The second step is to fully understand the complex situation facing the development of the silk industry.
**(a) Growth in silk exports, but no fundamental improvement in external demand**
Although the global textile industry has rebounded following a slow economic recovery, international silk consumption has gradually increased. According to customs data, China’s real silk merchandise exports from January to June 2010 reached $1.51 billion, marking an 8.3% year-on-year increase. This marked a reversal of a four-year decline and helped maintain dominance in traditional markets such as Italy, India, Japan, Germany, and Pakistan. However, it's important to note that external demand for silk has not fundamentally improved.
The reason for the halt in the four-year decline in silk exports is due to unsustainable factors. First, commercial inventories have remained low for a long time, prompting some foreign investors to place orders in advance due to expectations of currency appreciation. Looking ahead, the endogenous drivers of economic recovery in major developed countries are weak, and emerging markets may also face saturation. Additionally, developed countries like the U.S. have launched initiatives such as "export expansion" and "industrial return" post-crisis, which could impact China's silk exports. Many export companies report that orders for the third and fourth quarters are not optimistic, with some foreign buyers struggling to accept current high prices and even substituting silk with other textiles.
**(b) Improved silk production, but rising business pressures**
With increased demand, both the industrial output value and profit growth of the silk industry have risen significantly. According to statistics from the National Bureau of Statistics, the total output value of large-scale silk enterprises increased by 26.1% year-on-year, while profits rose by 75%. Losses also decreased by 8% and 47% respectively. However, the operational pressure on silk companies has grown significantly.
First, raw material prices continue to rise, particularly silkworm cocoons, leading to the phenomenon of "silk upside down" in the industry. Second, factor costs are on the rise, including labor, energy, resources, transportation, and environmental protection, all of which add pressure to silk companies. Third, the gradual appreciation of the RMB has increased export costs. In the first half of the year, the RMB appreciated by 0.7% against the U.S. dollar and 18.1% against the euro, further increasing the cost of silk exports. Foreign investors’ expectations of continued RMB appreciation may weaken the competitiveness of Chinese silk products in the global market.
**(c) Substantial improvement in sericulture efficiency, but the upward trend cannot be sustained**
This spring, sericulture production volume and prices showed a significant increase in efficiency. The purchase prices of silkworm cocoons in major producing provinces such as Guangxi, Jiangsu, Zhejiang, and Shandong exceeded historical highs. According to preliminary data from the Ministry of Commerce, the amount of spring silkworm seeds reached 7.11 million, up 12.1% year-on-year. The output of silkworm cocoons was 248,000 tons, up 9%, and the average price per unit was 15,31 yuan per carat (50 kg), a 57.1% increase.
However, this sharp rise in efficiency is unlikely to be sustained. On one hand, the high purchasing price of silkworm cocoons acts as a double-edged sword. While it can stimulate sericulture enthusiasm, in the context of unclear silk export recovery, it may lead to supply-demand imbalances, affecting the overall industry. On the other hand, there is limited room for sericulture expansion. The total area of mulberry gardens this spring was 11.733 million mu, a decrease of 59,000 mu compared to the same period last year. The area of spring mulberry gardens has declined for three consecutive years. Additionally, rising labor costs across the country will negatively impact the sustainable development of sericulture.
Moreover, the silk industry still faces many bottlenecks: the quality of high-quality cocoons at the upper end is not strong, and the scale and intensification of production need further improvement. Middle-stage production and processing technologies are poor, with insufficient research and development of common and key technologies. Emission reduction tasks remain heavy. Downstream marketing, product design, and innovation capabilities are weak, and brand competitiveness needs enhancement. All these issues require serious attention and effort to resolve.
**Third, take effective measures to promote the steady development of the silk industry**
Despite the many uncertainties, the future of the silk industry remains promising. China has a long-standing silk culture, rich in knowledge and tradition. Contemporary art continues to use silk as a material, highlighting its unique nobility. Breakthroughs in the silkworm gene map show the integration of science and technology in silk production. Silk can also be used in health products, cosmetics, and artificial skin, indicating vast potential for future development.
To achieve this, we must strengthen confidence in development. In the coming period, the main idea of silk work will be guided by the scientific view of development, focusing on "adjusting structure, creating brands, and promoting upgrading." The core content includes improving agricultural production, enhancing industrial levels, and optimizing trade structures. Platform construction, policy guidance, and reserve regulation will be used to promote technological innovation, brand building, and industrial upgrading, ultimately enhancing the competitiveness of the silk industry and ensuring its steady growth.
Implementing this vision requires us to further study the trends and laws of the silk industry. I believe the following trends and patterns will shape the future:
First, the market's decisive role will become more prominent. There are two different business models: one focuses on finding the market first, and the other on producing first. Although this reflects different philosophies, it directly affects company success. Only those that adapt to the market can survive and thrive.
Second, domestic and international integration is irreversible. Despite rising trade protectionism after the financial crisis, globalization remains unstoppable. The pattern of “Chinese production and world consumption†is already established. To compete effectively, companies must accelerate their integration into the global market, leveraging both domestic and international resources to reduce costs, expand markets, and increase competitiveness.
Third, the supply chain organization model will develop rapidly. Future competition will be between supply chains. Traditional models are often unstable and lack resilience. Only when companies form a shared-risk, mutual-benefit supply chain can they achieve long-term vitality.
Fourth, technological innovation will drive industrial development. The explosive growth of the silk industry has always been linked to technological transformation. From silk socks in the 1930s to sand-washed outerwear in the 1980s, and from silk underwear in the 1990s to mixed textiles today, each advancement was driven by innovation. Future competition will focus on technological innovation, and companies that stick to outdated methods will struggle to survive.
Fifth, branding will play a key role in wealth distribution. A strong brand represents independent innovation, quality, and reputation. It is the identity card for entering new markets and a gateway to success. Whether or not strong brand companies emerge will be a critical indicator of whether China can become a leading silk nation.
T&H INTERNATIONAL TRADING LIMITED , https://www.th-globe.com