In the first quarter of 2020, various factors such as the sudden outbreak of COVID-19 in China, the prolongation of the Spring Festival holiday, and the spread of pandemic around the globe, took a heavy toll on China's printing and dyeing industry. The main economic indicators all plummeted, and the industry is facing greater pressure.

01 The Output of Printed and Dyed Fabric

In the first quarter of 2020, printing and dyeing enterprises above designated size produced about 9.4 billion meters of printed and dyed fabric, seeing year-on-year decrease of 15.15%.

In February, China's epidemic prevention and control situation faced severe challenges, and transportation and logistics were blocked. There are several difficulties to the recovery of China's printing and dyeing industry. In March, as the economy picks up, opportunities will abound for production resumption. And the output decline in March has narrowed by 7.27 percentage points than that of the first two months. By the end of the first quarter, although the recovery rate of China's printing and dyeing industry had reached a high level, the overall level of capacity utilization was low.

02 Main Quality and Efficiency Indicators

In the first quarter, the overall operation of the printing and dyeing industry was in a difficult state, and the main quality and efficiency indicators showed a year-on-year downward trend. The share of three overheads in turnover of printing and dyeing enterprises above designated size was 7.95%, 0.65 percentage point higher than the same period of 2019. Its ratio of profits to cost was 2.60%, 0.92 percentage point lower than in 2019; sales profit margin was 2.50%, down 0.85 percentage point; the turnover rate of finished products was 3.58 times / year, plunged by 38.13% year-on-year; the turnover of account receivable was 1.81 times / year, seeing year-on-year decrease of 25.25%; and the total asset turnover was 0.19 times / year, down 25.25% year-on-year. The main business income of the printing and dyeing enterprises above designated size reached CNY 48.53 billion, down 23.64% year-on-year; their main business cost was over CNY 42.88 billion, decreased by 23.35% compared with the same period the previous year, accounting for 88.37% of main business income; and their total profits reached over CNY 1.21 billion, plunged by 43.08% year-on-year.

However, compared with the data from January to February, as the domestic epidemic prevention and control situation has continued to improve since March, the government's support policies for the industry have continued to achieve practical results, and the prosperity index of China's printing and dyeing industry has rebounded. Meanwhile, the decline in the main business income and total profits of the enterprises above the designated size has narrowed by 6.24 and 58.72 percentage points than the first two months of 2020.

03 Import and Export of the Eight Major Categories of Printing and Dyeing

After the Spring Festival, affected by the domestic epidemic situation, it is difficult for enterprises to resume production, which has a certain impact on foreign trade orders. In mid-to-late March, the global pandemic spread rapidly, and the overseas prevention and became increasingly severe, which caused an adverse impact on foreign trade demand of China's textile and apparel. Printing and dyeing foreign trade enterprises are faced with a new round of difficulties and problems such as difficulty in fulfilling contracts, poor international logistics, and no new orders. The foreign trade situation is even more severe.

According to customs statistics, the import and export of the eight categories of printing and dyeing products in the first quarter of 2020 totaled over US$ 5.39 billion, seeing a year-on-year decrease of 17.79%; the trade surplus reached US$ 4.81 billion, down 17.08% year-on-year. The import volume of the eight major printing and dyeing products was 138 million meters, declined by 33.97% year-on-year; the import value was US$ 290 million, down 23.24% year-on-year. While the export volume of the eight categories of printing and dyeing products was 5.08 billion meters, seeing a year-on-year decrease of 14.76%; the export value was over US$ 5.1 billion, decreased by 17.46% year-on-year.

By market, in the first quarter, the export value of the eight categories of printing and dyeing products to ASEAN fell by 13.19%, and the export value to countries along the "Belt and Road" region decreased by 12.88%, which was better than the overall export growth rate of 4.27 and 4.58 percentage points, respectively. And the export value to traditional markets such as the United States, the European Union, and Japan decreased by 29.72%, 25.39%, and 20.28%, respectively.

In terms of month-on-month growth, with the gradual advancement of domestic resumption of production, foreign trade companies have accelerated the production of pre-holiday orders, rushed to fulfill the contract. However, there is a lag effect on the impact of the overseas pandemic. The decline of the export value in March narrowed down 0.62 percentage points.

As the global pandemic spreads and continues to escalate in the next 2 months, international orders are largely canceled or delayed, and international logistics costs increase substantially. The good momentum for growth at the end of the first quarter is difficult to maintain. In April and May, affected by insufficient global demand and poor economic circulation, the industry operations are expected to be in a sea of red ink.