2024

Analysis of the Economic Operation of the Sewing Machinery Industry in the First Three Quarters of 2024

In the first three quarters of 2024, the global economy continued to show a slow recovery trend, with significant alleviation of inflationary pressures. Developed economies such as Europe and the United States have gradually begun their interest rate reduction cycles. Consumer momentum and inventory replenishment demand are gradually being released, and manufacturing sentiment in regions such as South Asia, ASEAN, and Africa continues to improve. Our country has successively introduced a package of policies to stabilize the economy and expand domestic demand, improving development expectations for consumption, investment, and production, creating favorable internal and external conditions for the stable development and transformation of the sewing machinery industry.

After experiencing two consecutive years of economic decline in the industry, 2024 has ushered in a cyclical growth momentum. In the first three quarters, China's sewing machinery industry seized opportunities from recovering downstream demand and cyclical development. The industry actively implemented the 'Three Products' strategy, expanded both domestic and international markets, accelerated digital transformation, and achieved year-on-year positive growth in major indicators such as production, sales, exports, and profits from a low base last year. Market vitality and business confidence have positively recovered, marking a good start for restorative growth and high-quality development.

I. Economic Operation of the Industry in the First Three Quarters of 2024

1. Significant Improvement in Profitability with Stable Quality Recovery

In the first three quarters of 2024, the industry's production and sales scale rebounded rapidly, leading to significant improvements in corporate quality and efficiency. According to data from the National Bureau of Statistics, in the first three quarters, 275 large-scale manufacturing enterprises in the industry achieved operating income of 23.8 billion yuan, a year-on-year increase of 18.64%, with an increase of 0.63 percentage points compared to the first half; total profit reached 1.132 billion yuan with a year-on-year increase of 61.05%, an increase of 3.72 percentage points compared to the first half; operating income profit margin was at 4.76%, up by 35.75% year-on-year but down by 0.27 percentage points compared to the first half.

The loss ratio among enterprises further narrowed in the first three quarters as operational efficiency stabilized its recovery. By September's end, large-scale enterprises had a loss ratio of 24%, narrowing by 3.57 percentage points compared to the first half; losses increased by 11.57% year-on-year with loss depth at 18.48%, expanding by 1.27 percentage points compared to the first half. The turnover rate for finished products among large-scale enterprises grew by 26.75% year-on-year while total asset turnover increased by 17.18%; accounts receivable amounted to 7.3 billion yuan with a year-on-year decrease of 4.10%, accounting for 30.75% of current operating income—narrowing by 16.75 percentage points compared to the first half—higher than that for national large-scale industrial enterprises at an average rate of 25.93%.

Figure 1: Operational Status of Large-Scale Enterprises in Industry for Q1-Q3 of2024

(Data Source: National Bureau of Statistics)

2. Moderate Growth in Production with Continuous Inventory Optimization

Driven by recovering demand and inventory replenishment efforts during Q1-Q3 showed an overall restorative growth trend within production according to data from National Bureau Statistics; from January to September this year saw an industrial added value growth rate reaching up to8 .2 %for large-scale manufacturing enterprises within China's sewing machinery sector—an increase over last year's figures which was higher than that seen within light industrial specialized equipment manufacturing (5 .2 %)and national average (5 .8 %).

Figure2: Changes in Cumulative Added Value Growth Rate Among Large-Scale Enterprises from September2023toSeptember2024

(Data Source: National Bureau of Statistics)

(Data Source: China Sewing Machinery Association)

From monthly statistics on industrial sewing machine production among one hundred major complete machine companies shows that there was significant growth during Q1-Q3of2024comparedto last year's figures; In January companies actively replenished stocks while increasing exports resulting into maintaining output levels at403 ,000units across these hundred firms; February saw output drop due largely due holiday factors downwards towards269 ,000units before rebounding sharply back up towards482 ,000units come March following full resumption operations alongside order accumulation release coupled with rapid recovery seen across certain regional foreign trade markets; During Q2andQ3despite slight adjustments made during April due market demands returning back towards stability around400 ,000units again until reaching439 ,000units come September—a11 .15%yearly increase.

