Xinye Textile: 2017 Annual Board of Directors Management Review

On April 10th, Xinye Textile (002087) 2017 annual board of directors management review contents are as follows:

I. Overview

2017, China's textile industry competition, the state has increased enforcement of environmental law enforcement on the part of enterprises constitute a major pressure on the industry inland large enterprises in particular benefited opposite. The company insists based industries and their own reality, and steadily promote the transformation and upgrading strategy, can continue to promote innovation power, promote harmonious corporate culture, encourage their employees to practice the socialist core values, the company continued to maintain a healthy, stable and sustained development trend.

During the reporting period, the company has significantly improved its textile industry layout, innovation drive, management upgrades, and quality services. The company ranked the 2016/2017 annual Chinese textile industry competitiveness hundred companies list No. 6, access to the China Cotton Textile Association released the "2016 cotton textile industry the main business income hundred enterprises".

During the reporting period, cotton prices increased slightly year-on-year, textile prices began to rise steadily in the middle of the year. At the same time, the price gap between domestic and foreign cotton was relatively stable, which played a stable role in the overall operation of the company.

1. Focus on R&D and innovation investment to ensure the driving force of sustainable development

2017, the company's focus on strategic goals, increasing new product development, scientific and technological innovation, continuous research and application of new materials, new technology and continuously enhance the company's core competitiveness. Establish a regular communication mechanism between the R&D team and the customer, timely understand the customer needs and market direction, and meet the customer's personalized product needs. At the same time, the company cooperates with professional colleges, upstream and downstream enterprises to promote innovation and development, expand the innovative application of new fibers, and make the company's product structure more diversified. The company is working on “bottleneck” technology to solve problems and new breakthroughs in technical problems. In 2017, the company's technical projects were initiated in 12 projects, including textiles, weaving, dyeing, energy, brands and other fields closely related to the company's development.

In recent years, the company has successfully developed a number of new technologies and products. It has 3 invention patents, 66 utility model patents, 19 design patents, and 21 national standards and industry standards presided over or participated in the formulation, of which 7 have been released.

2. Strengthen brand building and continuously improve independent design capabilities

During the reporting period, the company increased customer service in fabric R&D and design, and laid a solid foundation for the creation of high-end textiles. In 2017, we participated in domestic and foreign large-scale exhibitions and customer orientation promotion conferences, introduced and displayed functional new products to customers, and established a good communication mechanism with customers, which was favored by customers.

In 2017, China Knitting Industry Association awarded the title of “Hanfeng” brand JC40s siro spinning compact spinning knitting yarn “user trustworthy products”. China Cotton Textile Industry Association awarded the title of “Huazhu” brand cotton natural fabric and “Hanfeng” pure cotton natural yarn “the most influential product brand”.

At present, the company has formed a natural fiber fabric as the main line, guided by multi-component functional fiber fabrics, and is guided by consumption. It is based on the industrial layout of Xinjiang and Henan Xinye to ensure the company's leading position in the cotton textile field.

3. Strengthen investment integration and enhance profitability

During the reporting period, the company newly established Xinbei Cotton Industry and acquired two companies, Beizheng Guohe and Kefang Cotton. The production capacity of Xinjiang Raw Material Base continued to grow. Jinyu Textile Company Phase II Cotton Spinning 100,000 Spindles and 5000 Air Spinning and Company The 120,000-spindle intelligent spinning project of the headquarters was completed and put into production, becoming the company's new economic engine.

Second, the analysis of core competitiveness

The company's brand influence and strong research and development capabilities, good comprehensive management capabilities, and efficient customer service system constitute the company's core competitiveness.

1. The company has brand influence and strong research and development capabilities.

Companies adhere to independent innovation, relying on national-level enterprise technology center, Henan Province Engineering Technology Research Center and other technical platforms, strengthen technical cooperation with research institutes, universities, strategic customers and important suppliers, long-term commitment to textile frontier technology research, and gradually realize From product research and development to technological research, from the key technical difficulties to grasp the technical principles, the development of industry standards upgrades, from focusing on technological innovation to exploring the organic combination of new technologies and innovation models, strengthening low-carbon, green, circular development, and strengthening The power and vitality of enterprise development, enhance the contribution of scientific and technological progress to industrial development, and promote industrial upgrading. In 2017, China Knitting Industry Association awarded the title of “Hanfeng” brand JC40s siro spinning compact spinning knitting yarn “user trustworthy products”. China Cotton Textile Industry Association awarded the title of “Huazhu” brand cotton natural fabric and “Hanfeng” pure cotton natural yarn “the most influential product brand”.

As of December 31, 2017, the company has applied for 14 invention patents, has obtained 3 invention patents, obtained 66 utility model patents (including 19 utility model patents in 2017), and obtained 19 design patents.

2, the company has a good comprehensive management capabilities and high standards of quality management system

Since 1995, the company has passed ISO9000 quality management system, ISO14000 environmental management body and OHSAS18000 occupational health and safety management system. Since 2007, the company has passed the certification of OE100 and GOTS organic cotton system and CNAS national laboratory approval, OEKO-TEXSTANGARD100 ecology. Textile certification and BCI Good Cotton registered members have realized the internationalization, standardization and standardization of company management. In order to pursue high-performance management and better improve the company's performance and capabilities, the company has built a "big quality" system to promote management innovation to ensure the company's operating quality.

