By Zhou Yan, Qi Changdong & Xu Zhaoyuan, Research Team on “The Transformation and Development of China's Textile Enterprises ", Enterprise Research Institute of DRC

Research Report No 228, 2012 (Total 4230)

In recent years, the output value and the profit growth of China's textile industry have been decreasing on a yearly basis. In 2008, textile exports and profits saw negative growth for the first time in ten years' time, and the investment scale dwindled rapidly. In 2011, the growth of the textile output value, profits and investments slowed down in an all-around way, and the export growth even got close to zero. With the constant increase in costs spent on manpower, financing, raw materials and energy sources and, affected by such factors as RMB appreciation and the international trade barriers, the international competitiveness of China's textile industry diminishes gradually. In face of the fierce market competition, only by expediting the readjustment of the industrial structure, the market structure and the commodity structure and by enhancing their own abilities in technological innovation, scientific and technological research and development and in operation and management can textile enterprises bring about their survival and development through transformation.

During May~June 2012, a survey was made on the transformation and development of 300 enterprises in 10 provinces, regions and municipalities such as Guangdong, Hubei, Liaoning and Sichuan. Field survey was made among more than 80 textile enterprises, and nearly 2000 questionnaires were given out. 81 valid questionnaires¹ were fed back from textile enterprises. Preliminary analysis of the survey results show that, in terms of financing environment, manpower environment, enterprise sales and profits, enterprises by questionnaire-based survey were all better than enterprises interviewed on the spot, which suggest that questionnaire-related enterprises performed well on the whole.

I. Overall Conditions of the Surveyed Textile Enterprises and Preliminary Analysis

1. Enterprise property

Among the surveyed enterprises, 12 were state-owned, 6 were collectively-owned, 49 were privately-owned and 5 were Hong Kong, Macao and Taiwan-funded enterprises. 35 of the interviewed enterprises were listed, accounting for 43.2% of all interviewed enterprises.

Table 1 Ownership of Interviewed Enterprises

	State Holdings	Collectively-Owned	Private Holdings	Hong Kong, Macao and  Taiwan Holdings	Foreign Holdings	Total
Number	12	6	49	5	-	72
Proportion	16.7	8.3	68.1	6.9	-	100

2. Enterprise size and sales revenue

Of the interviewed enterprises, 31 were large enterprises, 36 were medium-sized, 12 were small-sized and 2 were micro-sized. In 2011, the maximum total assets of a company reached 60 billion yuan, while the minimum came to 2 million yuan. The number of enterprises with their assets reaching 5 billion or above made up 12.2%; the maximum sales revenue of one of those enterprises reached 52 billion yuan, while the minimum came to 2 million yuan, and the number of enterprises with their revenue reaching 5 billion yuan or above made up 13.2%. On the whole, textile enterprises in China are mostly not large in scale, and the sales revenue is directly related to the size of the enterprises.

Table 2 Asset Size of the Interviewed Enterprises (2011)

Asset Size (100 million yuan)	＜1	1～10	10～50	50～100	100～500	＞500	Total
Number of Enterprises	18	31	16	3	5	1	74
Proportion	24.30	41.90	21.60	4.10	6.70	1.40	100
Average Assets (100 million yuan)	0.49	3.48	17.23	87.77	216.82	600	-

Table 3 Sales Revenue of the Interviewed Enterprises (2011)

Sales Revenue (100 million yuan)	＜1	1～10	10～50	50～100	100～500	＞500	Total
Number of Enterprises	15	33	18	1	8	1	76
Proportion	19.70	43.50	23.70	1.30	10.50	1.30	100
Average Revenue (100 million yuan)	0.42	4.62	21.67	60	272.79	530	-

3. Distribution of sales market

Survey results on markets sales of the products during 2007~2011 show that the overwhelming majority of the products manufactured by the interviewed enterprises were sold domestically, accounting for an average of 77.03% of the sales total of those enterprises, and the domestic sales of 13 enterprises even accounted for more than 90%, with their domestic sales making up 41.91% (31 respondents) of the sales by the interviewed enterprises, showing a tendency of increasing on a yearly basis.

