Is there still a textile business this year?
Editor’s note: This article is from WeChat public account “Alpha Works” (ID: alpworks) , author : Global Textiles.
Foreign trade enterprises will face the second wave of pressure! The rapid spread of overseas epidemics has caused textile foreign trade enterprises to bear a new round of tremendous pressure. In the last week of March, China’s foreign trade factories were under the second wave of pressure since the outbreak of the new crown epidemic. Take a look at the following reports:
78.4% of Keqiao textile companies have reduced orders
Shaoxing Keqiao, China Textile City has been in business for half a month, and more than 80% of business households have opened their doors to welcome guests, but the gates have been left out. Before the epidemic, there were 100,000 people coming in and going out every day, and now there are only 10,000. A local industry survey report showed that 78.4% of textile companies indicated that orders were decreasing, and 64.8% reported that existing orders were cancelled by customers.
“Almost 50% of our company’s business is in Europe. If the epidemic in these countries continues to spread, it is meaningless for us to start work. Now we are considering whether to adjust the proportion and focus on the country.” An owner of China Textile City Say.
On the same day, information was uploaded from the “International Economic Situation Outlook” online video conference hosted by the China Development Research Foundation: At present, although the resumption rate in the Yangtze River Delta and the Pearl River Delta is as high as 90% or more, only 30% of them actually work Left and right because of missing orders.
In fact, order churn began when tariffs were levied in May and June last year. A textile company has a large customer in the United States. The order amount in 2018 was 1 million US dollars, and less than 500,000 in 2019, “directly cut more than half.”
Because China, the United States and Canada have imposed tariffs, and Southeast Asian countries such as Vietnam, Bangladesh, Cambodia, etc. have zero tariffs, customers have transferred their orders to Vietnam. Vietnam’s textile exports steady in 2019Rising, it is also the most bright East Asian country in economic growth in recent years.
In February, due to concerns about the epidemic and limited traffic, purchasing managers and designers of some well-known brands in the apparel industry were unable to travel to China. Several brands have begun discussions about shifting production of new season goods to Turkey.
Hadi Karasu, head of the Turkish Apparel Manufacturers Association, estimates that about 1% of China ’s total order volume will be transferred to Turkey; the new orders transferred at that time have made Turkish sewing machines fully capable Operational-capacity has reached 85%, if Turkey can not complete technical upgrades such as digital transformation and increase production capacity, its textile industry will not be able to accept more orders.
Beginning in early March, a large number of European and American clothing stores have ceased to operate. The share prices of almost all clothing companies, apparel-based department stores, and clothing e-commerce companies have been cut, and a large number of companies’ stock prices have fallen below their net assets. The impact of global epidemic prevention and control on the total market demand has already occurred, and the textile industry is just a barometer with high sensitivity.
China’s foreign trade companies who have just emerged from the first wave of domestic delayed production and resumption of work will face the second wave of pressure: delayed consumption, orders on hold or cancellation due to foreign epidemic control, have to start construction Press the pause key. Plant rents and taxes have to be paid, workers’ salaries have to be paid, some workers may be laid off … China’s nearly 50 million foreign trade employees are collectively under pressure. In 2019, the contribution of Chinese foreign trade enterprises to GDP is 10%.
The so-called Chinese play in the first half in January and February and the world’s second half in March and April became embarrassed by the butterfly effect. In the economic and trade field, the global supply chain has been severely truncated due to the epidemic situation, and “the same cold” is the reality.
Careful export orders in the near future
With the intensification of the Xinguan epidemic overseas, the economies of many countries are facing the verge of collapse, and textile companies have also ushered in the largest number of withdrawals and abandonment in history.
The cloth is on the machine, but it was cancelled
An industry and trade integrated company that makes extra-wide home textile fabrics said: “Recent orders have been cancelled because of the large volume, and our recent general orders come from this customer, which has caused us a lot of financial pressure.” < / p>
A designated supplier of a fast-fashion brand is helpless: “Recently, many brand apparels have been closed and our orders have not been spared. We just received a new order some time ago, and the cloth is almost finished. Cancelled again in a few days. “
“At present, domestic factories have basically resumed production. Orders that were put on hold for more than two months after production were overtime and busy shipping. Suddenly I received a message from a customer to cancel an order, and the loss was not small. “Because companies generally charge only 30% of customers’ deposits, the cost is out of reach.” Said a foreign trader.
