Recently, the editor learned from a conversation with a trader during a market research visit that there are orders but it is even more worrying. “The orders currently on hand have been received in December. The market has picked up a lot, but we are also worried that these orders will be canceled at any time. These orders are ultimately exported to the United States, where the epidemic situation is very unstable.”
Boss Bu’s fearful attitude in accepting orders shows that the current situation of foreign trade exports is still turbulent and there are many unfavorable factors.
Foreign enterprises have been affected by the second epidemic, and the recovery of foreign trade exports is still poor
According to data from the General Administration of Customs, from January to July, textile and clothing exports amounted to US$156.48 billion. A year-on-year increase of 5.6%. Among them, exports of clothing were US$66.4 billion, down 16.6%. These data show that clothing export data are still declining, so clothing exports have not fully recovered.
Textile foreign trade exports are mostly divided into two types, one is direct fabric export, and the garments are produced abroad; the other It is export of ready-made garments and the garments are produced domestically. As the world’s largest manufacturing factory, Vietnam has contracted the production of most of the world’s clothing, so most of my country’s fabrics are directly exported. However, many companies in Vietnam have recently been affected by the second epidemic. According to reports, 20% of companies said they have suspended operations, 76% said they are currently unable to balance their income and expenditure, 2% have gone bankrupt, and only 2% said they have not been affected by the epidemic yet. Most enterprises in Vietnam are facing operational difficulties, and clothing processing is also affected. my country’s textile exports will naturally be affected as well.
A trader who mainly exports to Vietnam said: “There are not many orders exported to Vietnam recently. There are only some orders for four-sided bombs, but there is no improvement in others. Over there Enterprises have also been seriously affected by the epidemic, and many workers have not gone to work.” In addition, in market research, we also found that there are very few foreign trade orders in Europe, America and other regions, and most export trade is still stagnant and has rarely recovered.
Textile foreign trade orders have improved, but traders’ profit points are still only 3%-5%
From the analysis of orders received by downstream trading companies, the recent The foreign trade situation has improved, but the profit pressure in most links of the industrial chain is still high. Although gray fabrics fell sharply, the company’s profits from finished fabrics also fell. According to the person in charge of a foreign trade company, the profit this year was only 3%-5%, and it could reach about 7%-8% last year.
According to statistics, from January to June, the loss rate of textile enterprises above designated size in the country reached 32.6%, an increase of 11.4% compared with the same period last year. percentage points, and the losses of loss-making enterprises increased by 50.2% year-on-year.
While foreign trade orders have recovered, the profitability of companies has not recovered as expected, and most companies are still on the verge of losing money. On the one hand, the profit point continues to decline; on the other hand, even if the orders are paid back, it is very slow, and various deductions will occur during the payment, leading to further decline in profits.
According to an owner of a foreign trade company, most of the current order contracts require 3 months for payment, but customers have been defaulting on payment, and it basically takes 6 months to receive payment. They will also find various reasons to ask for deductions when returning the money, so the profit point calculated from one order is very low. In addition, the payment time is too long and the financial pressure is relatively high. If there is an improvement in the second half of the year, it may be difficult to cope with the increase in orders.
From this point of view, it is very understandable to understand Boss Bu’s mentality of having a purchase but being worried. This year, there are many examples of foreign trade orders being canceled halfway due to the epidemic. Although foreign trade export orders are gradually recovering, the outbreak of the second epidemic is getting worse, and there is indeed a hidden danger of orders being canceled again.
The cloth boss who received the foreign trade order was worried, and the cloth boss who did not receive the order was even more worried. The outbreak of the second epidemic has brought the originally recovering export trade to a standstill, and now we can only rely on domestic sales orders to support workers. Entering September, foreign trade orders showed weakness again. The outbreak of the second epidemic not only forced many foreign companies to close again, but also caused the global economic development to stagnate. A report from Global Data, an international research and consulting company, pointed out that under the impact of the epidemic, the total loss of the global apparel market in 2020 will be as high as US$297 billion. Therefore, foreign trade export orders may not be optimistic in the second half of the year.
Although the foreign trade situation is unstable, trading companies cannot stop taking orders because of this. What enterprises need to do more is to take precautions before they happen and consider various factors when signing contracts to protect their own interests. Cherish every order you place now and do your best in the present. As for the future, you can only adapt to changes.
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