After the outbreak of the epidemic in the past two months, the recent textile market generally reflects that domestic and foreign trade orders have rebounded to varying degrees. Some factories said that although they only received a small order of 30,000 meters, they still I feel like there is a layer of honey in my heart! It can be seen that the market seems to have rekindled the fire of hope!
However, the downstream footwear and apparel industry does not seem to be so lively recently, and “heart-wrenching” news comes out from time to time:
1. Global The second largest shoe factory will lay off 30,000 people
Since the beginning of this year, the shoemaking industry has been affected by the new crown epidemic, and major brand manufacturers have cut orders by more than 80%. Hongfu Industrial, led by Zhang Congyuan, known as the “Mysterious Shoe King”, It is even reported that the Vietnam factory will lay off 30,000 people. It is reported that Hongfu Industrial is the second largest shoe factory in the world and the largest shoe factory for vulcanized shoes. It has an army of 150,000 people around the world and has long been OEM for brands such as NIKE and CONVERSE. Its annual output exceeds 160 million pairs of shoes, with an output value of More than 150 billion yuan.
2. The 100-billion-dollar clothing giant bid farewell to China
Recently ESPRIT, a big brand, has also announced that it will close its stores on May 31. Its parent company, Esprit Global, announced its withdrawal from China and Asia, leaving only the European market with no way out. Although ESPRIT’s selected stores in Germany, Sweden and the Netherlands have reopened, the subsequent impact of the epidemic is still far-reaching. Esprit said it was unable to predict when business would return to normal, nor could it quantify the impact of the epidemic on its full-year performance.
3. Garment manufacturers cut off 60 production lines in one go
According to media reports, the chairman of Ruhong, a vertically integrated textile factory that owns knitting factories, dyeing and finishing factories, and garment factories, said that due to the epidemic, revenue in April was a low point, only 1.491 billion yuan, and the monthly revenue was only 1.491 billion yuan. A decrease of 22% and an annual decrease of 27%, a new monthly low since February 2017. Because of this, Ruhong’s Vietnam factory has no plans to expand production this year. The original Indonesian factory expansion plan has also been cut in half from the original 120 production lines, and it is planned to complete 60 lines first. Its main customers include brands such as Nike, Lululemon, and UA, as well as distributors such as Costco and J.C. Penny.
In addition, since April there have been reports of clothing brand companies “running away” “News: GAP withdraws, H&M closes stores, LV withdraws cabinets, Uniqlo clears out…
This epidemic has had a considerable impact on the global economy. In addition to reducing corporate sales, In addition, inventory has also become their biggest factor dragging them down.
(Data source: National Bureau of Statistics)
Published from the National Bureau of Statistics Statistics show that in March 2020, the inventory of finished products in the textile, clothing and apparel industry was 85.1 billion yuan, an increase of 1.69 billion yuan compared with February, and an increase of 6 billion yuan, or 7.58%, compared with the same period last year. . It can be seen that even during the epidemic, factory operation was not as good as the same period in previous years, but the inventory pressure in the textile and apparel market has not decreased but has increased, which will inhibit the enthusiasm of downstream buyers for purchasing fabrics.
This also confirms what a cloth boss told the editor not long ago: now not only does he have no orders, his customers also have no orders, and the early inventory in the clothing industry has not been sold. I lost the money and the funds cannot be withdrawn. How to place an order? Although online live streaming is currently very popular and has brought some orders, this “small batch, multi-batch” order method cannot completely make up for the loopholes caused by the epidemic, and there are still few market orders!
The textile market in the post-epidemic era is still facing two major problems: overcapacity and insufficient consumption power!
Let’s first look at overcapacity. This power to the textile industry can be said to have been around for a long time. Although it received dividends from environmental protection rectification in 2017 and 2018, the textile industry experienced a phase of elimination and liquidation. “Scattered, chaotic, and dirty” companies were eliminated by the market, and some small and micro enterprises also chose to withdraw from the stage. For a time, the market supply exceeded demand, and the fabric market It also ushered in the “golden age”, and textile bosses made a lot of money.
However, the subsequent textile market experienced the expansion of peripheral production capacity, the escalation of Sino-US trade friction, and the ruthless suppression of the new coronavirus epidemic at home and abroad, and the market once again entered a state of oversupply. Under this market situation, weaving companies even chose to take turns to take vacations, take holidays, and reduce loads during what should have been the traditional peak season (April) to rush production. Their profits have always been hovering on the edge of profit and loss.
“At that time, a loom could earn more than 150 yuan a day, and the most was almost 200 yuan. , let alone 50 yuan this year, we are also doing machine rates of 15 or 20 yuan, because there are too many products on the market, and everyone can sell whatever they can.” said a textile boss in Changshu area.
In addition��According to the sample companies monitored by China Silk City Network, the inventory of most fabric manufacturers is still high. Most manufacturers said that although the goods on the market after May are better than the previous period, the large amount of gray fabric inventory accumulated in the early period will still be difficult to get rid of in the short term. . At present, the inventory of gray fabrics in Shengze area is about 41 days, which has doubled compared with the same period in 2017.
The second problem is insufficient consumption. Affected by the COVID-19 epidemic in 2020, consumption at home and abroad has almost “stopped”, and most residents have been quarantined at home. The Golden Week of consumption during the Spring Festival has disappeared directly. Although the May Day Golden Week ushered in a small wave of retaliatory consumption, The irritating effect on fabrics is not obvious.
From January to March 2020, the total retail sales of consumer goods was 454.671 billion yuan, a year-on-year decrease of 21.9%. Among them, the retail sales of consumer goods by units above designated size were 115.892 billion yuan, a decrease of 23.6%. From the perspective of classification, the value of clothing, shoes, hats, and knitted textiles from January to March was 8.099 billion yuan, a year-on-year decrease of 26.8%.
The epidemic has taught everyone a valuable lesson on consumption: when cash flow is tight, every penny spent should be infinitely directed towards the original value of the item, which means As a result, consumer consumption during the epidemic has become more and more rational, and retaliatory consumption is far less effective than everyone expected.
Editor’s Note
It must be said that the market in the post-epidemic era is still full of uncertainties. Looking at the daily increase in the number of confirmed cases of the new crown epidemic, even though foreign economic activities are gradually opening up, the recovery of the textile market is still relatively slow. “Now our orders have not increased, and we are still not too optimistic about the market in May, for fear of the epidemic. Repeatedly, Western countries will block it again.” A foreign trade boss said frankly.
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