The epidemic in India continues to spread, causing a chain reaction to the textile industry chain.
The Indian textile industry occupies a pivotal position in the global textile industry and is the second largest textile producer in the world after China. For the Indian economy, the textile and clothing industry is also one of the pillar industries. The textile industry accounts for about 15% of India’s total export revenue.
According to reports, due to the blockade measures during the epidemic, the exports of the Indian garment industry have shrunk severely, with exports of the Indian garment industry falling by 24% in 2020. In the new round of the epidemic, related Indian companies have lost a large number of garment export contracts because workers are unable to come to work.
This brings opportunities to China, the world’s largest textile country. A large number of textile orders that had previously been transferred from China to India began to return.
“Affected by the epidemic, the textile industry in India and Southeast Asia has come to a standstill, and some orders have been transferred to the country, bringing some orders to the company.” Vosges Shares (002083.SZ) recently announced The interactive platform responded to investors.
The reporter’s investigation found that many textile companies have successively received return orders from Southeast Asia. However, companies are also cautious about this part of orders, because once the overseas epidemic situation improves, the return orders will also leave.
Significant increase in production capacity
Vosges is China’s largest household appliance manufacturer Textile exporter, mainly exporting towels, bedding and other home textile products. At the end of April this year, Vosges stated on the investor interaction platform that the company was operating at full capacity and orders had been placed until July.
We learned from Vosges that the company’s orders are continuing to grow and are now scheduled until August.
The relevant person in charge of the company told reporters, “We have indeed taken on transfer orders in Southeast Asia, most of which are from India, mainly mid- to low-end. But not many parts have been taken on. The proportion is at most 10%. The company’s orders have always been mainly from old customers, and new customers account for a small proportion.”
The person said that in fact, the order transfer in Southeast Asia started from last year. It started one after another in the first half of the year, and since the first quarter of this year, the backflow has become slightly more obvious. “The epidemic in India has been relatively serious this year. Other overseas customers are worried about carrying the new coronavirus on textile products, so they are hesitant to place orders in India.”
Lianfa, the world’s leading manufacturer of yarn-dyed fabrics Shares (002394.SZ) also mentioned the return of orders. It said on the interactive platform that the new crown epidemic in Southeast Asia has caused some clothing orders to return to China, but it emphasized that this was “short-lived and limited.”
The company also stated that the company’s orders are characterized by small batches, multiple varieties, and fast delivery. At the same time, the COVID-19 epidemic is still spreading around the world, and there is great uncertainty in the external environment. Therefore, it is difficult to predict the order situation for the whole year.
Blum Oriental, the domestic leader in color spinning, has experienced a surge in performance as its product sales have increased significantly. In the first quarter, it achieved a net profit attributable to the parent company of 223 million yuan, a year-on-year increase of 213%.
In a recent interview with the media, Blum Oriental insiders said that the company undertook a wave of reshoring orders in the second half of last year. Since the fourth quarter of last year, the company’s order situation has been very good, close to Running at full capacity. Based on the order and production situation, it is prudent to estimate that the performance in the first half of this year will increase significantly compared with the same period in 2020, which has a relatively low base, and even be better than the same period in 2019 before the epidemic.
While paying attention to the return of orders, investors are also paying attention to the production conditions of textile companies in overseas factories. Previously, due to factors such as cost and trade policies, many textile companies chose to set up factories in Southeast Asia.
Footwear manufacturer Huali Group said, “The company does not have a factory in India, and the mass production factory is mainly in Vietnam. The Vietnam factory Relatively strict epidemic prevention and control measures have been formulated, and the epidemic control is relatively good.”
Liu Tiantian, chief analyst of the textile, clothing and light industry of Dongxing Securities, pointed out that recent epidemics in Southeast Asia, including Vietnam and Indonesia, The epidemic has worsened and the epidemic in these regions continues to ferment, which will have an impact on the global supply chain. The overseas production bases of my country’s textile enterprises are mainly in Southeast Asia. Companies where there is no epidemic in the factory or the factory has done a good job in epidemic prevention can better undertake the transfer of this round of orders, and are expected to seize the opportunity to expand production capacity against the trend. In terms of core customers, Share increased.
Reshoring is a short-term dividend
Although there are opportunities for overseas orders to return , but in the view of many business people, many orders are simply “unprofitable.”
“A lot of home textile orders came back to India last year, but the prices were not high and the profits were low. These low-end products will be made at a loss, so our business staff also We will judge whether we should accept it. Moreover, looking at it now, this part of the return orders will not have a big impact on the performance. On the contrary, the fluctuation of the RMB exchange rate will have a greater impact on the company.” A person in charge of a large textile company in Jiangsu told reporters.
The aforementioned person in charge of Vosges also said, “India’s textile production is mainly mid- to low-end. Since the company still has relatively strong bargaining power abroad, its own orders cannot keep up. Come on, so for theseThere is also a selection for moving orders, try to pick some products with high added value. ”
The person said that this part of the transfer orders has been predicted for a long time. The dividend must be temporary. First of all, the quantity is not large. Once the epidemic situation in India improves, it will still return to India.
Lin Xiangyi, a textile and apparel industry analyst at Galaxy Securities, believes, “In the long run, if the epidemic in India is controlled in the future, orders may return to India, because India will Costs in terms of manpower, taxation, and trade environment are all lower than those in my country. Chinese textile companies have obvious advantages in many aspects such as management experience, technological manufacturing, and labor efficiency, which can be used as a favorable basis for domestic textile companies to build factories overseas. ”
However, the epidemic has accelerated the start of a new cycle for the global textile and apparel industry. China is the country with the most complete textile industry chain, and its current advantages are reflected in the supply chain. In terms of stability and safety.
“At present, my country’s textile manufacturing industry is basically in a mature stage, and leading companies have benefited from the trend of increasing industry concentration with their technology, experience, and scale advantages. At the same time, affected by the epidemic in 2020, some small and medium-sized enterprises have been cleared, and industry concentration is expected to further increase. With the rapid upgrading of domestic industrial technology and the increasing machine replacement rate, the long-term development space of domestic leading textile enterprises is still broad. “Lin Xiangyi said.</p