China's flax industry relies excessively on the international market

The rise in the price of raw materials will directly increase the production cost of enterprises, but the rise in the price of finished products is difficult to synchronize, often lagging behind and lower than the speed and extent of the rise in raw materials. " It is understood that China's flax trading market was jointly established by China Hemp Textile Industry Association, China National Chemical Fiber Corporation, Jinda Holding Co., Ltd., Zhejiang Axiang Group, etc.

The rise in the price of raw materials will directly increase the production cost of enterprises, but the rise in the price of finished products is difficult to synchronize, often lagging behind and lower than the speed and extent of the rise in raw materials. In recent years, the huge fluctuation of raw material prices caused by the capital reaching into the field of raw materials has made enterprises panicked and even at a loss

Since this year, China's linen industry has been under the pressure of raw material fluctuations, rising exchange rates, inflation, interest rate hikes and other factors, which has put more than 90% of the textile industry, which is small and medium-sized enterprises, to the test. On July 22, China's flax trading market, in cooperation with the Industrial and Commercial Bank of China, will launch online commodity trading market financing business nationwide. "Due to the preference of banks for the mortgage of fixed assets of SMEs, they are generally unwilling to accept the mortgage of current assets of SMEs. Some banks even regard the textile industry as a sunset industry." Yao Jianchun, general manager of China's flax trading market, told the International Financial News that the current financing environment is tight, and the way of warehouse receipt pledge can transform the backlog of inventory into working capital to ease the financing difficulties of small and medium-sized textile enterprises.

"Two ends out" pattern

In fact, the difficulty in financing is only one of the problems to be solved in China's flax industry. In recent years, the domestic flax planting area continues to shrink, and the situation of highly relying on imported flax raw materials has buried hidden dangers for the development of the flax industry.

According to customs statistics, in 2010, China imported 142200 tons of flax raw materials, a year-on-year increase of 33.68%; The import amount was 235 million US dollars, with a year-on-year growth of 50.36%. At the same time, the export of flax yarn was 23200 tons, with a year-on-year growth of 61.25%; The export of flax fabric was 161 million meters, with a year-on-year growth of 34.99%; The export of hemp clothing and apparel (including more than 30% hemp) was about 1.643 billion pieces, up 9.67% year on year; The export unit price was 5.82 USD/piece, a year-on-year increase of 2.87%.

"Compared with cotton spinning and chemical fiber industry, China's linen spinning industry is a small industry, but it is a typical industry with two ends outside (raw materials outside and markets outside)." Yao Jianchun said that China is a large country in flax production and export as well as in flax raw material import. More than 85% of the world's flax raw materials are consumed by Chinese enterprises, while about 90% of flax yarns and fabrics are exported.

Hu Tingting, the general manager of Zhejiang Mingrui Linen Textile Co., Ltd., which is mainly engaged in yarn, pointed out that Normandy, France, is the first producing area of flax in the world, while the industrialization of domestic flax planting is not high. Although Xinjiang and Heilongjiang also produce flax, the quantity is relatively small. "At the same time, the gap between the retting process at home and abroad has led more foreign traders to designate French flax."

Seeking "pricing power"

"The rise in the price of raw materials will directly increase the production cost of enterprises, but the rise in the price of finished products is difficult to synchronize, often lagging behind and lower than the speed and extent of the rise in raw materials." Liu Yaping, vice president of China Hemp Textile Industry Association, told the media that in recent years, the huge fluctuations in raw material prices caused by the capital reaching out to the raw material field have made enterprises feel panic and even at a loss.

"It is also the purpose of establishing China's flax trading market to resist capital 'price raising'." Yao Jianchun pointed out that the Chinese flax trading market and the French Hemp Textile Association agreed to control the annual increase of the price of flax raw materials at 10% to 20% based on continued orders, inflation and other reasons. "In fact, any sharp rise or fall is unfavorable to the sustainable development of the whole flax industry. In order to maintain the healthy development of the market, we must resolutely resist the malicious speculation of flax raw materials."

It is understood that China's flax trading market was jointly established by China Hemp Textile Industry Association, China National Chemical Fiber Corporation, Jinda Holding Co., Ltd., Zhejiang Axiang Group, etc. In this regard, Wang Qianjin, an expert in China's textile industry, said in an interview with reporters that "the establishment of China's flax trading center will promote the flax industry to move in a good direction, which will make trading more convenient and transparent, so as to continuously strengthen industrial concentration and form a pricing mechanism."

Strengthen terminal development

According to the "Twelfth Five Year Plan" for the Development of Hemp Textile Industry, at the end of the "Twelfth Five Year Plan", the proportion of domestic market and export market of hemp textile will reach 1:1. During the "Twelfth Five Year Plan" period, the use of hemp textile fiber increased by 8% annually. It is expected to reach 1.25 million tons (including other hemp fibers) in 2015 and 2 million tons in 2020.

There is a long way to go to achieve this goal. In the opinion of analysts, the domestic flax product market is not mature, and the low awareness of consumers on flax products is one of the factors that restrict the development of the domestic flax industry. "The domestic flax market is still relatively small, but as a traditional textile material, flax is a fiber with excellent performance, and it will have a better development prospect in the future." Wang Qianjin believes that the key to sustainable development of the hemp textile industry lies in product development, and the development of high value-added end products should be targeted at the market.