Economic operation of knitting industry in 2017

The operation characteristics

The production of knitted fabrics continued to increase， while the production of knitted clothes decreased to some extent as a whole.

According to the statistics of National Bureau of Statistics， knitted fabric enterprises above designated size from January to December， 2017 completed the main business income of 307.227 billion yuan， a yearon-year growth of 4.60%. Thereinto， The main business income of knitted fabric weaving enterprises above designated size was increased by 5.43% over the previous year， and knitted printing and dyeing enterprises enterprises above designated size was up by 1.33%， and knitting product enterprises above designated size grow by 2.42%.

According to the statistics of National Bureau of Statistics， from January to December， 2017， knitted garment enterprises above designated size cumulatively completed the output of 13347 million pieces of knitted garments， a year-on-year growth of -2.43%， knitted garment enterprises above designated size completed the main business income of 400375 mil- lion yuan， a year-on-year growth of -0.84%， which was the first negative growth over the past five years.

The domestic market grew moderately， and the export market made a turnaround markedly.

Domestic economy maintained a steady growth， and residents income continued to improve， providing fairly good economic conditions for knitted garments and other consumption. Along with consumption upgrade， knitted goods are reflected much more in daily dressings， and the domestic market maintained a moderate growth. According to statistics from National Bureau of Statistics， the total retail amount of Chinas social consumer goods from January to December 2017 was 36，626.2 billion yuan， a year-onyear growth of 10.2%， of which the retail sales amount of clothing， shoes， caps and knitwear and textiles of units above designated size was 1，455.7 billion yuan， a year-on-year growth of 7.8%， and up by 0.8% from the same period in 2016. In 2017， the national online retail amount was 7175.1 billion yuan， a 32.2% growth compared with 2016， and wearing goods was increased by 20.3%， which was a 2.2% advance from the same period in 2016. From the data of China Customs on imported knitted garments， from January to December， 2017， China imported 391 million pieces of various knitted garments， an increase of 15.58% over the previous year， the amount was 2，515 million yuan， a year-on-year growth of 18.28%， both of which maintained a relatively fast growth trend.

According to the statistics of National Bureau of Statistics， from January to December， 2017， the export of knitting industry （including knitted fabrics， knitted garments and accessories） rose again steadily， and achieved the export of 88，265 million dollars in the whole year， making up 33.06% of Chinas textile and clothing exports， which was basically at the same level as 2016， and the export decrease contracted 9.1%， namely-0.65%. Thereinto， the export of knitted fabrics was 16，413 million dollars， a year-on-year growth of 13.82%， and the export increase has gone up again greatly； the export of knitted garments was 59，531 million dollars， a year-on-year growth of -4.97%， which fell 7.05% from the same period in 2016.

From the specific export market situation， the exports of Chinas knitted garments still showed negative growth in the four major markets of the European Union， the United States， Japan and ASEAN， but the decreasing amplitudes were significantly narrowed； the increasing amplitudes of knitted fabrics are relatively large in the three major markets of the European Union， Japan and ASEAN， among which the growth rate is the highest in ASEAN， as high as 16.13%， while there appears certain contraction in terms of the export of knitted fabrics in the United States market.

The overall growth rate of the industry was slowing down and the development of high quality was beginning to achieve initial success

The knitting industry has been expanding in the past five years， but the growth rate has come down to a certain extent. According to the statistics of National Bureau of Statistics， from January to December， 2017， the growth rate of the main business income of the industry （including knitted fabrics and knitted garments） increased first and then dropped， reaching the highest during January to May （up to 9.47%）， and gradually fell in the second half of the year， still maintaining 6.64% during January to October， but the growth rate has a certain decline in the last two months. In the whole year， 5，832 enterprises above designated size in the knitting industry completed the main business income of 707，645 million yuan， increased by 1.43% over the previous year， and the growth rate is lower than that of the whole textile industry （4.18）， down by 3.17% from the same period in 2016.

At present， industry enterprises are shifting toward the direction with a high-added value in the selection of processed products. While effectively controlling costs， they have gradually adapted to the requirements of the new normal and new era for industrial development through technological innovation， equipment transformation， process reengineering and brand building， and the development of high quality results is beginning to achieve initial success. In the past five years， the industry has realizing the sustained growth of profits while maintaining the growth of scale. According to the statistics of National Bureau of Statistics， from January to December， 2017， the growth rate of industry profits first increased and then dropped. In the whole year， 5832 enterprises above designated size in the knitting industry completed the total profit of 39，558 million yuan， a year-on-year growth of 4.99%； the scale of losses of the industry is 11.28， which was basically the same as 2016 and slighted increased by 0.66% from the same period in 2016； the profit margin level of the industry was 5.59%， slightly higher than the average level of the textile industry（5.47%）， of which the profit margin of knitted fabrics was 6.20% and the profit margin of knitted garments was 5.12%， and the profit margin level of the knitting dyeing and finishing industry reached the industrys highest， up to 8.13% （it is 12.37% for the same period in 2016）.