“Now the demand for the global textile and apparel market is declining, not just for the United States. The situation of overcapacity and shrinking orders may be more serious than last year.” The trader looked sad.
In addition to canceling orders, many companies have also revealed that as many US and European companies have begun to enter a remote office and half-stop state, it has greatly affected the operation of logistics. “Now we have to confirm with the customer whether we can receive the goods and say hello in advance to avoid the situation of money and goods. Before the goods arrived in Italy, they were abandoned at the port, and the goods were detained by the shipping company.” A foreign trade company Means.
A Zhejiang-based export company responsible for men’s outerwear, which is mainly in the European market, said that Europe is becoming the new center of the epidemic. The closure of multi-country routes has caused poor logistics and severely hindered the export of goods. At the same time, the epidemic situation in European countries is still spreading, residents’ lives are affected, local clothing consumer market demand is weak, and orders have dropped significantly.
Under the dual impact of the Sino-US friction and the new crown pneumonia epidemic, a carpet exporter from Shandong to the United States felt greater pressure. The person in charge of this company said that the United States is currently suffering from an increasingly severe epidemic, the exhibition is postponed, and the tourism industry is stagnant. The company ’s demand for carpet products for local hotels and conference centers and other places has fallen sharply, and new hotels should have been postponed. Or the suspension of work, the carpets of the conference venues to be updated will not be changed, and the market share originally affected by the friction between China and the United States has been compressed again.
Meanwhile, despite the high rate of resumption in export textile companies, most enterprises still face difficulties such as shortage of workers, asynchronous resumption of work in upstream and downstream enterprises in the industrial chain, and lack of protection resources.
At present, there is great uncertainty in the development trend of the global epidemic situation. The smooth operation of the market must go through a long recovery period. Therefore, the confidence of export textile enterprises has been frustrated.
No longer, Filament weaving enterprises have also started a “price war”
Under the condition of high inventory and low demand, textile bosses will generally face inventory pressure and capital pressure. Grey fabrics in warehouses have already occupied a lot of funds. Labor wages, utilities, rents, etc. must be paid by cash. In this case, if the grey cloth is not cashed, unless the family has a big business and there is no pressure on the capital, the company will not be able to support it, and sufficient cash can ensure the healthy operation of the company.
With the suppression of these two mountains, the phenomenon of dumping in the market has continued one after another, and even the best-selling simulation silk in recent years is difficult to “survive.” A person in charge of a professional manufacturer of artificial silk said that by the end of 2019, the price of 100D chiffon was 2 yuan / meter, and now it has dropped to 1.8 yuan / meter. In March of previous years, the price of grey fabrics increased and queued to get goods, but in March, the price of grey fabrics dropped and a large number of goods were sold.
This series of cancellations and discards has also worried the textile boss, and he asked the soul: “Is there any beginning in this year’s textile business?”
Adjust the ratio of domestic and foreign trade appropriately
With the outbreak of foreign epidemics, the textile and apparel industry has basically stagnated in European and American countries, and the textile and foreign trade people have been severely impacted. During the visits, many cloth owners have stated that the proportion of domestic and foreign trade will be adjusted accordingly to slow down. Impact of the epidemic.