(Data Source: China Sewing Machinery Association)

...

According to incomplete research statistics based on last year's lower baseline figures indicate that during Q1-Q3of this year our backbone complete machine manufacturers achieved double-digit mid-low speed growth rates within their domestic sales figures across all categories; From quarterly observations it appears that Q1saw notable increases while bothQ2andQ3were affected negatively due various factors including consumer behavior shifts leading users adopting more cautious stances regarding market conditions resulting into reduced demands seen particularly amongst traditional sewing equipment however still maintaining strong interests surrounding template machines & automated systems thus causing overall domestic sales rates slowing down somewhat.

(Data Source: China Sewing Machinery Association)

2024年前三季度，行业缝制设备库存呈现整体下滑态势，行业百家整机企业缝制设备库存量从上年末近百万台的库存量降至6月末的74万台，再至9月末的 66万台（其中，工业缝纫机库存47万台），同比下降17.45%，行业清库减存成效明显，库存结构持续优化。

3、内需明显回暖，销售前高后低

前三季度，国家系列稳增长政策逐步发力，下游服装等行业发展预期积极改善，投资需求和人均衣着消费支出有所增长。传统市场美国、欧盟等需求保持韧性，对国内服装、家纺、制鞋、箱包等下游行业的生产、出口平稳发展形成了积极支撑，国内阶段性的设备采购需求在上半年得到较快集中释放。云南德宏、保山、红河等区域市场积极承接内地纺织鞋服产业转移，设备采购需求激增。同时，缝制机械骨干整机企业加大高效智能设备研发和推广，通过参加专业展会、举办新品发布、强化技术服务、聚焦小单快反大单品的宣传和让利促销、以旧换新等相关活动，深入终端加大品牌营销，努力撬动存量市场。

据不完全调研和统计测算，在上年度较低基数基础上，前三季度我国骨干整机企业的工业缝制设备内销同比均实现两位数的中低速增长。从季度情况来看，一季度行业内销增长明显，二、三季度受消费、订单、库存及工价等因素影响，用户开始对市场持谨慎观望态度，服装工厂对传统缝制设备的需求明显减少，对模板机、自动机等采购需求依然较旺，行业内销增速有所放缓。

另据海关最新数据显示，前三季度我国工业缝纫机进口量4.1万台，进口额6976万美元，同比分别增长41.36%和22.32%；缝纫机零部件产品进口额6248万美元，同比增长43.99%，显示出国内下游行业复苏对中高端特种缝制设备以及自动化设备释放出较大的市场需求。

图5 近三年行业月进口工业缝纫机产品金额情况

(Data source: General Administration of Customs)

4. Exports are steadily recovering, with strong growth in key markets

In the first three quarters, as the global economy steadily recovers and the demand for replenishing inventory in developed economies for footwear and apparel is released, some regional markets such as South Asia, ASEAN, Africa, and Latin America have seen a warming in demand. Key overseas markets like Vietnam, India, Cambodia, Pakistan, Egypt, and Brazil have generally achieved restorative growth in footwear and apparel production and exports, effectively driving a steady recovery in China's sewing machinery product exports. According to data from the General Administration of Customs: In the first three quarters, China's cumulative export value of sewing machinery products reached $2.479 billion, a year-on-year increase of 13.25%.