Industry investment promoted industrial technological progress

According to the statistics of National Bureau of Statistics， in 2017， Chinas knitting industry completed more than 5 million yuan of fixed assets investment of 134，548 million yuan， accounting for 9.96% of the investment amount of fixed assets of the textile industry， a year-on-year growth of 6.91%， and its growth rate is 1.7% higher than the investment of textile industry. Among them， knitted fabric enterprises completed the investment of 65，122 million yuan， accounting for 48.40% of the investment amount of the knitting industry， a year-on-year growth of 10.96%； knitted garment enterprises completed the investment of 69，426 million yuan， making up 51.60% of the investment in the knitting industry， a year-on-year growth of 3.37%. In the last five years， the growth momentum of industry investment， new and investment projects will play a significant role in promoting the capacity and technological progress of the industry in the next three to five years.

The main factors that affect the development of the industry

Further deepening the adjustment of industrial structure

In the past five years， the industry growth has slowed down on the whole， and it has carried out a relatively in-depth adjustment preceding the national economy， especially under the circumstances of rising costs and gradual shortage of labor force， the industry will transform the reliance of the growth of quantity in the past to the pursuit of quality enhancement， which exerts a positive influence on the long-term development of the industry. By comparing the main business incomes， completed investment amounts and industry export amounts of enterprises above designated size in the knitting industry in 2017 and 2012， while expanding the industry scale， the industry has also made a certain adjustment in its internal industrial structure. In the last five years， the main business incomes of Chinas knitted fabric enterprises above designated size have changed little， and the main business income of knitted garment enterprises above designated size was increased by 1.64 times and the investment rose by 2.22 times， indicating that the industry is extending downstream， while the export amount of knitted garments is declining， the growth of knitted garments in the domestic market has driven the development of knitted garment enterprises. The ratio of export amounts of knitted fabrics in the export sales market increased from 11.42% in 2012 to 18.59% in 2017， the increased competitiveness of printing and dyeing knitted fabrics with high technical content in the international market mainly benefited from industrial technological progress and raised level of product design and development.

Making full use of two markets and two two kinds of resources

In recent years， with the sustained and steady growth of Chinas economy， the income of residents has been steadily improved， and the retail sales of social consumer goods have always maintained a nearly double-digit growth， especially with the gradual maturity of the new generation of consumer groups after 80s / 90s / 00s， the domestic market has become the focus and direction of domestic knitting industry enterprises. In the past five years， the ratio of domestic sales of enterprises above designated size in the knitting industry was increased year by year， which has increased from 66.87% in 2012 to 74.30% in 2017. The industry should fully realize the important role of two markets and two kinds of resources in promoting the development of Chinas knitting industry. In recent years， based on the expansion of the domestic market， E-commerce， big data， personalized customization and other industrial development ways have been applied in the industry， and the domestic sales of enterprises have also continuously enhanced the operating capacity of channels and brands， laying the foundation for the steady development of the industry.

The internal driving force of industry development was relatively sufficient， and the foundation of high-quality development was solid.

While the industry maintains growth overall， enterprise entities have been actively developing ideas in respect of product development， new technology applications， business management， brand operation as to adapt to new market changes， and the internal driving force of industry development is relatively sufficient， laying a foundation for realizing high-quality development. In regard to the development of new products， enterprises need to make constant innovations based on market needs， proceed from raw materials， weave structure， color， style and a variety of ways of changes and timely launch new products in line with market demand， and furthermore， the research and development input of the industrys outstanding research and development enterprises is generally higher than 3%， and the research and development input of some enterprises reaches more than 8% of sales revenue. By strengthening the application and update of new raw materials， new technologies and new equipment， enter-prises， while meeting the needs of industrial development better， also win the market space for themselves. At the same time， standardized management and information application of enterprises are continuously strengthened， and the comprehensive management level of enterprises has been greatly raised， which also plays a certain role in reducing the operating costs and operating risks of enterprises. In the meanwhile， the brand development of knitting industry has multiple alternative paths， the operation level of E-commerce brands， designer brands and independent brands and the capacity of market expansion have been enhanced， and industry transformation and development presents a fairly good situation.

