In the first three quarters of 2023, there is a noticeable decrease in world economic growth and a weak global market demand. Although the domestic market in China shows resilience, industry competition is intensifying, and the operating pressure remains unabated. Based on the data released by the National Bureau of Statistics, the main economic indicators of China’s textile machinery industry maintained a decline in the first three quarters. In addition, textile machinery exports and industrial operations faced significant pressure due to weak demand in overseas markets and the impact of a high base.

I. Economic Operation
Industry revenue continued to be under pressure and profitability declined. According to the National Bureau of Statistics, from January to September 2023, the operating income of textile machinery enterprises above the designated size decreased by 1.12% year-on-year, narrowing by 0.38 percentage points compared with the first half of last year. The operating income growth has always been in the negative range, but the rate of decline narrowed. The total profits of textile machinery enterprises above the designated size declined by 2.18% year-on-year, down by 8.61 percentage points compared with the first half. Operating income margin reached 6.56%, seeing a decrease of 0.13 percentage points over the same period of the previous year. 23.10% of textile machinery enterprises operated in deficit, which grew by 2.76 percentage points year-on-year.

The decrease in costs and expenses of the textile machinery industry exceeded the decrease in revenue. According to the National Bureau of Statistics, in the first three quarters of 2023, the total cost of the textile machinery enterprises above the designated size decreased by 1.29% year-on-year, 0.17 percentage points larger than the decline in operating income. The share of three overheads in the turnover of printing and dyeing enterprises above the designated size was 9.13%, which was 0.39 percentage points lower than the same period in 2022. Selling expenses increased by 2.37% year-on-year, representing 3.68% of the total. Management expenses also rose by 3.52%, accounting for 5.83% of the total. Additionally, financial expenses grew by 52.73%, making up 0.53% of the total.

Accounts receivable and finished goods inventory of the industry decreased. According to the National Bureau of Statistics, the turnover of accounts receivable decreased by 3.03% year-on-year in the first three quarters of 2023, which is 16.48 percentage points lower than the same period of the previous year. The inventory of finished goods of textile machinery enterprises above the designated size decreased by 5.92% year-on-year, which was 8.29 percentage points lower than the same period of the previous year.

II. Foreign Trade

According to the General Administration of Customs, China’s foreign trade of textile machinery totaled US$ 5.63 billion in the first three quarters of 2023, declining by 15.54% year-on-year. Thereinto, the exports of textile machinery totaled US$ 3.38 billion, down 18.67% year-on-year, while the imports stood at US$ 2.25 billion, down 10.36%.

1. Import

From January to September 2023, China imported US$ 2.25 billion worth of textile machinery from 64 countries and regions, down 10.36% year-on-year.

By product category, chemical fiber machinery ranked first, with imports amounting to US$ 871 million, up 32.03% year-on-year, accounting for 38.67% of the total. Besides that, other categories all saw a decline in varying degrees, in which nonwoven machinery dropped the most.

2. Export

In the first three quarters last year, China exported about US$ 3.38 billion worth of textile machinery to 195 countries and regions, seeing a year-on-year decline of 18.67%.

Out of all the product categories, knitting machinery exports have secured the leading position, despite a slight decrease of 14.53% from the previous year, accounting for a notable 25.98% of the total export value at US$ 879 million. All seven categories of textile machinery saw different ranges of decline.

As for the export destinations, in the January-September period of 2023, China’s textile machinery exports to India, Vietnam, Türkiye, Bangladesh and the United States accounted for 53.49% of the total exports, seeing a year-on-year decrease of 19.91%. The countries mentioned above are major destinations for China’s exports. The exports to the countries and regions along the “Belt and Road” Initiative amounted to US$ 2.53 billion, seeing a year-on-year decrease of 19.89%. Thereinto, exports to Northeast Asia, Central and Eastern Europe, and Central Asia have increased.

3. Industry Outlook

Currently, China’s textile industry is facing challenges due to slow external demand and increased international competition. Fortunately, replacing old growth drivers with new ones in China’s textile industry promotes high-quality development and presents potential opportunities. With effective policies and measures in China, strong enterprises, and the country’s large domestic market, the textile industry will receive vital support for high-quality development. Despite the lack of demand in the global market in 2023, the overseas market remains an important growth point for China’s textile machinery industry. Green, recycling, and digitalization are the direction of development of the textile industry. The textile machinery industry, an important support for the textile industry, should seize the opportunity, and boost the industry to a higher level of development.

III. Sub-industry performance

1. Spinning machinery

The statistical data showed that the overall operation of spinning machinery is stable. The domestic sales of ring-spinning frames grew by 32.4% year-on-year in the first three quarters of 2023. New projects and technological transformation projects in Xinjiang and other regions have driven the demand for various types of ring-spinning frames. The domestic sales of rotor-spinning frames and air-jet vortex spinning machines began to fall back last year following a record high in 2022, but they are still higher than that of the same period in the past except for 2022. This indicates that the market demand for short-process equipment is still hot.

As for their exports, ring-spinning frames and rotor-spinning frames all saw a significant drop, plummeting by 62.2% and 41.8% year-on-year, respectively. This indicates that the demand from the main export destinations of China’s spinning equipment, such as Southeast Asia, fell significantly.

Since the beginning of 2023, the economy has continued to decline due to global high inflation and geopolitical risks. The international market demand has been insufficient, and exports remained in a weak situation. Although China has introduced several stabilizing economic policies, the overall improvement effect has not fully appeared yet. Enterprises are receiving fewer new orders, and downward pressure will exist continually.

