In the first half of 2018， the fabric market demonstrated a strong momentum. Many enterprises actively sought transformation， which in turn accelerated the overseas layout and consolidated their industrial competitiveness. An increasing number of fabric enterprises attached great importance to technological R&D; and innovation， and strove for increase of their products added-value…However， things were changed in the second half of 2018， an eventful period for the fabric industry， marked by slowdown of product price increases， decline of transactions and month-on-month decreases， etc. Downturn of the political and economic environment exacerbated the Sino-US trade frictions， and occurrence of a series of “black swan” events made things hard for the fabric market in the second half of 2018.

The whole year of 2018 has seen a growing raw material price， a growing labor cost， a strengthening brand innovation capacity， and growing difficulty of financing. All these problems have occurred in the dyeing and printing industry as a whole. Most printing and dyeing enterprises have sought their development in adversity； some enterprises have had a hard time with too many problems to deal with； a few enterprises have even withdrawn from the fabric market for difficulty to sustain.

In order to find a way out， the industry and enterprises have joined hands to overcome these difficulties， actively promoting industrial structural adjustment， innovation and upgrade， and ensuring the industry to head towards a more environmentally-friendly， efficient， and sustainable direction.

Environmental tariff

Take the initiative to upgrade； Survival of the fittest

On January 1， 2018， the first green tax targeted at environmental protection in China， namely the Tax Law on Environmental Protection of the Peoples Republic of China， was launched， thus replacing the pollution charge which has been implemented for nearly 4 decades. According to regulations of the Tax Law， the environmental taxes are declared on a quarterly basis. Therefore， many fabric enterprises encountered the first tax collection period from April 1st to April 15th.

According to the “Environmental Tax List，” the lower limit for the tax amount according to the Tax Law is “Every air pollution is equivalent to 1.2 to 12 yuan； every water pollution is equivalent to 1.4 to 14 yuan； every ton of solid waste is charged by 5 to 1，000 yuan， of which the dangerous waste is charged 1，000 yuan per ton； industrial noise is charged by the number of excessive decibel and charged by 350 yuan to 11，200 yuan.” The upper limit of the tax amount should not exceed ten folds of the minimum.

“The environmental tax takes a low percentage， which is below 1%， in the total tax amount， so it will not cause a major burden on enterprises.‘Transformation of fees into taxes actually does not have a huge influence on corporate cost，” says Lin Xueying relaxingly， General Manager of Shaoxing Yongyao Textile Co.， Ltd.“The purpose of levitation of environmental taxes is to encourage enterprises to reduce pollution. As enterprises， we should actively respond to the governments call.” Of course， there are some enterprises confessing a considerable increase in their operating cost after“transformation of fees into taxes.” For example， Du Yunhai， Deputy General Manager of Zhejiang Babei Textile Co.， Ltd.， tells the reporter that， after “transformation of fees into taxes，” the company is faced with more pollution charge items， leading to a higher amount of tax to be paid by enterprises. “However， the tax amount is， on the whole， affordable to enterprises. It is not a huge problem. In order to guarantee the profits for the downstream clients， the companys product quotation has not yet increased.”

Sino-Africa cooperation

Overseas layout； Mutual complementation of strengths

Grow cottons in South Africa and Egypt， build processing bases in Ethiopia， and pave the overseas logistics network…The continent Africa has been frequently mentioned by professionals in Chinas textile garment industry in 2018. Many domestic textile garment industrial plants have come here for investigation， survey， investment， and plant-building.

Xu Yingxin， the Vice-President of the China National Textile and Apparel Council， introduced on the Africa Textile Industry Seminar， a part of Intertextile 2018， that Africa was demonstrating obvious competitive strengths in developing the textile industry. First， it has a large number of young labor charged at a low cost. Second， some African countries have an edge in providing energies and raw materials. Third， Africa is enjoying a favorable external trade environment， which is allowed to enter the market of Europe and North America. Fourth， various African countries have issued preferential policies， which can create a favorable business environment. Fifth， the consumption market of African countries possesses a huge potential. Sixth， African countries are equipped with essential conditions to drive the development of its textile industrial chain via its the garment sales.

Wuxi Talaktex Group Co.， Ltd. is one of the Chinese textile enterprises based in Africa. According to the introduction of Zhou Yejun， Talaktex started paying attention to Africas investment environment years ago. After numerous investigations into the climate， traffic， human resources， energies and infrastructures of Talaktex， the company finally decided to set up its plant in the Dire Dawa Industrial Park in Ethiopia.”Development of industrial parks has been emerging in Ethiopia as a new development model， which is based on reference to the relatively successful development model in China. The industrial parks in Ethiopia almost follows the same development model of the Chinese counterparts.”

