban and rural areas is becoming increasingly prominent. Therefore, in the long run, the growth of cotton and other natural fibers is constrained, and the trend of high cotton prices cannot be reversed. Therefore, chemical fiber will continue to replace natural fibers such as cotton to gain greater market share, and the increase in fiber consumption is also mainly supported by the growth of chemical fiber. Duan Xiaoping pointed out that the current chemical fiber production capacity is only a structural excess and a phased imbalance. For the future development of the textile industry, the chemical fiber industry has a long way to go.

Why is this topic? The traditional model needs to be upgraded to consensus

The annual international chemical fiber conference has received extensive attention from colleagues at home and abroad. The theme of this year's conference is set as "how to achieve sustainable development in the chemical fiber industry in the era of high costs."

Duan Xiaoping said that in recent years, chemical fiber companies have truly felt the arrival of the high-cost era, and their previous cost advantages have been lost. We can clearly feel that the traditional development model of the chemical fiber industry can no longer be adapted under high-cost conditions. The industry urgently needs to find new outlets, accelerate the transformation and upgrade, increase the core competitiveness, and achieve sustainable development.

Duan Xiaoping discusses two aspects in connection with the problems faced by the industry at the moment. On the one hand, the textile industry in the downstream faced the grim situation at home and abroad and showed a cautious attitude towards the demand for chemical fiber. Textile companies would not pay for the rise in prices of chemical fiber products. On the other hand, the rapid growth of domestic chemical fiber production capacity has led to fiercer market competition. Therefore, the high costs of the chemical fiber industry cannot be smoothly conducted downstream, and the economic efficiency of the industry has fallen sharply. The conference focused on how to achieve sustainable development in the chemical fiber industry in the era of high costs, and it is particularly necessary to discuss in depth the current trends in the economic development of the chemical fiber industry and the hot and difficult issues in the industry.

Why Xiaoshan? Promoting the Cluster Effect to Build a Regional Brand

Xiaoshan is one of the most important chemical fiber industrial clusters in China. It has a high reputation and influence in the domestic and international chemical fiber industry. In recent years, the level of technical equipment and independent innovation have been continuously improved, forming an upstream and downstream integrated industrial chain. Competitive advantage, and has a clear advantage near the textile market.

Duan Xiaoping believes that holding the China International Chemical Fiber Conference in Xiaoshan is more conducive to the clustering effect and facilitates the participation of upstream and downstream enterprises and traders. In addition, the association is advancing the construction of chemical fiber regional brands. As one of them, Xiao Shan can use this conference to strengthen its image publicity and increase its influence in the industry.

Duan Xiaoping said that the chemical fiber industry is an important pillar industry in Zhejiang Province. The organization of this conference will also help the local government understand the situation in the chemical fiber industry in China and even in the world.

What are the characteristics? Standard forums help break the technical barriers

Each session of the China International Chemical Fiber Conference will pay attention to changes in the pattern of the world's chemical fiber industry, and invited experts from the European, American, Japanese and Korean chemical fiber industry associations as well as experts from internationally renowned consulting agencies to give speeches. Duan Xiaoping said that this year will further emphasize the important impact of technology and R&D on the development of the industry.

The conference established four special forums: "Functional Fibers and Textiles," "Industrialization and Application of New Fiber Materials," "Sustainable Development," and "Standardization." At the same time, it also invited Teijin Corporation of Japan and industrial technology innovation in the industry in China. The Alliance conducts two technical exchanges on behalf of the company. Duan Xiaoping said that the meeting proceeded from the requirements of the “12th five-year” development plan for chemical fiber industry, emphasizing the interaction of upstream and downstream enterprises, and focusing on energy conservation, emission reduction, recycling, and sustainable development.

Duan Xiaoping specifically mentioned the "standardization" forum that was specially set up at this conference. He said that in recent years, the trend of chemical fiber differentiation and functionalization has put forward higher requirements on the quantity and quality of standards, and the existing standard system cannot meet the development of the industry. At the same time, technical barriers in international trade are increasing, among which standards are important technical barriers. In addition, with the advancement of the international status of China's chemical fiber industry, the international standardization work for chemical fiber began to shift to China. In 2008, China became a permanent member of the International Organization for Standardization. In 2010, it was related to chemical fiber-related technical committees, subcommittees, and working groups. The convener is borne by our country, which means that we must assume more of the responsibility of international chemical fiber standardization.