City People's Government Notice Regarding Issuance of the Xuancheng City Textile Industry Adjustment and Revitalization Plan

Xuan Zheng [2009] No. 76

To all county, city, and people's governments, governmental departments, and associated institutions:

The Xuancheng City Textile Industry Adjustment and Revitalization Plan is hereby issued to you. Please organize and accomplish it accordingly to the local situation.

December 31, 2009

Xuancheng City Textile Industry Adjustment and Revitalization Plan

The textile industry is one of the traditional fundamental industries and an important livelihood industry for the people. It exerts great importance in maintaining market prosperity, expanding exports, maintaining the employment rate, increasing local economic income, and other such areas. In order to respond actively to the international financial crisis, keep up with the general guideline of “maintain economic growth, expand internal consumption, and reorganize economic structures” from the Party Central Committee, the State Council, and the provincial government, seize the opportunity of “building a Wan River city-band model industrial transfer zone,” advance textile industrial structural restructuring and technical transformation, cultivate advantageous enterprises, and achieve aggregation of the textile industry comprehensively. This plan is formulated according to the Provincial Textile Industry Adjustment and Revitalization Plan and according to a realistic evaluation of the textile industry. The timeline of this plan is 2009-2011.

I. Introduction of reality and situation of our city's textile industry

The textile industry of this city started early with an excellent foundation, which has given the industry great importance and influence in the whole province. In recent years, the production and sales from the textile industry have continued to grow. Textile enterprises have increased in number and scale. The products and the structure of production have also gradually been optimized. The textile industry began in apparel production, and gradually formed a quite complete production structure consisting of apparel textiles, domestic textiles, and industrial textiles. In 2008, there were 81 large textile enterprises, with 10,900 employees, 1.26 billion RMB of total revenue, 120 million US dollars of total export value, and 2.1 billion RMB of total net worth. These enterprises own 5,000 spindles for cotton spinning, more than 4,000 looms, 2,000 spindles for flax spinning (among which 1,000 spindles are for long threads), 28,000 spindles for silk reeling (among which there are 64 sets and 25,600 spindles of automatic reeling machines), 2,500 silk looms (among which there are 48 arrow looms), and 6,300 clothing processing machines. The enterprises produced 1.45 billion RMB of total domestic industrial production value. Cotton and linen textile production accounted for 367 million RMB, clothing production accounted for 350 million RMB, silk reeling and silk and satin production accounted for 480 million RMB, and home textile and industrial textile production accounted for 220 million RMB.

Since the second half of 2008, influenced by the global financial crisis, export of textile products has faced challenges. This situation has led to the decrease of enterprises’ revenue, deficit expansion, and increased losses. The industry's ability to increase employment has also been weakened and the industry's development has been challenged severely. Meanwhile, the long-term accumulated problems and conflicts holding back the textile industry have appeared together. Some of these problems were represented by enterprises' weak indigenous innovation ability, lagging research and development of new products, outdated processing machinery in production of main textiles, such as cotton, linen, and silk, and low industrial concentration. Most enterprises are small in scale and their profit levels are low, and some factories lack a sufficient number of employees and are under the burden to reduce energy consumption and waste output. In general, the textile industry is facing unprecedented challenges.

It shall be seen, while the textile industry is facing many difficulties, opportunities coexist with these challenges as risk contains opportunity. Since the second half of 2008, the national government and local government have heightened the importance of the restructuring and development of the textile industry and issued a series of supporting policies. The increase of tax refunds for exports is beneficial for increasing the advantage of export textile goods and enterprises’ profits. Also, policies to stimulate domestic consumption increases the domestic consumption of textiles and clothing. As the disposable income of residents increases stably, the purchasing power of both urban and rural populations is to increase. At the same time, the geographic advantage of neighboring Jiangsu, , and and the ongoing construction of development zones in our city provide an opportunity to become a new host of the textile enterprises gradually transferring out of Jiangsu, Zhejiang, and Shanghai, as well as other developed regions of the east coast. This advantage attracts direct foreign investment in the textile industry and further facilitate the formation of industrial clusters. All of these opportunities provides a broad space of development that will encourage healthy growth of the textile industry of our city.

II. Guiding ideas, basic principles and goals

(I) Guiding philosophy

Guided by the Scientific Outlook on Development and the main theme of development strategy transformation. The focus is on apparel production and textile products with high additional value. Key point is the application of new material, the development of new techniques, and the promotion of brand and quality, which significantly impacts improving the development of the industry to enhance the progress of industrial technologies, cultivate promising and leading enterprises, and heighten the entire developmental capability of the industry.