Elimination of backward equipment

Implementation of environmental protection rules； Industrial transfer

In 2018， affected by the national environmental protection policies， a large number of hydraulic looms in weaving gathering grounds such as Zhejiang and Jiangsu have been eliminated. In 2018， around 30，642 sets of low-end hydraulic looms were eliminated in Wujiang District， Suzhou City， Jiangsu Province alone.

Considering the front-period trouble-shooting， the current hydraulic loom weaving industry is faced with three major problems. First， the sewage treatment is improper. The sewage pipe connection rate in many places is just around 20%， the sewage treatment up to standards is below 50%， and the recycled water reuse is just around 10%. Besides， there are many illegal phenomena. The hydraulic loom weaving enterprises are found with the following problems， including emission without approval， excessive emission， and abnormal operation of sewage treatment facilities. All these problems have seriously influenced the water quality of inland rivers and led to formation of “milk rivers.”When the summer comes and it is so hot， the riverway even becomes black and stinking. Second， the industrial development lacks standards. Some enterprises， driven by interests， do not handle any formalities， and even arbitrarily increase the number of hydraulic looms. Sometimes， a plant is rented to multiple hydraulic loom owners， thus causing chaos of management.

However， of special note is that， as the hydraulic looms are eliminated by a large margin， some manufacturers have returned to Anhui， Jiangxi， Hunan， Hubei and so on. Thanks to the vigorous support of the local government， the hydraulic looms production capacity has been transferred by a large amount. Some hydraulic looms have already been settled down， and some are on the way to transfer.

No robust sales on the peak season

Cooling down of the production and marketing momentum； Innovation to seek new breakthroughs

From the third quarter of 2018， Chinese fabric market has been faced with the constant slowdown of the product price increase， slump of transactions， and decrease of the production orders month-on-month growth.

The Keqiao Fashion Index in China showed that the overall business index of enterprises dropped by 17.93% and 18.22% year-on-year in September and October 2018. The report suggested that， from September to October， the order month-on-month ratio of mass fabrics for dyeing was dipping among clients of South China and North China. The marketing performance of the traditional market was still quite mediocre. The popular products of the autumn experienced a shrinking of their cash commodity transaction month-on-month ratio. The number of dye fabric orders in the early winter was still partially inadequate. The domestic market demand demonstrated shrinking of the month-on-month rate. As the number of production orders dropped， some textile dyeing and printing enterprises also reduced their production hours， resulting in a drop of the production and marketing month-on-month ratio.

Zhejiang Lanao Textile Co.， Ltd. specializes in production and sales of polyester filament yarns and chemical fiber fabrics. The enterprise had 12 sets of elasticizers for uninterrupted operation. Nevertheless， from September 1 on， the production capacity has been reduced by around two thirds， and half of the staff have been on holiday. “We have no choice. The filament yarns have no market and a lot have been put on stock. This is the only choice for us，” says Dong Yuemei wearing a frown. He is the President of Zhejiang Lanao Textile Co.， Ltd.

Apart from Zhejiang， fabric gathering grounds in Jiangsu， Guangdong and Fujian have also been affected by the “market cooling.” The woven polyester market data of Jiangsu Province suggested that， from midSeptember to late-October， the polyester and chinlon market transaction was poor， and the price kept on dropping. “Since September， the product price of FDY and DTY has been dropping all the way， changing the previous steady and slight growth， and the market demand is weak，” discloses a local market observer.

The head of an enterprise located in Chaoshan， Guangdong， who is unwilling to reveal his name， says with a forced smile that， since 2018， the enterprise has been in a semi-shutdown status. The traditional peak season has brought no changes to the enterprises basis status， and the same situation has been found with the surrounding enterprises.

Trade frictions

Severity of situations； Growing pressure

Since July 2018， the United States has announced its levitation of a 25% import tariff on around 50 billion USD of Chinese products， and the list of Chinese products which will be faced with 10% of tariffs. In response， China has fought back. This has fueled the Sino-US trade frictions.

Wang Haiyao， head of Shaoxing Hengchang Textile Import and Export Co.， Ltd.， says the companys sales in the second half of 2018 has cooled down. Over the past ten years， Hengchang Textile has committed itself to the American market， with around 40% of its products directly exported to the United States， and the remaining 60% of products transported back to the United States after being processed into garments. Wang Haiyao says the export volume of the company from January 2018 to June 2018 has been basically the same to that of previous years. However， the export in July dropped by around 15%. “Affected by the Sino-US trade frictions， the market purchasing power of the United States has been weakening， and clients are all looking for opportunities.”

