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| Issue date:26/05/2010 |
| ATA Journal for Asia on Textile & Apparel - May 2010 Issue |
| Source:Journal for Asia on Textile & Apparel |
| by Amy Xiao |
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| Huangjing (璜涇) town is famous for its robust development of the DTY (drawn texture yarn) industry. The town was honoured as the "Chinese town of DTY" in 2004 by the China National Textile and Apparel Council (CNTAC) |
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| DTY production facility in Huangjing (Source: Shenjiu Chemical Fiber) |
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Huangjing town , located in Taicang (太倉) city of Jiangsu (江蘇) province, has currently 1,135 chemical fiber DTY producers, which operate more than 1,700 units of imported and China-made textile machinery machines, including more than 530 units of high-speed equipment, according to the local government statistics. Remarkably, the tow of Huangjing only accounts for 20% of the country's total DTY output.
This town is also home of 11 RMB100-million-or-above enterprises, and half of them engage in the DTY production. Some well-known enterprises include Jinkai (錦凱), Changle (長樂), Yahua (雅華) and Xinyi (信逸). Moreover, a number of yarn filaments and specialty filaments producers are also based in the town, such as Shenjiu (申久), Tongkun (桐昆) and Rongwen (榮文). 
Number of texturing machines in Huangjing (Source: Huangjing government |
After years of development, the town has established a complete supply chain of DTY, ranging from preparatory spinneret, texturing, weaving, printing, dyeing to apparel making. In recent years, these enterprises have intensified their efforts in the areas of marketing, product development, brand building and market research.
Industry built by farmer-turned-businessmen
The economy of Huangjng town has been a miracle mainly created by farmer-turned entrepreneurs. Local private enterprises have a total capital exceeding RMB 3 billion and half of these enterprises are owned by rural people.
To understand the strong private investment in this small town, one has to consider its geographical location. Situated between Suzhou city and Shanghai city, Huangjng is benefited by rapid growth of textile business in Shanghai, raw material supply of Zhejiang (浙江) province and apparel making activities in Changshu (常熟) city.
Against this backdrop, numerous farmers ceased the agricultural activity and started their own modern manufacturing businesses. With an area of 80 square kilometers, Huangjng town houses more than 200 sizable enterprises (with an annual operating revenue of at least RMB5 million). On average, there is an owner or shareholder of private business in every four rural households of the town. Half of 50,000 permanent residents in the town are directly employed or indirectly involved in the local DTY manufacturing sector. The annual per capita income of local rural working population is about RMB 14,000 and the per capita GDP is US$12,000.
"DTY manufacturing in Huangjing is mostly supported by private capital, with 90% of investors coming from local rural population. Once as farmers, they however had turned to entrepreneurs or shareholders and built up the local economy. Following years of development, smaller businesses without updated technology have exited the market and those remaining are aware of modernizing themselves to survive," said Zhou Jianhui, a senior government official bearing the title of the CPC Committee Secretary of the Huangjing town.
One example is Suzhou Changle Chemical Fiber (長樂化纖). General Manager Qu Zhenqing and other two partners raised a capital of RMB 42,000 in 1991 to establish their company with two units of used equipment and achieved a daily capacity of one tone DTY. Each of these new bosses earned about RMB 150,000 after one and a half years. Starting 1993, they worked to replace obsolete equipment with new machines.
DTY production facility in Huangjing
(Source: Shenjiu Chemical Fiber) |
Their good market sense helped them earn more and they eventually bought the first high-speed machine in 1997. By a decade later (2007), Suzhou Changle has been equipped with 15 units of high-speed machines and become a large enterprise in the town.
Mr Qu is confident with the future of Huangjing chemical fiber industry. He believed that the local chemical fiber enterprises have established a dense and strong industrial cluster that features a high output, low cost production, as well as a low debt ratio, a high level of stability and good risk resistance. What's more, Huangjing is a leading area in the field as the industry possesses internationally advanced textile machinery from e.g. Germany, Japan, Italy and Switzerland.
The Huangjing chemical fiber industry is also known for product diversity. An extensive portfolio of DTY is available in the town from 30D to 300D, including hundreds of differentiated chemical fiber products.
Additionally, capital funding is often a concern for private investors. Local entrepreneurs of Huangjing set up five cooperative credit companies, which have been joined by 120 local private enterprises. The cooperative credit companies provided RMB 1 billion guarantee loan for private enterprises in the town last year, easing their financial needs.
Downsteam expansion
According to the official data, the chemical fiber industry in Huangjing is heading to optimization.
Firstly, a considerable scale of partial oriented yarn (POY) is produced in the town.
Jinkai Textile (錦凱紡織), one of the first private companies set up in Huangjing, has transformed itself from a producer of DTY to a chemical fiber maker with commencement of a second-phase plant and a new chip spinning line last November. The company planned to increase the annual chip spinning capacity by 10,000 tons and the annual output value by RMB 100 million. In addition, Jinkai has 32 texturing machines. The company further planned to implement the third-phase project to achieve an annual chip spinning capacity of 10,000 tons, as well as to purchase another 20 high-speed spinning machines. In this way, Jinkai Textile aims to establish a vertical production of chemical fiber products.
Textile entrepreneurs in Huangjing have also extended downstream to weaving and apparel making. For instance, Xinyi Chemical Fiber (信逸化纖) was started as a DTY maker and sold its yarns to warp knitting enterprises. However, rising production costs in labour, raw materials and transportation eroded its profits, prompting Xinyi to engage in the highly technical field of warp knitting. This proved to be a right direction for sustained development of Xinyi, as it is now able to produce and market more value-added, warp-knitted products at lower labour and environmental costs.
Further, Yalu Group (雅鹿) is one of the well-established enterprises in the Huangjing apparel making sector. The company specialises in the manufacture of down apparel and winter clothing and produces over 20 million pieces of apparel per annum. It registered a total sales value of RMB 3.5 billion and a total export of US$20 million. Notably, the company acquired an Italian design brand last April and planned to enter the Chinese premium consumer market with 100 stores in the next five years.
Improving profitability with innovative products
When talking about the impact of the global economic downturn in 2009, few enterprises in the town could say they felt nothing about it, but many of them had gone through technological advancement enabling them to stay in the market.
General Manager Wei Zhihong (魏志紅) of Shenjiu Chemical Fiber (申久化纖), for example, said: "The impact of financial crisis on Shenjiu has been limited, because we had completed product upgrade before the crisis took place. We earned about RMB 500 more per ton of yarns by offering better products manufactured on upgraded production lines. We have also developed an assortment of innovative products with such added features as moisture absorbency and release.
Subsequently, sailing to the "blue ocean" where competition is less fierce helps manufacturers improve the bottom line. Mr Wei further explained that the company spent substantially on new and profitable product development.
"We've planned to complete the third-phase project this year, which will be in operation next year. By then, our production capacity of differentiated chemical fiber products will reach 300,000 tons. We will thus begin a low-cost production of high-end products to maximize our competitive power," he concluded.
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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