(II) Basic principles

Pursue jointly and integrate exploration of international markets and expansion of domestic markets. Overall planning to cover both international and domestic markets by adopting comprehensive measurements. On the basis of strengthening and exploring international markets, maintain the stability of export value, while cultivating and expanding domestic consumption.

Support backbone enterprises and promote the integration of small- and medium-sized enterprises. Key competitive enterprises encouraged to play a leading role in industrial adjustment and revitalization. Competitive corporate mergers and acquisitions supported to build stronger and more competitive corporations. Small- and medium-sized enterprises with good performance and development potential to receive help to cope with the crisis and to enhance their ability to resist risks.

Encourage the integration of indigenous innovation and technological innovation and eliminating outdated technologies. Give full play to technological progress bringing forward the key links and important areas of the industry. Accelerate the pace of technological development and industrialization by promoting technological innovation in cotton, silk, and other key components of the industry to speed up the elimination of outdated technology and of low production capacity.

Give free rein to the role of market mechanisms and integrate strengthening policy guidance. Free rein given to market forces, the basic role of which is allocating resources. Promote industrial restructuring, strengthen enterprise management, and achieve a situation of the survival of the fittest. Strengthen policy support and guidance, maintain stable industrial development, and promote the optimization and upgrading of the industrial structure.

(III) Adjustment and revitalization goals

The building of a textile industry cluster (concentration area) aims to achieve an optimized industrial structure, strong innovation ability, influential brands, high market share, strong core competitiveness, complete industrial chain, etc. and create three major industrial chains: silk textiles, cotton textiles, and apparel and home textiles. To the year 2011:

1. Maintain stable production growth. The large textile enterprises strive to produce an output of three billion RMB, for an average annual increase of 28 percent. Of this revenue, cotton textiles to account for 600 million RMB, for an average annual increase of 15 percent. Silk to account for 700 million RMB, for an average annual increase of 20 percent. Home textiles and industrial textiles to reach revenue of 800 million RMB, for an average annual growth of more than 50 percent. Accelerate increasing of apparel production capacity, so that the proportion of the clothing textile industry in the city's total industrial output value increases from 24 percent in 2008 to around 40 percent by 2011.

2. Substantially promote backbone enterprises. Cultivate three enterprises with annual sales revenue exceeding 200 million RMB and ten enterprises with annual sales revenue reaching 100 million RMB.

3. Increase the proportion of advanced technology and equipment. Eliminate outdated production capacity. To reach the national advanced level, the proportion of autoconers for cotton production to increase to 90 percent, the proportion of shuttleless looms and combing machines to increase to about 45 percent. The proportion of automatic silk reeling machines to increase to 95 percent international advanced apparel processing and finishing equipment and technology to be introduced.

4. Increase product quality and added value. The proportion of high-grade textile fabrics to increase from the current 20 percent to 40 percent, there to be breakthroughs in novel differential fiber applications, and the proportion of high-count yarn to increase from the current 30 percent to 50 percent. Silk, apparel, linen, home textiles and other components of the textile industry to to produce one to two famous Chinese brands, two to three provincial brands, and one to three well-known Chinese export trademarks.

5. Promoting industrial agglomeration. Form two industrial clusters, one cotton and the other silk, that have great influence in the province. Nurture and build up a number of professional industrial villages and counties.

III. Emphases in adjustment and revitalization

(I) Strengthen the “integration of agriculture, industry, and trade” and developing the silk industry

Seize the opportunity for a national project of “moving silk production from east to west.” Continue to improve and extend the industrial chain, strengthen sericulture base construction, constantly work to optimize mulberry and silkworm varieties and stabilize silkworm production, and promote comprehensive utilization of mulberry and silkworm resources. Establish interaction among farmers, workers, and enterprises, and build management system in which mulberry, silkworms, and silk production are mutually promoted.

Reinforce the basis of industrial development. Focus on the main producing areas of sericulture, cultivate silk enterprises that combine production, supply, and sales, as well as integrating agriculture, industry, and trade. Build industry clusters and expand industrial advantages and accelerate the transformation of the silk industry from processing primary products to processing high-end products. develop silk knitting, silk clothing, and other high-end products and expand the production scale of complex, blended, interwoven silk fabrics and silk blankets.

Breakthroughs in the production of high-grade silk fabric development, in which product quality, grade, and added value to be improved, and two product series, high-grade silk and artificial silk, can be formed. Develop antibacterial features, antifungal features, anti-wrinkle features, deodorant features, and other features of blended silk products, and achieve serialization and functionality in silk products. develop the application of non-silk fiber on silk products and interlacing, interwoven, compound-woven, wrapping, and blending of cotton, wool, or synthetic fibers with silk fiber for the development of new, high-end silk products.

