The rainy season in July is still continuing, and the hot weather has not yet come. However, the textile market has entered the off-season. The lack of orders has lasted for more than half a year, and some textile companies are struggling to operate their companies and barely make ends meet.
“The trade situation is relatively good, and we are receiving some orders one after another. However, the situation in the weaving factory is very poor, and the sales are not ideal. We only have 40 units. Weaving machines mainly produce conventional imitation silk such as chiffon, tangled hemp, etc., and now the inventory has reached millions of meters. The financial pressure is too great, so we have to shut down the factory. It has been shut down for one month now, and it is planned to be shut down for another month.” The owner of an industry and trade enterprise said.
Weaving company profit is 5% VS trading company profit is 20%
Today’s textile market, It is true that life is the most difficult for weaving manufacturers. New gray fabrics are produced on the machines every day, and this speed is much faster than the shipping speed. The inventory accumulates and the more funds are invested. Funding is the most important factor affecting the operation of an enterprise. Once capital turnover becomes difficult, production reduction or suspension becomes the only way out.
In terms of profit margin, the weaving factory only makes money from selling cabbage because of its intention to sell white flour. This year, the sales profits of weaving enterprises’ gray fabrics are very slim, and there are also many companies selling at a loss. Taking ordinary polyester taffeta and pongee as examples, one meter can only earn 0.05 yuan, so the profit margin of conventional varieties is only about 2%-5%. The profit margins of trading companies can be said to have increased to some extent this year. The price of gray fabrics of most specifications has dropped by more than 30%, while the price of fabrics has dropped, but it may only drop by 5%-10%. According to some trading company owners, the profit margin of fabrics this year can reach 20%-30%.
You can see the comparison of the profit margins of the two. The life of traders is relatively easy this year, which is why more and more textile bosses tend to engage in pure trade. The person in charge of an integrated industry and trade enterprise that originally owned 200 looms revealed: “In the first half of 2019, I sold all the machines and factory buildings. Now the gray fabric business is getting harder and harder to do. Not only does it require a lot of capital investment, but it also involves a lot of energy. , but the benefits were not ideal. Therefore, I thought twice and decided to only do trade in the future. Looking back now, I am particularly glad that I sold the factory last year, otherwise I would have lost so much this year! Although the trade market is not good this year, at least when there are no orders In this case, there is no need to invest much money, and at most it will not make any money, nor will it lose money.”
The monthly expenditure of the weaving company is 1.83 million VS the trading company’s monthly expenditure of 80,000
Indeed, running a factory requires much more capital than running a trading company. Taking a factory with 200 looms as an example, even with three shifts this year, it will require about 40 people, and the monthly salary alone will cost about 200,000 yuan. Electricity and water bills cost about 600,000 yuan a month. If the factory is rented, based on the 2,000 square meters of the factory, the monthly rent will be about 30,000 yuan. In addition, there is the most important cost of raw materials, which costs about 1 million per month. Ignoring other expenses for the time being, it will cost 1.83 million per month.
And the fees required by trading companies are only a small amount. See the big witch, only 80,000 yuan per month. Taking a small and medium-sized trading company as an example, there are about 10 workers and the monthly salary required is about 50,000. The electricity and water bills are almost the same as household expenses and can be ignored. Most of the office buildings in the sales department are rented, and the monthly cost is about 10,000 yuan, which is a large expenditure. If you receive an order, you generally only need to pay a 30% deposit for the gray fabric. All other post-finishing costs can be paid in arrears, and you only need to pay the dyeing fee on time. Similarly, other expenses are ignored, and the maximum monthly expenditure of a trading company is about 70,000-80,000 yuan.
After settling this account, the editor was very disappointed. The gap in capital investment was really too big! Of course, this account is calculated without considering whether there is an order. Considering the volume of orders received, weaving companies may not be inferior to trading companies. After all, having a factory has advantages and dominance, which is what many traders dream of. But this year, under the influence of the epidemic, many weaving company owners have indeed begun to think of closing their factories. However, in a bad market, it is also very difficult to sell machines and factories, and it is difficult to get out for a while.
For some companies that have difficulties in running funds , production reduction and suspension can be regarded as a good strategy to alleviate the current predicament. Some trading companies are also facing problems such as lack of orders. Weaving companies need to carefully consider the transition to trade, which may not be a good idea.
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