From the monthly export trend perspective, starting from December 2023, the monthly export growth rate of China's sewing machinery industry turned positive. In January, the industry's export value was $296 million, a year-on-year increase of 3.86%; in February, affected by factors such as the Spring Festival holiday, the industry's export value fell to $192 million but still grew by 30.77% year-on-year; in March, under the backdrop of global inflation fluctuations and tightening funds, the industry's export value was $237 million, a year-on-year decrease of 17.24%, showing signs of tightening at the end of the quarter; in Q2 and Q3, global manufacturing sentiment and international trade continued to improve with overseas market demand for sewing machinery products gradually warming up. From May to August, the average monthly export value remained above $300 million with stable recovery. As we entered late Q3, while global economic recovery continued, growth momentum weakened due to increased uncertainty in international trade and intensified geopolitical conflicts among other factors like U.S. elections and gradually weakening labor markets in major economies such as Europe and America; thus global consumer follow-up momentum appeared slightly insufficient with downstream users gradually adopting a wait-and-see attitude leading to a decline in monthly export value to $260 million with a year-on-year increase of 8.70% but a month-on-month decrease of 16.28%.

Figure 6 Monthly Export Value of Sewing Machinery Products Over Three Years

(Data source: General Administration of Customs)

From an export product perspective: In the first three quarters China exported 3.46 million industrial sewing machines valued at $1.114 billion with year-on-year increases of 1.95% and 9.39%, respectively; among them automatic sewing machines accounted for an export volume of 2.31 million units valued at $814 million with respective year-on-year increases of 4.38% and 13.47%. The proportion by value for automatic products within industrial sewing machines was respectively at 66.86% and 73.11%, which increased by 1.55 percentage points and 2.63 percentage points compared to last year's same period; embroidery machine exports were recorded at 71 thousand units (including products below $2000) valued at $472 million with respective year-on-year increases of 26.45% and 31.80%; pre-sewing and post-sewing equipment exported amounted to149 thousand units valued at $356 million with respective year-on-year increases of24 .52%and13 .58%; spare parts for sewing machines had an export valueof$325millionwithayear-onyearincreaseof7 .26%; household sewing machines exported amountedto7 .94millionunits (including manual sewing devices) valuedat$212millionwithrespectiveyear-onyearincreasesof26 .01%and8 .14%. All major categories within this industry showed an upward trend.

Figure7 Year-On-Year Changes in Export Indicators for Various Categories of Sewing Machinery Products from January to September2024

(Data source: General Administration of Customs)

From an export price perspective: In the first three quarters among various typesofsewingmachineryproducts,theexportaveragepriceforindustrialsewingmachinesandembroiderymachinesshowedanupwardtrendyearonyear.Amongthem,theaverageexportpriceforindustrialsewingmachineswas$322 .3perunit,a7 .29%year-onyearincrease;theaverageexportpricefor embroiderymachineswas$6649 .2perunit,a4 .24%year-onyearincrease.Whereas householdsewingmachinesandpre-sewing/post-sewingequipmentshowedadeclineinaverageexportpricesyearonyear.

Table1 Average Export Prices for Major CategoriesofSewingMachineryProductsfromJanuarytoSeptember2024

(Unit: USD/unit,% )

(Data source: General Administration of Customs)

From key regional market exports perspective: In the first three quartersof2024China'sexports ofsowingmachineryproducts showedgrowthtoAsia,LatinAmerica,andAfrica while showingadeclineinexports toyEurope,NorthAmerica,andOceania.Yearonyeachregion'smarketChina'sexports tothe"BeltandRoad"marketreached$1 .73billion,a21 .42%year-onyearincreaseaccountingfor69 .58%oftheindustry'stotalexports,increasingby4 .68percentagepointscomparedtolastyear;sExports totheRCEPmarketamountedto$737million,a36 .31%year-onyearincreaseaccountingfor29 .74%,anincreaseby5 .03percentagepointscomparedtolastyear;sExports totheASEANmarketamountedto$647million,a49 .19%yearyear increase accountingfor26 .10%,anincreaseby6 .29percentagepointscomparedtolastyear;sExports totheSouthAsiamarketamountedto$645million,a39 .21%yearyear increase accountingfor26 % ,anincreaseby4 .85percentagepointscomparedtolastyear;sExports totheWestAsianmarketamountedto$194million,a14..42 %decrease compared toyoyr ;Exports totheEU market amountedto$105million,a20..19 %decrease compared toyoyr ;Exports totheEastAsianmarket amountedto$78..81million,a17..33 %decrease compared toyoyr ;Exports totheCentralAsianmarket amountedto$74..65million,a39..25 %decrease compared toyoyr.