3, has a rigorous and efficient customer service system

Focus on customers, comprehensively strengthen quality management, adhere to high standards of service, and establish a brand image of industry leading, customer satisfaction and market recognition. Quality awareness runs through every aspect of product production, and a sound quality traceability mechanism ensures product reputation.

4. Complete textile industry chain and industrial layout

The company has a complete industrial chain of cotton acquisition, processing, spinning and weaving, and therefore has the cost advantage of all aspects of high-end textile production. The company has established high-end textile production bases in Xinye and Xinjiang, Henan, and established market service agencies in various textile distribution centers across the country, giving full play to comprehensive advantages and consolidating the company's leading position in the cotton textile sub-sector.

5, the company has strong investment integration capabilities

In the framework of the national strategy along the way, companies have invested 20 billion yuan in Xinjiang, the integration of the acquisition of cotton in Xinjiang cotton processing, spinning industry chain, driving the company's production capacity to more than 1.7 million, provided there is a market competitive products . During the reporting period, the Belt and Road strategic investment brought more than 100 million yuan of government subsidies to the company.

Third, the company's future development prospects

1. Industry competition pattern and development trend

China is a world textile and garment production and trade country, occupying an important position in the global textile industry layout, and the scale and supporting advantages formed are difficult to replace. Developed countries such as Europe and the United States are China's key consumer markets. Because of its clear structure, rich colors, comfortable wearing and strong ventilation, cotton products have always been the main fabric of high-end clothing. In recent years, with the domestic environmental protection requirements, the increasing cost of production factors and the orientation of the national transformation and upgrading strategy, some low-end small-scale production capacity has entered the market has become an inevitable trend.

In the long run, with the global economic recovery, China's urbanization and the increasing demand for domestic residents' income and consumption, the market demand for medium and high-end textiles will continue to grow in the future, and the market will also be concentrated in medium and large enterprises. tendency.

2. Company development strategy

China's textile industry has outstanding advantages in the global textile industry, mainly in terms of capital, technology, labor efficiency, etc. Although the cost of production factors is rising, the overall competitive advantage of China's textile industry is still outstanding. The company is set cotton purchasing and processing, spinning, weaving in one large textile enterprise with a complete industrial chain, is the larger of casual cotton fabric production base, has formed cotton, cotton and natural fiber, cotton and functionality Three series of cotton yarns and fabrics, such as fiber blending. At present, the company is advancing from manufacturing to upgrading, improving quality and efficiency, and will continue to accelerate the integration of advantageous resources, realize the rational layout of the company's production capacity, further enhance the company's international level, and maintain the company's cotton casual apparel fabrics. Outstanding advantage. In terms of brand, we will continue to open up new marketing models to promote the balanced development of domestic and foreign markets. Further increase R & D, design and energy conservation efforts, to promote low carbon green market new products. Maintain competitive advantage and continue to improve, and strive to lead the way in product innovation and improve efficiency.

3. Business plan (this description does not constitute a company's commitment)

(1) In terms of corporate governance, strengthen the internal control system of the enterprise, continuously improve the organizational structure, corporate governance structure and risk prevention mechanism, and ensure the company achieves healthy, stable and sustainable development at the institutional level.

(2) In terms of market development, we will actively carry out the “Market Service Deepening Year” activities based on the concept of equal emphasis on domestic and international markets, actively explore emerging markets on the basis of stabilizing existing markets, further enhance domestic market share, and promote domestic and foreign markets. The depth of development.

(3) In the enterprise management, we will guide the direction of quality improvement and efficiency, refine the management functions, comprehensively and deeply promote the performance management model, further deepen and refine the overall budget management, and continuously promote management upgrade.

(4) In brand building, vigorously innovate the marketing model, win customers with quality and service, further optimize resource allocation and meet the individual needs of the market.

4. Capital needs, sources and usage plans

During the reporting period, the company's 120,000 smart yarn production line project, has been completed and put into production; knitted fabrics production line designed annual output of 20,000 tons of knitted fabrics, construction is proceeding as planned. The source of funds for all of the above projects is the company's own and raised.

5. Risk factors and countermeasures that adversely affect the company's development strategy and business objectives

(1) the economic environment: impact and sustainability of the domestic economy slow recovery in developed market economies, the new normal for the entire duration of the consumer market, may have some uncertainty to the market environment facing the company, the company may affect the inside, The promotion of export business. The company will strive to expand the international market while stabilizing the domestic market to achieve the common development of domestic and foreign sales.

(2) Fluctuation of raw material prices: The raw materials used by the company are mainly fine cotton, and its price is affected by many factors such as market supply and demand, climate, policy, exchange rate and quota. In 2017, when the national cotton quota policy has not changed, the cost of cotton is mainly affected by the domestic market. Therefore, the company must seriously study the cotton market dynamics, and strive to reduce the impact of fluctuations in raw material prices on the company's operating performance through active and effective ways and methods.

(3) exchange rate risk: Part of the company purchasing cotton from the international market, part of textile products directly or indirectly exported overseas, the RMB exchange rate fluctuations have an impact on the company's operating income and exchange gains and losses.