Apply for national project funding for “moving silk production from east to west” and increase support for Jixi County, County, and Jingxian County, which are the three main counties of silk and sericulture. Cultivate Jixi County and Sihe village in Guangde County into the silk processing and manufacturing center for southern Anhui.

With regard to industrial layout, accelerate the establishment of a standardized sericulture production base in Guangde County, Jixi County, and Jing County. Introduce and promote new varieties and farming techniques and rely on other companies, such as Longteng company in Guangde, to accelerate the establishment of a sericulture service system. Support leading enterprises in specializing in cooperation with the mulberry silkworm breeder liaison office organization. Accelerate the renovation and the introduction of automatic silk reeling machines and shuttleless looms. Rely on the Hongxiang Company in Guangde County, the XinRMB Company in Jing County, Longchuan silk Industry in Jixi County, Hangjia Company in Jixi, Huashen Company in Jixi County, and other leading companies to develop high-grade raw silk and high-end silk fabrics. Accelerate the consolidation of the silk industry and create bigger and stronger industrial clusters.

(II) Promote “major brands” and develop the apparel industry

With improving apparel processing quality and producing famous brand clothing as a focus, strive vigorously to implement a branding strategy and increase the proportion of branded products. Establish an automated fabric cutting system and a three-dimensional virtual graphics system for fashion design. Introduce production lines, including clothing-hanging line transmission, stereo ironing, three- dimensional warehousing, product distribution centers, and other advanced apparel processing equipment and technological innovations. Bring in and train talented high-end fashion designers, increase the level of clothing design, develop and produce premium brand clothing, and increase the proportion of export garment production.

With regard to industrial layout, the municipal areas (including Xuanzhou) Langxi, Guangde, and , to cultivate clothing companies of a certain size and with growth potential, such as Daoying Clothing, Xin Jiale Clothing, Jinning Fashion, Sanchuan Clothing, Diniwei (Anhui) Clothing, Rainbow Dress, Zhongping Clothing, and Yuntong Clothing and promote the brand and quality of these clothing companies. Create a number of garment processing towns, such as Liqiao in Xuanzhou County, Biqiao in , and Qiucun in Guangde County, to form a characteristic textile sector economy.

(III) Highlight the “increase to fine quality” and develop the cotton and linen textile industries.

1. With regard to cotton textiles (chemical fibers), eliminate the existing “A” series spinning equipment, such as Type A512 and Type A513 spinning machines, promote the use of the latest highly- efficient, energy-saving cotton textile technology and equipment, promote the use of carding machines, automatic winding machines, and shuttleless looms, and develop new spinning technologies to increase labor productivity. By 2011, the proportion of knotless yarn to reach 90 percent, the proportion of shuttleless cloth to reach 50 percent, and the proportion of combed yarn to reach 40 percent. Place more emphasis on the development and production of new-fiber interwoven fabric and high-density fabric, expand the application of high-tech fibers, wood pulp (bamboo) fibers, chemical fibers, and other composite chemical fibers, and increase the differentiated fiber use ratio.

Develop a variety of fibers for interwoven, woven, and jacquard fabric to produce high value- added products and rationally allocate high-speed electronic jacquard dobby and high-speed electronic devices. Develop industrial fabrics, decorative fabrics, and functional fabrics and further expand areas of use of textile fabrics.

With regard to industrial layout, Xuanzhou to rely on Anhui Yuhua Textile Co., Carp Jump cotton Co., Xuancheng Zhongyi cotton limited Co., and other competitive enterprises with promising growth and foster the development of competitive enterprises in the cotton processing industry in Xuanzhou to strengthen the cotton industry. In the Eastern Xuanzhou Economic Development Zone, nurture pillar enterprises, encourage and support small- and medium-sized textile enterprises in settling in the economic development zone and utilize the industrial clustering effect of specialization. Jing County to rely on RGB Textile Co., Ltd. to develop new fabric types.

2. With regard to ramie, vigorously promote quality ramie planting to encourage regionalization, standardization, and scale development of ramie production. Build demonstration bases of quality ramie cultivation technology to promote ramie cultivation with new technologies and advanced technologies to strip hemp. Transform old ramie farming by introducing new quality varieties, strengthen the development of leading enterprises, and renovating and expand equipment for retting, long (short) spinning, and weaving production lines. Develop complete industrial chains of production technology, including retting, spinning, and weaving technologies, and develop new fabrics by blending ramie with cotton, wool, silk, chemical fibers, and other fibers to create blended fiber products.