“Since some local American clients still wait and see， the number of orders recently will inevitably decline， but such decline will not exert a huge influence on the company，” says Wu Jing， Business Manager of Shaoxing Rhein Textile Import and Export Co.， Ltd. The Rhein Textile is devoted to manufacturing of artificial cottons and knitted fabrics. The large diversity of product types ranges from the low grade to the medium grade and to the high grade. Its export to the United States took up around 10% of the companys total foreign trade. New York and Los Angeles are two major export destinations. Wu Jing points out that the company directly processes the fabrics into garments， and then exports them to the mediumand high-end market of the United States. “Currently， the tariffs have not yet been spread to the garment industry.” As to large-scale wholesalers in Los Angeles and so on， the ordered output might decline but not by a large margin.

Rapid rise of the dyeing price

Shrinking of profits and increase of expenditure

The dye price increase in 2018 was startling. On April 2nd， the international dye giant， Hens， released a notice of price increase， and the new price policy came into effect on April 8. On the same day， the global chemical supplier， Kemira， increased the dye product price by 15% to 25%， and the price increase came into effect from April 15th. At the same time， the domestic dye enterprises were faced with another increase in price. From April 10th on， the disperse dyes increased by 3，000 yuan per ton to reach 53，000 yuan per ton， and the price increase range has reached 77% from 2017 to the end of 2018.

It is generally held by industrial analysts that the price increase is subject to burdens brought by environmental protection. The domestic dye production bases has been confronted with limitations to launch their production because of environmental problems. A small number of small-and medium-sized dye manufacturing plants have stopped their production. Conse- quently， dye supply is faced with unprecedented pressure. Besides， since the global textile industry has made a turnaround and the downstream printing and dyeing enterprises are enjoying a sound development momentum all the year around， the contradiction between supply and demand on the dye market has been aggravated.

The menacing dye price increase has obviously exerted a vital influence on downstream enterprises. Qiu Jianxia， President of Zhongcheng Dyeing and Printing Co.， Ltd. says that the business in 2018 has been good， so every workshop has put all out to finish their production tasks. In the early 2018， the companys dyeing fees have been up-regulated once， and the price increase is around 5% to 6%. “The dye price has to increase， and we dare not increase it too much considering the acceptability of customers. The increase of the dye price is far lower than that the increase of dyes，” adds Qiu Jianxia， “Though this years business is much more popular this year than the year before， but the profit margin is shrinking.”

Besides， as the dye price keeps on rising， industrial analysts report that， in order to balance the cost expenditure， some printing and dyeing enterprises have reduced their purchase of textile auxiliary agents.

Withdrawal of giants

Reduce losses； Narrow down the industrial size

On March 16th， Fujian Zhonghe Shareholding Co.， Ltd. published an announcement， saying that， in order to promote efficiency of the major assets restructuring， the board of directors agreed that the company would list itself on the property right transfer institution at a price of around 1 billion yuan， selling the companys assets in the textile printing and dyeing sector， including the equity of five subsidiaries （Fujian Zhonghe， etc.） as well as land， buildings， mechanical equipment， inventory， receivables and payables， and non-equity assets.

On May 11th， the group made a second announcement. Considering the shrinking profits of the dyeing and finishing link and a low industrial bargaining power， the companys textile printing and dyeing sector has fully stopped its operation and production so as to reduce its costs. So far， renowned printing and dyeing giants， which once served Septwolves， Joeone， K-Boxing， Etam， Yishion， Exception， and Zara， have bid farewell to the printing and dyeing industry.

It was reported that the operating income of Zhonghe Shareholding Textile and Dyeing in the first half of 2018 decreased by around 30% compared with the year before. The increase dropped from 232 million in the same period of last year to 82.45 million， and the percentage plummeted from 50% to 20%. Industrial analysts point out that environmental pollution charge and costs are the greatest challenges facing the current textile fashion enterprises. Zhonghe has also experienced the same influence. Particularly， the rising number of chemical and industrial products and comprehensive costs in the industry of dyes and chemicals will exert a huge pressure on the cost control of enterprises. Therefore， Zhonghes operation largely relies on the macroenvironment and the industrial trend changes.

Industrial transfer

Proper planning； Green connection

In February 2018， the Hunan Textile Industrial Base project entitled“Jeans Town” was launched in Changning， Hengyang， Hunan. Around 10 billion yuan has been invested in this project， aiming at building “Jeans Town” into the largest cowboy fashion industrial cluster in Hunan.

So far， this project has realized its integrated internal migration from the Zengcheng jeans industrial chain in Guangzhou， and built the environmental protection treatment garden in different districts. Advanced and environmentally-friendly processes have been adopted， and its washing process can achieve three types of water qualities.