The person in charge of a company that mainly makes orders in Italy and South Korea said: “Although we have not received any notice of order cancellation this year, the volume in the first quarter has been significantly reduced compared with last year. We will continue to develop domestic trade in the future. Now that the domestic epidemic situation is basically under control, there is still a lot of waste waiting to be revitalized, which may be a good opportunity. “
Similarly, an owner who exports fabrics made of silk fabrics also revealed: “The unit volume has been reduced by 20% compared with last year. The current order can be achieved by the end of April. Next, we will consider a greater proportion of domestic trade, but domestic trade There are also disadvantages. The customer’s repayment is longer than the foreign trade. Most of them are 3 months or more. Therefore, domestic trade is not easy to do. This year is really difficult. “
It is true that it is a good policy to shift the focus of the business to the domestic situation when the epidemic situation in foreign countries has not been effectively controlled, but the boss also needs to understand that the domestic sales market is already too few and the industry competition is fierce. At that time, the boss of cloth must pay more attention to his product quality, so that he has enough strength to win in the competition.
Starting construction, shifting from two shifts to three shifts, ensure sufficient cash flow
It is said that cash flow is the “life and death line” of an enterprise. When new orders are difficult to sustain, many cloth owners think that for the company, there is no order, that is, no account is received, but the cost of labor and rent is again Difficult to remove, if there is a loan, the loan and interest must be repaid every month. Therefore, it is necessary to reduce expenditures next.
“Next we may reduce production appropriately to alleviate the pressure on capital and inventory.” A factory director doing imitation memory is helpless. “Now the raw materials have fallen very badly. We have not received new orders. We can only produce some conventional varieties, but we use raw materials that were previously stocked at high prices. Therefore, we choose to stop half of the machines next month and inventory production. Too much can not be sold, but it takes up our liquidity (the raw materials are all traded in cash).
Another person in charge of the dyeing factory also revealed that the working hours of employees may be adjusted appropriately, from two shifts to three shifts. Reduced worker time and wages can reduce labor costs.
From the current market situation, the start-up rate of various factories is slowly rising, but destocking is slow, and new orders are not smoothly delivered. Next, the market will be in excess capacity, and low-price competition will be triggered. Therefore, when the market is uncertain, it is wise to choose strategies such as reducing production or adjusting the working hours of workers to reduce expenses.
When the market is in a downturn, many manufacturers will consider reducing production and vacations. In July and August of last year, many weaving and dyeing factories took high-temperature leave, but this year is likely to advance. In the case that the next order is unsustainable, many manufacturers will consider reducing production or even holiday. In the short-term, it is recommended that varieties with larger stocks go along with the market, and the transaction can be appropriately profitable; prices of lower-stock varieties can be temporarily stabilized, and the principle of production according to order, use-and-use, and strict inventory control is adhered to.
It is said that cash flow is the “life and death line” of an enterprise. When new orders are difficult to sustain, many cloth owners think that for the company, there is no order, that is, no account is received, but the cost of labor and rent is again Difficult to remove, if there is a loan, the loan and interest must be repaid every month. Therefore, it is necessary to reduce expenditures next.
“Next we may reduce production appropriately to alleviate the pressure on capital and inventory.” A factory director doing imitation memory is helpless. “Now the raw materials have fallen very badly. We have not received new orders. We can only produce some conventional varieties, but we use raw materials that were previously stocked at high prices. Therefore, we choose to stop half of the machines next month and inventory production. Too much can not be sold, but it takes up our liquidity (the raw materials are all traded in cash).
Another person in charge of the dyeing factory also revealed that the working hours of employees may be adjusted appropriately, from two shifts to three shifts. Reduced worker time and wages can reduce labor costs.
From the current market situation, the start-up rate of various factories is slowly rising, but destocking is slow, and new orders are not smoothly delivered. Next, the market will be in excess capacity, and low-price competition will be triggered. Therefore, when the market is uncertain, it is wise to choose strategies such as reducing production or adjusting the working hours of workers to reduce expenses.
When the market is in a downturn, many manufacturers will consider reducing production and vacations. In July and August of last year, many weaving and dyeing factories took high-temperature leave, but this year is likely to advance. In the case that the next order is unsustainable, many manufacturers will consider reducing production or even holiday. In the short-term, it is recommended that varieties with larger stocks go along with the market, and the transaction can be appropriately profitable; prices of lower-stock varieties can be temporarily stabilized, and the principle of production according to order, use-and-use, and strict inventory control is adhered to.