Products of 2 enterprises were exported to more than 30 countries and regions, and the 2 enterprises were located in the provinces of Guangdong and Zhejiang where textile industry was better developed. The 2 enterprises were all private holding companies in operation for more than 15 years. One of them was listed.

Table 4 Enterprises Whose Products Were Exported to More than 30 Countries (Regions) (2011) (Unit: 100 million yuan)

Year of Establishment	Location	Enterprise Property	Enterprise Size	Listed or Not	Total Assets	Total Revenue	Number of Export Destination Countries
							2007	2009	2011
1979	Ningbo, Zhejiang	Private Holding	Large-Sized	Yes	600	360	56	43	32
1996	Guangzhou, Guangdong	Private Holding	Medium-Sized	No	6	6	40	40	40

The overwhelming majority of the products manufactured by the interviewed enterprises were exported to less than 10 countries and regions, and the average number of countries came to 3.8; products of only one enterprise were exported to more than 50 countries and regions in 2007, and none of the enterprises exported their products to more than 50 countries in 2009 and 2011.

　　 Table 5 Number of the Main Export Destination Countries (Regions) During 2007~2011

Number of Sales Networks	<10		10～30		30～50		＞50		Total
Year	Number of Enterprises		Number of Enterprises		Number of Enterprises		Number of Enterprises		Number of Enterprises	Percentage (%)
	Number	Proportion（%）	Number	Proportion（%）	Number	Proportion（%）	Number	Proportion（%）
2007	19	82.61	2	8.69	1	4.35	1	4.35	23	100
2009	18	78.26	3	13.04	2	8.69	0	0	23	100
2011	19	82.61	2	8.69	2	8.69	0	0	23	100

4. Sales revenue growth in recent three years

In recent three years, of the interviewed enterprises, 25 saw their sales revenue growing rapidly (by over 10%), 38 saw their growing steadily (by 5%~10%), 13 saw their growing slowly (by 0~5%) and 5 saw theirs decreasing.

Of the 25 enterprises with their sales revenue growing by more than 10%, only 1 is listed and 4 are state-owned, accounting for 2.86% and 33.33% respectively of the questionnaired enterprises. The number of research personnel of the 25 enterprises reached an average percentage of 9.76% of their total employees during 2007~2011, being higher than 8.6%, the average percentage of research personnel of all questionnaired enterprises. Among the 25 enterprises, 9 saw technical levels of their manufacturing equipment living up to international advanced levels and 13 saw theirs reaching the advanced domestic levels, suggesting that equipment technologies are of vital importance to product quality and competitive power, which has a direct bearing on business performance.

5. Human resources environment

Data from China National Textile and Apparel Council show that in 2011 82.2% of the textile enterprises in China were short of workers in varying degrees and, in the first half of 2012, this percentage dropped to 57.8%, still remaining at a higher level. In terms of the present labor shortage, 17 of the 81 surveyed textile enterprises thought they had sufficient human resources, yet most of the enterprises said that it was quite difficult for them to recruit general and technical workers and those new recruits were less capable and were hard to retain.

Only 9 of the enterprises saying that they had sufficient human resources were large enterprises, making up 29.03% of all surveyed large enterprises and, 3 of the 9 enterprises also mentioned they had difficulty recruiting skilled workers and that the new recruits were less capable, suggesting that problems like labor shortage and inability to retain personnel exist at large and the problems are not much affected by enterprise size but directly related to the management levels. In addition, 6 of the 17 enterprises that held that they had sufficient human resources saw their sales revenue increasing by more than 10% in recent 3 years and 10 saw theirs up by 5%~10%, making up 94.1%, suggesting that enterprises with good business performance are less bogged down in serious labor shortage and are in a better position to attract and keep excellent personnel.

Among the enterprises with frequent personnel mobility, 19 were medium-sized and small and micro-sized enterprises, making up 76%, suggesting that large enterprises are more attractive to talented people.

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^{1 Of the 81 enterprises, 1 was textile machinery enterprise, 1 was textile trade enterprise and the rest were textile production enterprises.}