As the only world's largest color spinning supplier and manufacturer in the color spinning industry with layouts in the East, Xinjiang and Vietnam - Huafu Fashion Co., Ltd. (hereinafter referred to as " Huafu Fashion ") issued an announcement on May 24, stating that the company's wholly-owned subsidiary Aksu Huafu Color Spinning Co., Ltd. (hereinafter referred to as "Aksu Huafu"), was included in the entity list by the US Department of Commerce on May 22.
Instructions and Announcements on the Integration List of the Company's subsidiary Aksu Huafu by the U.S. Department of Commerce
The Company noted that the subsidiary Aksu Huafu Color Textile Co., Ltd. (hereinafter referred to as "Aksu Huafu") was included in the Integration List by the U.S. Department of Commerce on May 22, 2020. The announcement is as follows:
1. The decision made by the U.S. Department of Commerce is an irresponsible act that ignores the facts, and we oppose the politicization of the industry.
2. According to the U.S. Export Administration Regulations, the transactions of any EAR controlled items with U.S. exporters (including exports, reexports and even domestic transfers) are restricted. Aksu Huafu serves the domestic market, and its raw materials, equipment and technologies can avoid products originating from the United States. Being included in the entity list will not have an impact on its daily operations.
3. Since its establishment, Aksu Huafu has made it a purpose to not only be a capable enterprise, but also a good enterprise, faithfully fulfills its social responsibilities, abide by relevant laws and regulations, abide by business codes, and fully respect the rights of employees. Passed the certification of domestic and foreign social responsibility institutions many times.
4. I sincerely thank all sectors of society for their attention to this incident and their support for Huafu. Only by being good and being a better self can we repay everyone's love as always.
Huafu Fashion Co., Ltd.
May 24, 2020
Huafu Fashion believes that the decision made by the US Department of Commerce is an irresponsible act regardless of the facts, and the company opposes the politicization of the industry. Since its establishment, Aksu Huafu has made its purpose to not only be a capable enterprise, but also a good enterprise, faithfully fulfills its social responsibilities, adhere to the concept of sustainable development, abide by relevant laws and regulations, abide by business codes, and fully respect the rights of employees.
Huafu Fashion said that the company is one of the world's largest new yarn companies, and its investment in Xinjiang is based on resource advantages such as high-quality cotton, energy prices, industrial workers, and future opportunities for the development of the Belt and Road Westward. The company invested in and operated Aksu Huafu, created many jobs, and contributed to local economic and social development. Aksu Huafu's raw materials, equipment and technology can avoid products originating from the United States, and being included in the entity list will not have a substantial impact on the company's daily operations.
About Huafu Color Textile
Aksu Huafu is located at No. 37 Huafu Road, Aksu Textile Industry City, Xinjiang. It was registered and established in the Aksu Regional Industry and Commerce Bureau on December 14, 2010. The company has a registered capital of 1.46 billion yuan. Its main business is "manufacturing and sales of textiles and textile equipment, textile technology training, exporting the textiles and clothing of the enterprise, raw materials, machinery and equipment, instruments and accessories required by the import enterprise, cotton and linen purchase and sales."
First Textile .com reporters previously learned that Huafu Fashion has invested in Xinjiang since 2006, with a total investment of 5 billion yuan, annual tax payment of 160 million yuan, and employed 14,700 employees. Currently, there are 80,000 mu of cotton fields; there are more than 30 flower ginning factories, with an annual cotton processing capacity of more than 200,000 tons; there are 3 dyeing factories, with a production capacity of 30,000 tons; there are 10 textile factories, with a production capacity of 670,000 spindles, with a production capacity of 110,000 tons.
According to the annual report of Huafu Fashion in 2019, its total assets were 3.875 billion yuan, achieved operating income of 1.821 billion yuan and net profit of 187 million yuan.
Everbright Securities analyst Li Jie believes that in 2019, Huafu Fashion overseas revenue accounted for 15% of the total revenue, and yarn business revenue accounted for 33% of the overseas revenue. At the same time, there was indirect exports and the network chain business was domestic sales.Since 2019, the performance end of Huafu Fashion has been under pressure, mainly due to the impact of the external environment. During the reporting period, the Sino-US trade frictions have led to a decline in the industry's prosperity and expectations of all links of the industrial chain have been relatively pessimistic and the decline in cotton prices is not conducive to enterprises taking orders.
Since 2020, the domestic and foreign epidemics have successively affected. At present, the epidemic abroad has not improved significantly, there is great uncertainty in foreign demand, and it is expected that the pressure to take orders in the second quarter is greater than in the first quarter. If the epidemic prevention and control abroad is effective, the impact of foreign demand under suppression is expected to gradually weaken, and we need to pay attention to the recovery progress of domestic and foreign terminal retail.
