In the past two days, a manufacturing factory in Shenzhen announced its dissolution and became a hot topic.
Seeing this result is indeed embarrassing , it is understood that this manufacturing factory is a Japanese-owned enterprise, and the main reasons for its closure were the sharp decrease in demand for production products and the skyrocketing rent costs.
This manufacturing plant is just a microcosm of many manufacturing companies. In recent years, rising costs and shrinking demand are important reasons for the continuous reduction of manufacturing profits. The same is true for the textile industry, especially this year due to the epidemic. , many factories are facing production reduction, suspension or even bankruptcy. The textile industry has fallen into a vicious circle of “high cost, low profit”, and small and medium-sized enterprises are struggling.
Textile companies are under excessive cost pressure and have been making small profits Operation
In recent years, Southeast Asian countries represented by Vietnam have gradually increased their share in global garment exports, and have gradually extended their reach to upstream textile raw materials. Although the labor efficiency of workers in Southeast Asian countries in Vietnam is not high and there are obvious shortcomings in completing orders with complex processes and tight delivery times, they still attract a large number of bosses to set up factories. Mainly because workers’ wages and land rent there are much lower than in China.
According to a cloth boss who runs a factory in Myanmar: “As a labor-intensive industry, the biggest advantage of developing here is the low labor cost, which is paid domestically. The salary of ordinary workers is more than 5,000 yuan, but here it only costs about 800 yuan equivalent to RMB.” Another cloth boss also said: “Labor costs have risen too fast in recent years, and now account for more than 40% of the total expenditure. Although This is true, but the annual worker turnover rate is still very high, and prices are also rising year by year. Therefore, workers’ wages still tend to continue to rise.”
As an important factor directly related to the survival and development of the enterprise itself, the cost of the enterprise has always been the biggest headache for textile bosses. In addition to labor costs, raw materials, water and electricity bills, rent, investment in environmental protection equipment, transportation fees, taxes, etc. are all costs incurred by enterprises. In the past October, the company benefited from the boost of the cold winter and the “return flow” of orders from India. “Textile companies have received a lot of domestic and foreign trade orders, but profits are at a low level. This is mainly due to the surge in raw materials. For example, the price of 60-count yarn has increased by 5,000 per ton. In addition, the RMB exchange rate has surged, entering the 6.5 era, and sea freight has increased. The rising prices have put cloth bosses in a very passive state, and the profits of textile companies have shrunk by more than half.
The volume of terminal clothing orders is shrinking, and fabric companies are “fighting for price”
In recent times, although market transactions have improved, fabric prices have not risen. This is mainly due to the high social inventory of gray fabrics. According to incomplete statistics, the total number of looms transferred from other places has exceeded 200,000 units, further exacerbating the long-standing overcapacity situation. This year is the period when the effects of overcapacity are concentrated. A company that produces imitation silk said: “The inventory of gray fabrics of each variety is now more than 300,000 meters, and no one wants the gray fabrics after they have been kept for a long time, so they can only be disposed of at a low price. According to the price of raw materials, how to calculate They are all losing money.” It is understood that the average gray fabric inventory of enterprises in Jiangsu and Zhejiang is now about 41 days. Although the destocking effect was obvious in the early stage due to Double Eleven, there are now signs of a slight increase.
“The market cake is shrinking, like some brands While the order volume is being reduced, more and more people are sharing the cake. In this case, customers are more inclined to suppliers with lower prices. This also causes the price of our fabrics not to rise. Instead, it becomes cheaper and the profit margin becomes larger. They are getting smaller and smaller. And the lower the price, the harder it is to sell them.” said a production boss of polyester taffeta and Oxford cloth. Taking 190T polyester taffeta as an example, the current price of gray fabric on the market is about 0.90 yuan/meter, and the profit of a loom per day is also maintained at about 10 yuan. The profit is relatively meager, and the profit was the highest in 2017 and 2018. It can reach 120 yuan/day. Another cloth boss also felt deeply: “A group of companies may have to be eliminated and the supply will be balanced before the market will be good. Otherwise, our factories will always operate at a low profit.”
Business owners in physical factories are under great financial pressure this year. Many cloth bosses have said that their goal this year is just to stay alive and be able to support their workers. But no matter what, when external conditions are uncontrollable, companies still need to start from within and win customers with services, products, delivery dates, etc.recognition, there is still one month left before 2021, and next year will be a new beginning. Now the new crown vaccine is making rapid progress, and foreign trade has also picked up. In short, the most difficult time has passed. As long as you persist, make good funds and If you control production, you will have a chance to see a pick-up in orders!
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