2. Weaving Machinery

In the third quarter of 2023, the production and sales of weaving machinery steadily improved. The performance of foreign trade and exports exceeded expectations. Firstly, the demand for weaving machinery gradually recovered due to changing fashion trends and fabric styles. Secondly, industrial clusters in Xinjiang Uighur Autonomous Region, Henan Province, Anhui Province, etc., have developed, supporting the sales of weaving machinery. Thirdly, Indian and Bangladeshi markets remained the major destinations of China’s weaving machinery exports; meanwhile, demand from Russia, Uzbekistan, Pakistan, Türkiye, and other emerging markets is increasing. However, due to homogeneous competition, complicated payment methods, and other factors, the enterprise’s operating profits are being squeezed. As for the downstream market, apparel, home textile, technical textile and other industries were under pressure in the first three quarters of 2023, but they performed better than that of the first half.

Looking forward to the future, affected by insufficient demand and complex changes in the global supply chain pattern, enterprises can focus on Russia, Central Asia, Africa and other emerging markets. Coupled with the transfer of the Chinese domestic textile clusters, Xinjiang Uighur Autonomous Region, Hebei Province, Shandong Province, Anhui Province, and Hubei Province may present new opportunities.

3. Knitting Machinery

In the first three quarters of 2023, the circular weft machine industry remained stable, the flatbed machine industry rebounded, and the warp knitting machine industry showed a slight increase in operation, demonstrating different performance trends.

The circular weft machine industry maintained stable operations in the first three quarters of 2023. In the first quarter, the market remained stable. In the second quarter, the versatile use of fine-gauge knitted fabrics increased the demand for fine-gauge circular weft machines, which led to a significant boost in sales. In international markets, the exports of circular weft machines decreased significantly because of reduced demand from abroad and downward fluctuations. And the conventional key export markets such as India, and Indonesia saw a year-on-year increase in their exports, while that of Vietnam, Türkiye, and Bangladesh have declined. By far, circular weft machine enterprises forge ahead to innovative development for niche areas.

The market of flatbed machines began to recover in 2023. The operation in the first three quarters of last year gradually rebounded. On one hand, the demand for flatbed machines in the downstream market has gradually recovered. Additionally, a portion of the existing computerized flatbed machines has entered the replacement cycle, particularly the more cost-effective double-system computerized flatbed machines, which has led to a rapid growth in flatbed machine sales. Driven by the promotion of fully-fashioned computerized flatbed machines, relevant technologies gradually improved. Domestic computerized flatbed knitting machines have been sold in batches. Due to global economic instability, exports to overseas markets decreased significantly. Specifically, Bangladesh, the main destination for flatbed machine exports, experienced a substantial year-on-year decline.

Each segment in the warp-knitting machine industry performs differently. Benefiting from the market cycle, the demand for velvet home textiles and vamps boosts the sales of double needle bar warp-knitted machines. The operation of the high-speed warp knitting machine is driven by the development of warp-knitted elastic fabric. The strong market performance of high-speed Tricot machines with 2 guide bars continued, but the demand for high-speed Tricot machines with multiple guide bars continued to decrease. Affected by the sluggish demand, production and sales of lace machines have declined. The multi-axial warp knitting machine did not achieve a significant breakthrough due to the poor performance of wind energy materials, infrastructure projects, and other related markets.

4. Printing, dyeing and finishing machinery

Confronted with escalating global geopolitical tensions and a progressively intricate and severe external trade climate, the Chinese textile industry has faced significant trade strain in the first three quarters of 2023. Due to sluggish consumer demand in both local and global markets, most goods in China’s dyeing and finishing machinery sector have witnessed a decrease in sales. During the peak sales season of autumn and winter, the third quarter performance in 2023 showed a slight increase compared to the previous quarter. Compared to 2022, the situation was still not optimistic. China’s dyeing and finishing machinery imports and exports have seen a decline in the first three quarters of 2023, as a result of increased pressure from the international market.

5. Chemical fiber machinery

As evidenced by the statistics, the chemical fiber machinery industry enterprises have experienced heightened production and operational pressures in the first three quarters of 2023. Compared with the same period last year, the polyester filament market saw a relatively large decline. Amid a complex international situation and increased financial pressure, the market once again experienced slow development. The current increase in filament capacity is due to newly signed contracts in 2023. A large proportion of the equipment comes from foreign leading enterprises, while the contracts for domestic machinery represent a small portion. These are all typical expansions for the existing industrial chain. On one hand, small enterprises are reducing production, while on the other hand, there is a decrease in market demand from downstream chemical fiber, leading to a state of losses.

Compared with the same period of 2022, there is a significant downward trend in the sales of false twisting machines. Enterprise production and supply are extremely challenging, as the low rate of enterprise startup can lead to delays in goods delivery and a reduction in original orders.

6. Nonwoven Machinery

In the current economic downturn, the production lines for spunmelt and spunlace nonwovens, closely tied to the manufacturing of pandemic prevention materials, are experiencing significant market challenges. The market needs time to absorb the release of large quantities of production capacity. Fluctuations in the real estate market have reduced the demand for geotechnical and waterproof materials, worsening the situation for the relevant equipment enterprises. Many businesses are actively responding to address the current economic challenges that have not been seen for many years. To adapt to international circular economy norms, enterprises are concentrating on technological innovation and product improvement, aiming to achieve the integration and development of intelligent manufacturing. Creating unique technology and distinct products to meet the demand for high-quality and varied products has become a popular option for businesses. In addition, enterprises are likely to establish a more robust business model to better cope with the uncertainty of the external environment. The industry will likely undergo a new round of reshuffling and restructuring in the future through innovation and diversification strategies to achieve sustainable business development and open up new market opportunities.

Source: CHINA TEXTILE LEADER Express