Analysis of excess capacity in the textile industry

Machinery, electronics, and chemical industries have been recovering hard from the second half of 2012 to the present, and textiles are still hovering. Why is the recovery of the textile industry weak? Some experts believe that the overcapacity of backward production capacity has dragged the recovery of the textile industry. In fact, overcapacity is not a bad thing in itself. A modest surplus can encourage companies to fully compete. However, if an industry's capacity exceeds 30% of market demand, it is worthy of industry alert.

In a market economy, overcapacity is inevitable. In the market, price is a signal, and the “invisible hand” greets all enterprises waiting for action to compete and supply, from supply shortage to oversupply, resulting in excess capacity. With overcapacity, companies are either eliminated under pressure or reborn in service and innovation. But in many cases, the government department in which the company is located will come to the rescue and will leave behind the production capacity.

In China, the phenomenon of excess production capacity is not a product of the market economy, but a companion product of the government-driven investment model. The overcapacity in many industries is due to the government's excessive involvement in microeconomic activities from the very beginning. For example, a large group engaged in textiles in China, in the late stage of the last century, under the guidance of the government, acquired a large number of companies that were in bankruptcy. These enterprises did not have a modern management model and lacked competitiveness. Finally, they had to close their doors.

Encouraging enterprises to expand their own capabilities beyond their capabilities not only distorts the role of the market economy, but also artificially increases the company's risk costs and disrupts the normal market order. On the one hand, local governments give money to the land to give policy, and all sorts of secret supplements make up for the sudden expansion of the company's bigger and stronger heart; on the other hand, excessive government intervention has caused corporate investors and creditors to over-confide in the government. The bottom of the pocket.

In a certain place in Shandong, local governments out of financial and taxation considerations and employment considerations, supported local cotton textile companies in terms of finance and land, and vigorously expanded cotton spinning production capacity. As a result, overcapacity accumulated gradually. Today, the company is closed. With 40% of production capacity, this cannot but be said to be the result of local government's manipulation of the market.

It is also necessary to tie bells to solve the bells, and it is also the way to solve the overcapacity in the textile industry. First of all, the competent authorities must manage their own hands and invest in them. Otherwise, excess capacity in the textile, cotton, chemical fiber, machinery, etc. industries will only be left over. At the same time, investors don't feel too good about themselves, and they must lead the industry at every turn. The result is suddenly swarming and falling apart. Soy protein fiber is one of the best examples.

The textile industry is not leading, nor is it planned. The ups and downs of soy protein fiber illustrate the essence of the problem. In fact, both the industry management department and the textile industry organization are shouldering more important tasks. They are committed to the improvement of the market environment, and will guide the development of the industry by improving the layout of plans and standard setting standards, so as to make the environmental costs explicit. Only under the endogenous driving force of the market, mergers and reorganizations can be carried out, and natural elimination can be considered. The problem of overcapacity in the textile industry can be better digested.