Opportunities and challenges facing industry development in 2018

The industry is under pressure in the transition to middle and high ends.

With the rising cost of domestic labor， etc.， Chinas knitting industry is increasingly affected by developing countries and regions such as Southeast Asia， and currently， the simple low value-added processing market is faced with fierce competitions， and there is basically no profit， transition to the high value-added direction has become the important content concerning the sustainable development of the industry within a limited period of time. In the process the industry marches toward the middle and high ends， design， research and development and brand marketing are in the central position， and it is an important direction to break through the present stage of development to transit to the high value-added link of industrial value chain of knitting product design and brand marketing， while at present， while at present， there are still some problems in the development of the industry， which is mainly reflected in that there exists a certain ceilings and barriers in the transition of the industry to the direction of high added value. In particular， in the process of expanding the market of knitting garments and creating domestic brands， large-scale knitting enterprises in China mostly grow from subcontract- ing enterprises for international brands， the development of independent brands of enterprises lags behind， and their development of independent brands is limited by foreign brands， and in order to guarantee the normal operation of enterprises， these enterprises generally restrict the development of independent brands； at present， domestic sports wears， casual clothes and other clothing brands that develop fairly well cover multicategory clothing products， and the development of independent brands of small and medium enterprises is restricted by their own strengths， and it is difficult for their brands to transform and develop into large clothing brands separately based on knitted garments. In recent years， the export of knitted fabrics has maintained growth thanks to the complete knitting industry system that has taken shape in China， in particular， the capacity of knitting and dyeing processing reflects the relatively high technological content of Chinas knitting products， and with the increased processing volume of knitted garments in Southeast Asia， knitted fabrics are expected to continue to grow.

The construction of industry talent teams takes a heavy burden and embark on a long road.

At present， bottlenecks of talents and labor and environmental pressure for industrial development keep on the rise， enterprises generally reflect the shortage of talents and the tension of labor recruitment and use， especially， the labor force in other places in coastal developed areas takes up a relatively high ratio， and there is the great pressure of return of talents to mainland provinces in the future， and at present， enterprises alleviate the loss of some personnel by increasing labor remuneration， but talent shortage in the industry and how to transform labor dividends in the past into talent dividends and human resource dividends are still the problems that enterprises and industries must focus on and spare no effort to solve in the future. At present， some enterprises have been actively engaged in technical transformation and equipment automation transformation， which has reduced their dependence on operating skills to a very large extent，“de-skilling” is put on the agenda， which will greatly alleviate the problem of labor shortage in the industry， but it is required to see the characteristics limited to knitting garment processing， and the most labor-intensive production and processing of knitting garments is still difficult to fully realize automation. In the future， enterprises must consider concentrating efforts in enhancing the added value of products.

Consumption upgrading provides a stage for the development of new business models.

As the post-80s， post-90s population and middle class gradually become the main force of consumption， the changes in their consumption habits and consumption styles and preferences for products gradually pursue brands， quality and fashion， take on a personalized and diversified trend and are upgraded in cost performance and service experience， which has offered many opportunities for the development of new business models. In the innovation of business models， since there are many categories of knitted garments， they are the necessary products for the masses and young people to reflect fashion dressings， for instance， T-shirts， knitwear， knitted sportswear， pullovers， etc. are all goods products that can reflect fashion and personality design， knitting designers rely on their own design abilities and fashion experience abilities， cooperate with processing manufacturers， and then use relatively mature modern E-commerce expansion and sales channels， open up the channels from design to manufacturing to consumer-oriented， which will provide employment and entrepreneurial opportunities for a great many new graduates. At present， the industrys mass entrepreneurship and innovation has become the order of the day， the power of the new generation of the industry gradually emerges， especially in some areas close to the cluster places of the characteristic knitted garment industry， and relying on the mode of “deign of knitting garments + E-commerce sales” has created a lot of employment opportunities. In the future， relying on Chinas strong production capacity of knitted products and expanding the products to more markets through the innovation of new business models will will inject new vitality for industry development.

Knitting design and independent brand promote the increase of industrial added-value.

