The second key point is to fully understand the complex situation currently facing the silk industry.
**(a) Growth in silk exports, but no fundamental improvement in external demand**
Although the global textile industry has rebounded due to a slow economic recovery, international silk consumption has gradually warmed up. According to customs data, China’s real silk merchandise exports from January to June 2010 reached $1.51 billion, a year-on-year increase of 8.3%, reversing a four-year decline and maintaining dominance in traditional markets such as Italy, India, Japan, Germany, and Pakistan. However, it's important to note that external demand for silk hasn't fundamentally improved. The reason for the halt in export decline over four years is due to unsustainable factors, including low commercial inventory levels and expectations of RMB appreciation, which have led some foreign investors to place orders in advance. Looking ahead, the internal drivers for economic recovery in major developed countries remain weak, while emerging markets may face saturation. Additionally, policies like “expanding exports†and “reindustrialization†in the U.S. and other developed nations could impact China’s silk exports. Many companies report that orders in 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) Silk industry production has improved, but business pressure has significantly increased**
With rising demand, both the output value and profit of the silk industry have grown. According to the National Bureau of Statistics, the total output value of silk enterprises above designated size increased by 26.1% year-on-year, and profits rose by 75%. However, operating pressures on silk companies have also risen. First, raw material costs continue to climb, with silkworm cocoon prices remaining high, leading to the phenomenon of “silk upside down.†Second, factor costs have entered a period of rapid growth, with rising labor, energy, resource, transportation, and environmental protection costs putting pressure on the industry. Third, the gradual appreciation of the RMB has increased export costs. In the first half of this year, the RMB appreciated by 0.7% against the U.S. dollar and 18.1% against the euro, increasing the cost of silk exports. Expectations of further appreciation may weaken the competitiveness of Chinese silk products in the international market.
**(c) Sericulture efficiency has improved, but the upward trend cannot be sustained**
This spring, sericulture production and pricing showed significant improvements. The purchase prices of silkworm cocoons in major producing provinces like Guangxi, Jiangsu, Zhejiang, and Shandong exceeded historical highs. According to preliminary data from the Ministry of Commerce, spring silkworm seed production reached 7.11 million units, up 12.1% year-on-year, while cocoon output reached 248,000 tons, an increase of 9% year-on-year. The average price per carat (50 kg) was 15,31 yuan, up 57.1% year-on-year. However, this sharp increase in efficiency is unlikely to continue. High purchasing prices may act as a double-edged sword—stimulating sericulture enthusiasm but potentially causing supply-demand imbalances if silk exports do not recover. Additionally, there is limited room for growth in sericulture, with the area of mulberry gardens decreasing for three consecutive years. Rising labor costs across the country also pose challenges to the sustainability of sericulture.
In addition, the silk industry still faces many bottlenecks: the quality of high-quality cocoons at the upstream level is not strong, and the scale and intensification of production need further development. Midstream processing technologies are underdeveloped, and research into common and key technologies is insufficient. Emission reduction tasks remain heavy. Downstream marketing, product design, and innovation capabilities are weak, and brand competitiveness needs improvement. These issues require our full attention and concerted efforts to address.
**Third, take effective measures to promote the steady development of the silk industry**
Despite the uncertainties, the future of the silk industry remains promising. China has a long-standing silk culture, with deep knowledge and experience accumulated over time. Contemporary art continues to use silk as a raw material, showcasing its noble qualities. Advances in silkworm gene mapping highlight the integration of science and technology with silk. Silk can also be developed into health products, cosmetics, and artificial skin, indicating vast potential for silk product development.
To achieve this, we must strengthen confidence in development. In the coming period, the main idea of silk industry work will be guided by the scientific outlook on development, focusing on "adjusting structure, creating brands, and promoting upgrading." This includes improving agricultural production, enhancing industrial levels, and optimizing trade structures. Through platform construction, policy guidance, and reserve regulation, we will vigorously promote technological innovation, brand building, and industrial upgrading to comprehensively enhance industrial competitiveness and ensure the steady development of the silk industry.
Implementing this vision requires us to further study the trends and laws of the silk industry. I believe the following trends and laws will shape its future:
First, the market’s decisive role will continue to grow. There are two main operational models: one focuses on finding the market, while the other focuses on finding the market first. Although this reflects different philosophies, it directly impacts business success. Only those who adapt to the market can survive and thrive.
Second, the process of domestic and international integration is irreversible. Despite rising trade protectionism after the financial crisis, economic globalization remains unstoppable. The pattern of “Chinese production and world consumption†is already in place. Enterprises must accelerate their integration into the international market, utilizing both domestic and global resources to reduce costs, expand markets, and increase competitiveness.
Third, the supply chain organizational model will develop rapidly. Future industry competition will center around supply chains. Traditional models are often unstable and lack resilience. Only when supply chains are built on shared risks and mutual benefits can they sustain long-term vitality.
Fourth, technological innovation will become the engine of industrial growth. 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 breakthrough has driven industry progress. Future competition will focus on innovation capability. Companies that rely on outdated technologies will be eliminated.
Fifth, branding will play a crucial role in wealth distribution. A strong brand represents innovation, quality, and reputation, serving as a key to market access and competitive advantage. Whether or not a company can build a strong brand will determine its ability to become a leading silk producer.
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