In Li Jie's view, in the overall operating difficulties of the textile industry, Huafu Fashion , as the leader, has strong risk resistance and customer bargaining power, and is expected to increase its share after the epidemic is over. From the perspective of the company's fundamentals, the leading position of color spinning has not changed. Although gross profit margin and capacity utilization rate have been damaged in the short term, the improvement of operating cash flow indicates that the company has adopted a more cautious strategy. In 2020, while increasing the expansion of the domestic market, Huafu Fashion continues to promote front-end network chains and accelerate the development of back-end network chains, and continues to make efforts in the fields of cotton, cloth and yarn.
The terminal downstream of Huafu Fashion includes internationally renowned brands such as Adidas, Nike, H&M, ZARA, Uniqlo, etc. In recent years, international sports and casual clothing brands have operated well. The revenue of two internationally renowned brands, Adidas and Nike, has maintained a steady upward trend. Adidas's revenue growth rate has reached 10.76%/17.45%/17.45% respectively in the past three years, while Nike's revenue growth rate has remained at around 10% in the past four years.
In the casual clothing market, Uniqlo's global sales have maintained an average annual growth rate of 15% in the past six years, and its revenue scale has continued to expand. Zara's parent company grew rapidly in the Asia-Pacific region, with revenue CAGR reaching 21% from 2015 to 2017. International sports and leisure brands have a high market share in the global clothing market and continue to maintain steady growth, which is conducive to supporting the company's continuous increase in order demand.
Further reading:
What list is the "entity list"?
In the past, as a Chinese company, if you don’t enter the “list”, the CEO will be embarrassed to say hello to others when you go out. Being included in the list is equivalent to the official "Box B" certification given by the United States.
has said so much, I believe many of you readers are very curious. You read news every day and say "entity list". So what exactly is "entity list"? What happens when you enter the list?
Today, I will take you to fully understand what the "entity list" is.
"Entity List", the English word is EntityList, which is used by the U.S. Department of Commerce Bureau of Industry and Security (BIS) to restrict exports to specific objects. All entities that fall into this list become the objects that BIS restricts exports.
"Entity List" is an export control regulations established by the United States to safeguard its national security interests. No U.S. exporters shall assist businesses on these lists to obtain any items subject to this Ordinance until they are licensed. Simply put, the "entity list" is a "blacklist". Once it is included in this list, it actually deprives the relevant companies of trade opportunities in the United States.
For example, after Huawei was included in the "entity list" in May last year, it could no longer import components from American chips and integrated circuit companies such as Intel, Qualcomm, and Xilingcom, nor could it use the Android and Windows operating systems of American companies Google and Microsoft, which is a devastating blow to Huawei. What is the impact of adding
to the list?
actually explained clearly that the companies added to the list will not only not be able to obtain the technology or products exported by American companies, but even if you are a foreign company, as long as the part of the technology or products derived from the United States exceeds 25%, they cannot be exported to entities on the list.
Last year, Ren Zhengfei talked about being added to the list in an interview and said, "When the United States first released the 'entity list', even McDonald's in Mexico did not sell us."It can be seen that the deterrent effect of the list on American companies.
As of now, there are nearly 300 companies in China on the "entity list", second only to Russia. And there are countless institutions on the list. Can you imagine it? Even domestic universities such as Beijing University of Aeronautics and Aeronautics, Northwestern Polytechnical University, Sichuan University, and University of Electronic Science and Technology are on the list.
How to "get out of singleness"
It has been said that entering the "entity list" is not a permanent thing, and "performing well" can still be done. How can
come out? The method is "voting", and the voter is a member of an inter-departmental committee under the US Department of Commerce - the End User Review Committee.
In fact, when deciding whether an entity is added to the list, the committee also uses the voting method, but when joining, it uses the majority vote to pass, while when moving out of the list, it uses the unanimous vote. It is easy to get in, but it is difficult to get out.
so how can companies on the list get the opportunity to vote and remove the list by the end user review committee? Basically, they rely on admitting their conscience and fines.
In addition to ZTE , for example, Jerry Co., Ltd., an unknown oil service company in Yantai, paid a fine of US$337.5 and was removed from the entity list.
Summary
The "entity list" system of the US Department of Commerce, to put it bluntly, is the technological weapon of the United States to threaten high-tech enterprises of non-ally countries. After finding any reason to add it to you, by banning the export of American companies and foreign companies using American technology, it can basically be said that you can even crippled if you don't kill you.
can only say that Chinese people should be self-reliant!
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