At present， it has become the industry consensus to drive the enhancement of the industry to high added-value based on the design of knitted products and independent brands， order processing enterprises gradually transform from the original OEM to the present ODM， or further extend from the original ODM to OBM， and transit to the brand operation with highend magnitude of value， and by strengthening supply chain management， they establish a stable top-down industrial cooperation model. Industry enterprises have achieved success through the integration of sup- ply chains of brands， such as the relatively mature brands of Three Gun， Aimer， Cosmo Lady， etc. In cluster locations of the knitting industry， all places are also constantly strengthening the construction of the public service platform of knitting design and brand building that serves small and medium-sized enterprises， and by building and designing design and development institutions， they strive to provide various services from design， development to market operation for small and medium-sized enterprises， which will drive a number of enterprises to march toward high-end value chain. In addition， with the increasing proportion of knitted clothing in the daily clothing consumption， related talents of knitting product design will enter the industry in an accelerated manner， providing a fairly good talent base for the industry to rely on the strength of design talents and raise the level of industry development in the future.

Trend and direction of industry development in 2018

Intelligent manufacturing has become the focus of the industry.

Automation， flexible manpower line and intelligence are the focus of the industry in the coming period of time， in particular， as Chinas labor dividend has subsided， the traditional model of relying on cheap labor to promote the development of the industry has basically come to an end. In the future， whether to improve the delicacy management of the enterprise or increase efficiency by downsizing payrolls， it has already become the key choices in front of the industry to raise labor productivity， reduce management costs and risks， and promote industry automation， flexible manpower line and intelligent manufacturing. At present， knitting industry has introduced and used the full-fashion computerized flat knitting machines， seamless underwear machines， circular knitting machines and other networked equipment for many years， and it has gradually become the direction of industry development to strengthen the construction of enterprise digital management capacity by building the MES management system based on the Internet of Things of equipment； in garment workshops， new automatic cutting beds， hanging and production scheduling system will be gradually popularized； in knitting printing and dyeing workshops， equipment automation control and networking， feeding and networking control and strengthening the bottom link of the equipment will be gradually popularized in the industry； in the operation of brand enterprises， digital intelligent management system will be gradually popularized. Furthermore， in the future， with the application of Internet of Things， big data and other technologies in the industry， large-scale personalized customization of knitted garments will be gradually realized， and intelligent manufacturing will become a reality.

Manufacturing + service boosts the industry to transit to a high-quality stage.

To promote the industry to transit from “manufacturers” to “manufacturers + service providers” is an important direction of industrial transformation and development， and in the past， processing enterprises in the knitting industry mostly rely on processing of incoming materials or processing of incoming samples， and make a living by earning meager material costs and processing fees. In the future， the transformation of industry enterprises from “manufacturers” to“manufacturers + service providers” is imperative， that is， to transform from the previous manufacturers that focus only on production to the solution providers and service providers that combine product services with product life cycle problem， and reduce costs and improve quality and efficiency by strengthening the upstream and downstream cooperation in the industrial chain and integrating supply chains， by actively transforming the traditional mode of product-centered to consumer demand as the core， provide customized production and services for downstream customers， actively participate in the collaboration of service-based manufacturing networks， take the initiative to find customer needs， carry out targeted services and proactively engage in market expansion. All of these practices will drive most enterprises in Chinas knitting industry to transit from pure “manufacturers” to “manufacturers+ service providers”， and boost the high added-value industry to achieve high-quality development.

Innovation of business models will add wings to business development.

Based on Chinas huge domestic market and the relatively mature industrial development forms of international subcontracting， the innovation of business models in the knitting industry will lead the industry enterprises to expand development ideas， seek new profits and market growth space. For instance， expanding the industrial chain to become vertical integrated enterprises， transiting export enterprises to develop domestic sales， independent brand operation and marketing channel construction， marketing mode innovation （such as direct marketing， joining， chain， agent， E-commerce， etc.） and product innovation of the industrial chain cooperation mode will play a vital role in changing the original rigid management system of enterprises， realizing the reconstruction of organizations and processes， creating wider market space and obtaining more commercial value， etc.

There is still a relatively large room for differentiation in the field of intra-industry segmentation.

There is a wide range of knitted products whose categories are very multifarious and disorderly from dressing， domestic use and industry use， and industry segmentation has provided the conditions for differentiated development of the industry and rendered more market space for the industry to strengthen vertical and horizontal innovations. At present， there has emerged in a variety of excellent production and processing enterprises of knitting products in the industry， but there still exists a relatively large room for development in respect of knitting products in the emerging segmented fields （such as one-batch forming vamp， knitted jeans， warp-knitted shirt fabrics， warp-knitted industrial textiles， etc.）， and industry enterprises need to strengthen the tracking and development of new products， while adapting to market changes， do their utmost to lead the development direction of new products.