Yang Zhaohua: How do you view the transformation and upgrading of the home textile industry from an industry perspective?

This issue is of a macroeconomic nature. This time, the master has outlined a plan for the 12th Five-Year Plan and the home textiles sector. What you just mentioned is not incorrect—it reflects the overall situation in our country. All industries are facing the need to restructure and upgrade. So, how do we approach this within the Home Textiles Association? These two major macro issues have clear footholds, and the question is: where should we start? According to our industry research, from 2000 to 2009, the growth rate of the home textiles industry increased by over 20%. Our market share has never exceeded 20%, with an average of 22% over the past five years. The entire development of China’s textile industry relies heavily on domestic demand. This is different from what many foreign media or international friends may believe. When they talk about manufacturing in China, they often assume it's export-driven—but this is not the case for home textiles. Our industry is entirely driven by domestic demand. In particular, the national policy in 2008 brought significant changes. We faced a global financial crisis, and in 2008, there were policy adjustments, followed by macroeconomic shifts in 2009. Despite these challenges, our home textiles industry remained competitive. In 2009, exports fell by 6.3%, but the entire industry still grew by 11%. While most industries experienced negative growth, the textile industry saw positive growth, and home textiles even accelerated. Domestic demand was the main driver behind this growth. Based on this solid foundation, how can we proceed with structural adjustment and industrial upgrading? We must start at the source—through the supply chain, focusing on the development and application of new raw materials. Research and development, as well as design innovation, are crucial. On the other end, we also need to focus on our distribution channels. Both aspects must be addressed effectively. Throughout the development of the entire industry, we hope for collaboration rather than isolated efforts. It's now about leveraging the collective advantages of the industry. While some areas may be particularly strong, individual companies still lag behind their overseas counterparts. Therefore, cooperation across the industry—from R&D to channel distribution—is essential. In terms of channels, we will emphasize innovation and cross-border collaboration. During the process of industrial upgrading, we must not only focus on leading enterprises but also pay more attention to the vast number of SMEs. If the upgrading of SMEs isn't addressed, the overall industry upgrade won’t be successful. To support this, we are engaging in comprehensive strategic cooperation with local governments and associations to help the majority of SMEs in the industry. This year, our proposal for how the industry serves enterprises includes a K-degree layout, K-degree development, and K-degree service. It's like a pagoda structure, where we arrange different levels of support based on the needs of each enterprise. Some may require more assistance, especially since there are more SMEs than leading companies. We have a good setup for the leading enterprises, which can either be developed internally or through partnerships. As for the remaining SMEs, once they scale up and upgrade, the overall industrial transformation will take shape. We are focusing on design, R&D centers, and resource deployment. Resource allocation is comprehensive, including labor productivity. Human resources are key, and labor remains one of the most important factors. Recently, especially since the beginning of this year, the price of raw materials has risen rapidly. The surge in cotton prices and chemical fiber costs has put significant pressure on downstream companies. To address this, we are carrying out a series of updates, including testing platforms and intellectual property protection. These initiatives aim to better serve SMEs. We have already started this process. We held a meeting in July and are now moving forward. We are part of a national initiative led by seven ministries and commissions that involve various industries under the "Quality Credit" campaign. The home textiles sector is included in this effort. We will launch this activity this month, from August to August, and quality is the foundation. Alongside quality, we must also ensure standardization. How to achieve this quality is part of the overall strategy. That’s the current situation.