With regard to industrial layout, Jingde County to rely on Hualong Ramie Company and Jingde XinRMB Textile Co. as industry leaders, in order to achieve the goal of creating the strongest leading enterprises in early processing of ramie textiles and gradually increasing the proportion of deep processing of ramie.

(IV) Focus on "functionality" and the development of household and industrial textiles.

Construct a complete system from raw material production to a complete set of products, and from product development, production, and processing to marketing. Build a platform for development of home textiles, and develop and produce high-quality textile products with distinct characteristics and rich cultural content. Create a set of high-quality products with our own brands by using new materials, new technologies, new processes, and a new culture of thinking holistically. By focusing on the Guangde Textile Company's Textile Industrial Park and the Textile Industrial Park, cultivate one to two independent brands with strong influence and competitiveness in the domestic market for the textile products. Also further expand the production scale of industrial textiles.

With regard to industrial layout, the Xuanzhou district to rely on Xuancheng Wanshilin Home Textile Co. as the development focus to promote the invention, design, production, and sale system of high-end and medium-range home textile products. Guangde County to rely on Xinda Textile Weaving Limited as the developmental focus to introduce jet weaving equipment and expand special functional fabric production with special shaded, reflective, metallic, or extra-wide fabrics. Guangde County to also support Guangde Zhengxin Co. and Guangde Tianyun Non-woven Ltd. as pillar enterprises to develop the application of innovative nonwoven products.

IV. Policy measures and support

(I) Encourage enterprises to implement mergers and acquisitions. Encourage backbone enterprises with advantageous positions in textile and apparel industry to conduct mergers and reorganization of enterprises in difficulties. During the business merger and reorganization process, the government to support financial liquidity, debt approval, personnel placement, etc. For companies that provide relevant measurement and proper placement of enterprise workers, the government to accordingly provide provisions of tax deductions as encouragement. The government to also give priority support, in terms of land, planning etc., to enterprises and transformation projects that meet the criteria and plan to implement mergers and acquisitions.

(II) Increase the financial and credit support to the textile industry. Implement national financial policies for the textile industry, encourage financial institutions to increase credit support for the textile industry, and provide liquidity support for corporations that are fundamentally solid but experiencing temporary difficulties. Provide more adequate fixed asset loans to important technology transformation projects in line with industrial policies and encourage credit agencies to provide financial assurances and financing services to textile enterprises.

(III) Encourage technological innovation. providing financial support for key, backbone enterprises to continue conducting technological transformation, encourage and guide enterprises in seizing the opportunity to improve management and techniques and standards of management and production, and support and guide leading enterprises and research institutes to cooperate and develop new textile technologies and new fabrics and to build new technological development centers and promotion centers for the textile industry. Encourage the introduction, localization, and application of international advanced technology and equipment.

(IV) Support industrial transfer. Encourage textile enterprises to take the path of industrial clustering development and expand and upgrade industrial clusters. Seize the opportunity of our city's plan of building Wan River City Band as a demonstration region for industrial relocation. Increase investment opportunities and use preferential policies to attract foreign investment to achieve seamless relocation of textile enterprises and transfer of textile industrial capitals from Jiangsu, Zhejiang, and Shanghai.

(V) Adhere to environmental preservation as a priority. Resolutely implement environmental evaluation criteria for access, apply strict restrictions on or eliminate high energy consumption, heavy pollution, and environmentally-unfriendly outdated techniques, technologies, equipment, and products, and accelerate the elimination of outdated production capacity. Strictly control the wastewater discharge of textile corporations, apply advanced technologies to upgrade the finishing level of textile products, and encourage and support invention and application of technologies and production processes with low pollution, low-emission or zero emissions that are conducive to environmental protection.

(VI) Enhance operational monitoring. Strengthen the focus on the monitoring of leading textile export enterprises, increase research on trade policy for export markets, and provide relevant export information in a timely fashion. Avoid trade barrier risks rationally and increase international market share.

V. Planning and implementation

Municipal government departments shall plan out division of labor according to the Plan. strengthen communication, consultation, and close coordination to develop and perfect supporting policies and measures as soon as possible to ensure the realization of the adjustment and revitalization goals for the textile industry. Government departments shall establish information systems jointly to ensure a timely release to the community of information on industry adjustment and revitalization. Relevant departments to carry out timely evaluation on the implementation of the Plan and make timely evaluation comments.

All counties, cities, and districts shall act according to the Plan to determine the objectives, tasks, and policy measures and pay close attention to local conditions to develop detailed implementation plans in order to achieve substantive results.