According to the latest data published by China Sewing Machinery Association (CSMA), the sewing machinery sector in China has gained strong momentum of recovery, with a 34.4% growth rate of industrial added value in the first half of 2021, which is far higher than the 15.9% average rate of above-designated-size enterprises nationwide during the same period; and the whole sector becomes better and better evidenced by robust export and continuously improved profitability.
So, what are the new development trends and changes in sewing markets at home and abroad in the first half of this year? Let's have a look at the leading companies' marketing veterans' judgment on the situation.
Overall strong growth
Based on the analysis by National Bureau of Statistics and CSMA, Yang Xiaojing, Deputy General-director of CSMA has noted that judging from the manufacturing situations the production capacity of enterprises has almost resumed to its peak in 2018 gradually since it starts to recover from Q3 last year; currently, enterprises' production grows at a high rate in that they still have a relatively low stocks to replenish. But, as domestic and overseas demands drop, enterprises have began to slow down their manufacturing accordingly, evidenced by less over-time work, and less expediting orders. As estimated, the production will decline sharply in late Q3, then the struggle of excess capacity will surface.
Qiu Yangyou, Deputy General Manager of Jack, believes that the year of 2021 is one characterized with high growth of sewing machinery sector, and also the starting point of recovery growth. After years of periodical adjustment, the sector has enjoyed smooth development ever since Q4 last year, and its production capacity has technically resumed and reached to the highest level in the past two years. Generally speaking, more business opportunities may emerge during the pandemic; the production and sales summit will sustain hopefully, and the sector will probably continue its growth into the following year.
Domestic: continuous improvement of production capacity
Domestic sales keep growing at a high rate in the first half, then slacken off in May; at present, it shows palpable decline because of market saturation. In the second half of this year, domestic sales will see more slowdown, even slump. The underlying reasons include the down-stream users having replenished their inventory, the lingering adversary impact of the pandemic, the sluggish recovery of down-stream investment and their indecisive mentality, complete with the lack of a solid foundation for high growth. It's expected that in the end of this year or earlier next year, domestic sales will rebound after fall to the bottom as global economies reopen and domestic demand recovers over time, then it will embrace another stint of vigorous development, of which the extent is less than that in the first half though.
In 2021, the production and sales of companies in sewing machine, parts and trading have multiplied. As many enterprises of sewing machine and parts invest more into equipment, premises, and recruitment, their production capacity has been further strengthened, and will reach to summit in October as estimated. Taking Jack for example, it has built another industrial cluster as planned since Q4 last year, which occupies an area of 280 mu (about 18.7 hectares), employs nearly 2,000 persons, and yields 70,000 sets monthly. At present, Jack is capable of producing 300,000 sets of industrial sewing machines every month. In the meanwhile, it has kept investing heavily in research and development, for the purpose of reinforcing technology and product innovation; recently, it has built up a R&D team of 200 people to focus on the R&D of hardware and software specific to sewing machine, cutting bed and hanging system, which will hopefully facilitate the rise of Chinese apparel and national sewing machine brands.
Overseas: growth slowed down by a new outburst of pandemic
Since the reopening of European and North American economies in Q3 last year, the export of sewing sector has gradually regained lost grounds, and grown at a favorable rate in the first half of 2021. Although it substantially resumes to its highest level, the export growth has began to slow down and drop as the domestic sales do. It's expected that the slowdown will continue to early Q4 due to higher exchange rate, higher freight cost, another outbreak of pandemic, and the fact that the stock consumed by the pandemic has been replenished.
Zhu Miaohai, Overseas Marketing Director of Zoje, reckons that a post-pandemic world would only be possible until the second half of next year, considering that a number of countries and regions including Vietnam, Japan, Indonesia, India, Brazil are still under lockdown, and their lockdown can only be lifted after the rollout of inoculations. If the pandemic can be brought under control in the second half of this year, western economies will be out of the valley first and increase their demands, and the revitalization of ASEAN economies will speed up next year; after a lull, overseas market will embrace a new round of growth, with potentials noticeably greater than domestic market.
Rumor has it that the garment industry will relinquish China phase by phase. Chen Xinhua, President of Changzhou XT, has said that he has faith in China's garment industry and sewing machine sector. He explained that global sewing market has experienced structural changes in the mid and late stage of the pandemic as numerous orders flow back to China from countries like Bangladesh (pants), Vietnam (shirts), Indonesia. IMB, affiliated to XT, selling its products in more than 30 countries, has continued to provide services for its clients and launch new products through subsidiaries or local agents during the pandemic, and has been running its business reliably, though the overall sales drop slightly due to impacts of the pandemic.
It's worthy of noting that in places where the harder the pandemic hits, the higher the sewing machinery sales grow, according to Qiu Yangyou. No matter what troubles the pandemic makes, rigid demands of huge proportions still exist in each country. Since the very beginning of the pandemic, exported-oriented manufacturers have shifted their attention back to domestic market, but will likely to overseas again next year.
Recently, many provinces have tightened their pandemic control measures after the Delta variant scatters in China, which will probably impact consumption, logistics and manufacturing. All in all, the sewing machinery sector in China develops positively though the growth has slowed down and has been faced with periodical drop at home and abroad; the domestic market will probably maintain a stable growth while overseas ones grow at a moderate rate; even though the sector will not encounter significant decline, enterprises are expected to adjust and control their production capacities, lower their expectations, and take a modest development strategy.
(To be continued)