Figure8 Export SituationofSewingMachineryProductsacrossContinentsfromJanuarytoSeptember2024

(Data source: General Administration of Customs)

Figure9 Main MarketExportSituationofSewingMachineryProductsfromJanuarytoSeptember2024

(Data source: General Administration of Customs)

By country: InthefirstthreequartersOf2024China'ssewingmachineryproductsexported203countriesandregionswithmorethanhalfshowingpositivegrowthinexportvalue.Thetopsevenexportmarkets(India,Vietnam,Pakistan,Brazil,Bangladesh ,Indonesia,Cambodia)allshowedsignificantgrowthinexportvalue.Inthesetop20markets ,13 showedpositivegrowthinexportvaluewithseven markets havinganannualgrowthrateexceeding30 %,one market—Pakistan—sawitsannualexportvaluedouble.

Figure10 GrowthSituationofMainMarketExportValueofSewingMachineryProductsfromJanuarytoSeptember2024

(Data source: General Administration of Customs)

II.Outlook on Industry Economic Operation for Q4 ,2024

Overall,inQ1-Q3 ,2024 driven by phased recoveryinboth domesticandinternationalmarkets,theChinese sewing machinery industry has ushered ina positive momentum after hitting bottom.

InQ42024 accordingtotheIMF'slatestforecastreleasedinOctoberglobal economic growthisexpectedtostaystablewithinflationlikelycontinuingtodeclineprovidingpositiveconditionsfortheliftingoftightmonetarypolicybymajorcentralbanks.Butduetoincreasedgreatpowercompetition,persistentgeopoliticalconflicts,andslowingconsumptiongrowthamongmajoreconomies,theglobal economic situation remainscomplexandchangeable;Chinas economyundercomprehensivefactorswillgraduallystrengthenitsgrowthmomentumthroughsteady releaseofdomesticdemandandprecisepolicyregulationespeciallythroughaconcentratedlaunchofa series ofincreasementpolicies.Theeconomic growthmomentumisexpectedtosteadilyimprovewiththeconsumption market gradually warming up layingafirmfoundationforachievingtheannualGDPgrowthtargetof5%.

Fromtheperspectiveofthedevelomentofdowstreamindustriescloselyrelyingonsewingequipmentwiththeweakrecoveryoftheglobal economyandconsumer demand fields such as clothing ,leather ,footwear ,home textiles,bags etc.stillremainintheflatrecoverycycle possessingcertainresilienceandpotential.InQ42024variousdownstreamindustry indicators suchasproduction,sales,revenue ,profit,andinvestmentareexpectedtocontinue low-speed growthandstable development.The new government's plans post-U.S.elections regarding tariffs on China may further stimulate short-term replenishment demands from EuropeandAmerica alongwithdownstream industries increasing production.

In the fourth quarter, the sewing machinery industry in our country is still expected to maintain relatively stable development. It is anticipated that the trend of slowing domestic demand and growing exports will continue, and market growth will further concentrate on various specialized, functional, and automated equipment. Industry enterprises should strengthen their confidence in development, closely align with the strategic requirements of building a modern industrial system and constructing new quality productivity, seek progress while maintaining stability, find opportunities in crises, deeply explore user pain points, accelerate technological innovation, promote intelligent transformation, moderately increase production to replenish inventory, focus on overseas markets, continuously enhance their comprehensive competitiveness and differentiated advantages, and adopt more proactive strategic measures from within to promote high-quality development of enterprises.