It is said that the land area planned for the Hunan Textile Industrial Base has reached around 1.33 million square meters， of which 540，000 square meters is for Phase I. In Phase I， one sewage treatment plant which can cope with 60，000 tons of sewage a day， 38 washing plants， six dyeing plants， eight pulp dyeing plants， eight mercerizing and finishing plants， three print-works， one carton manufacturing plant， and one chemical plant garment manufacturing plant will be set up in the Changning City Yiyang Industrial Park. In Phase I， 40 garment manufacturing enterprises and one export trade center will be set up.

The sewage treatment plant of the Industrial Base will adopt the MBR membrane process. After processing， the discharged waste water will reach Level-1 Grade-A. Around 50% of the waste water after processing will be reused for textile production and greening. This can create a great momentum for circular economic development of the Shuikou Economic Development Zone. Following the construction of the Base project， the largest jeans garment industrial clusters in Hunan， which covers the whole industrial chain of the jeans garment manufacturing， will be built to help Changning Shuikou Economic Development Zone realize more than 100 billion yuan of industrial output by 2020.

This project has finished signing its contract on December 29th， 2017， and started construction in early 2018. The total investments will reach around 10 billion yuan. After the project starts operating， the annual output of garments will reach around 1.5 billion pieces， creating an annual output value of 100 billion yuan and 16 billion USD of foreign exchange. The project construction will be organized in two phases. Phase I was finished and put into use before the end of October 2018.

Emergence of e-commerce

Reconstruction of the industrial chain； Flexible production

With the integration of the “Internet Plus”， textile fabrics has emerged as a popular entrepreneurial category in the vertical B2B， which is just behind the fresh product and steel e-commerce. Many fabric B2B e-commerce platforms have emerged， including isoubu.com， uliaobao.com， liaoshang.com， soouya.com， etc. Even hichao.com has internally incubated its fabric B2B platform， “Yibudaowei”. All this has made a turnaround for e-commerce development of textile fabrics.

In November 2018， the textile product B2B platform， baibu.la， announced its completion of C2 round of financing totaling at around 100 million USD.

It is said that baibu.la， founded in April 2014， has set up its supply chain center in Guangzhou and Shaoxing after more than four years of development. Meanwhile， it has established in-depth cooperation with more than 1，000 first-grade suppliers and has been linked with more than 4，000 primary suppliers. Every week， tens of thousands of new products of different categories are launched with an absolute competitiveness in quality and price. At the same time， Baidu has established a complete fabric information database. Through the image retrieval technology， the fit degree of the pattern and fabric searching is efficiently ensured.

Zhao Zhenhong， founder and CEO of baibu.la， said， “After this round of financing， baibu will further optimize its cooperation with suppliers， product development， warehousing system， textile industrial informationalized and intelligent manufacturing， and provision of new technologies for its partners， and create a better， more efficient， more transparent， and more intelligent garment fabric and auxiliary material flexible supply chain service system. Meanwhile， it will expand more than 10 garment manufacturing towns in North China and Southwest China. Efforts will be made to establish a more efficient set of service standards for the supply chain and keep on expanding the market share in fields which the company has already gained a solid foothold.”

Sharing of plants

Quality improvement and efficiency increase； Supplementation of short slabs

In April 2018， the Shandong Provincial Government drew up the“Construction Plan for the Provincial Printing and Dyeing industry ‘1+7Regional Plant Sharing System” （hereinafter abbreviated as the “Construction Plan”）， and the whole province plans to erect one dyeing and printing industrial cloud platform and seven shared plants for distributed dyeing， printing and processing.

It is learned that the overall thinking of the “Construction Plan” is to build an intelligent cloud platform integrating coordinated innovation， creative design， customized transaction， remote operation， standardized formulation， and human resource training of intelligent， green printing technologies based on the “cheese digital automatic dyeing technology and equipment in the complete set” in five years. At the same time， the intensive， standardized， distributed intelligent green printing and dyeing shared plants will be laid out in six areas （Zibo， Zaozhuang， Weifang， Bingzhou， Liaocheng， and Xintai） of Shandong， where the textile fashion industry is relatively concentrated， to form an annual printing and dyeing output capacity of around 720，000 tons， provide intelligent and green dyeing， printing and finishing services for textile garment enterprises within the radiated regions， and replace the traditional printing and dyeing plants with a small scale， scattered distribution， backward technologies and equipment， and outdated production means.

Establishment of the “1+7” regional plant sharing system can make up the printing and dyeing production capacity of Shandong Province. At the same time， around 22 billion yuan of sales will be increased annually， of which 2.1 billion yuan is profit and 4 billion yuan is taxation of profit. Around 68 million tons of water， 800 million kilowatt hours， 4.1 million tons of steam， and 64 million tons of sewage discharge can be cut， thus fueling the increase of the income of the provincial textile garment industry by more than 100 billion yuan.