The COVID-19 epidemic, which began at the beginning of the year, has not stopped raging so far. Global economic and trade activities have inevitably been hit hard. In particular, the economies of some overseas countries that have failed to prevent the epidemic have either stagnated or regressed. The textile industry, which relies heavily on foreign trade exports, has also suffered greatly. The weakening market and shrinking market have been the consensus of the vast majority of textile people in 2020.
So what impact will the COVID-19 epidemic and weak foreign trade have on our textile industry, and what will be the development trend of the textile market in the future? With this series of questions, we went to the Shanghai Textile Expo and visited nearly 50 companies across the country to bring the real situation of front-line textile companies.
Over 50% of textile companies have reduced orders and profits have shrunk by 10 %
During our visit, we may hear most words such as “poor market conditions”, “few orders”, “thin profits”… which reflect bad market conditions. According to data analysis, this is indeed the case.
Among the companies participating in the survey, as of September, 53% of the companies had reduced orders this year compared with previous years. Another 30% of companies said that this year’s orders had not changed much compared with previous years, and the overall order could remain the same. Finally, 17% The company said its order volume this year has increased year-on-year.
The decrease in order volume is also very obvious in the company’s overall sales. Among the companies surveyed, only 23% said their sales increased this year, while the other 77% reported declines to varying degrees. Among them, the largest number of companies experienced a decline of 30-50%, accounting for 59%. In addition, 6% of corporate sales were directly cut in half, a drop of more than 50%. However, there are still many companies engaged in the production of anti-epidemic fabrics whose orders and sales have increased significantly.
The reduction in orders also had a certain impact on sales, but this impact was relatively limited. Although almost all companies’ profits have declined, the decline is not large compared to sales, and most of them are controlled at around 10%. The decline in the textile market is not only due to changes in sales and sales volume, but also changes in receivables have a significant impact on textile companies.
Receivables generally account for 30%+, and delays have become the norm
Engaged in textile trade , the order quantity is important, but more importantly, the payment can be collected in time and in full, so to some extent, the receivables are of great significance to the textile people. Due to the particularity of the textile trade, credit sales are already a sales model that is difficult to change. The only thing that can be done is to reduce the proportion of receivables and shorten the account period. However, this year’s market environment is obviously somewhat unfavorable for receivables.
As expected, 100% of textile companies have receivables to some extent. 17% of companies have a receivables ratio of less than 10%, and the number of companies with a receivables ratio of 30-50% is the largest, reaching 53% of the number of companies surveyed. There are even more than 10% of companies whose receivables account for more than 50% of sales, which means that more than half of the payment for goods of such companies has not been recovered. An excessive proportion of receivables will not only affect subsequent orders, but also threaten the company’s financial security. However, most textile companies that are in a weak position in the supply and demand relationship have no choice but to accept it, or even have their account periods continuously postponed.
Normally, the account period of textile receivables is not long. In the interview and survey, only 34% of the companies said that their payment periods exceeded 3 months, while 66% of textile companies controlled their payment periods within 3 months, and even more than 20% of the companies had payment periods of more than 3 months. Less than a month.
This kind of good accounts receivable period is obviously difficult to maintain in this year’s textile environment. Almost all companies said that this year’s account period has been extended. A delay of 1-3 months is normal, and a delay of more than 3 months is not uncommon.
However, most of the companies surveyed said that the financial pressure is not great. Because although the account period has been extended, the security of the payment is still guaranteed, and basically all the money can be returned. It is just a matter of time. The off-season performance of the textile market obviously cannot stop at the trade side, and the situation on the production side is also unsatisfactory.
The operating rate of textile factories has declined, but the inventory performance is better
Normally, September and October are the peak seasons for textiles. In these months, various types of The operating rate of textile factories, large and small, should be at a high level. Even if they are not fully operational, they are at least above 90%. However, this year’s textile factoriesIn the weaving factory, work has become the main theme.
According to interviews and surveys, although it is in the traditional peak season of textiles, only 40% of textile factories can maintain full operation rates, and 60% of factories have experienced a drop in operating rates. Less than 70% is 40%, and even 10% of the surveyed companies cannot guarantee a 50% startup rate. The change in the power-on rate can also reflect the “quality” of this textile peak season to a certain extent. Of course, the result is obviously not ideal.
However, the overall inventory of textile factories is not large. Even if there are many companies, they generally only have about 3 million meters. Most of them are controlled below 1 million meters, which is converted into output. , roughly equivalent to 30 days to 45 days of output. Effective inventory control is mainly due to the factory’s ability to adjust operations and produce on demand.
Compared with the trade end, the textile production end has higher costs, such as factory rent, worker wages, machine depreciation, environmental protection and safety supervision, etc., which are all unavoidable expenses. Therefore, once the market weakens, the pressure on the production side will be the greatest. In order to reduce the pressure, the first thing most factories will think of is layoffs and salary cuts. Among the companies surveyed, except for a few who said they had not laid off employees, all other companies had some practice of downsizing. At the same time, not only the number of workers has decreased, but most workers’ wages this year have stopped increasing and have slightly decreased by 500-1,000 yuan/month.
Until various influencing factors such as the global epidemic, Sino-US trade, and clothing company business have not substantially improved, It is difficult to restore market confidence, but during interviews, a considerable number of textile companies still said that the market in October is expected to be better than that in September. And many companies are looking for opportunities in the crisis and actively seeking ways to transform and upgrade. There are endless methods such as live broadcasting, developing new products, and expanding customers.
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