Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News Hot textile orders returning to India: mainly “short and bulk”, with meager profits and high delivery risks

Hot textile orders returning to India: mainly “short and bulk”, with meager profits and high delivery risks

Currently, the COVID-19 epidemic in India continues to be severe. According to the latest data released by the Ministry of Health of India, as of 8:00 local time on May 13 (10:30 Beijing time), India has record…

Currently, the COVID-19 epidemic in India continues to be severe. According to the latest data released by the Ministry of Health of India, as of 8:00 local time on May 13 (10:30 Beijing time), India has recorded 362,727 new confirmed cases of COVID-19 in the past 24 hours, and the number of new confirmed cases in a single day has increased continuously. The number of cases has remained above 300,000 for 22 days, with a total of 23,703,665 confirmed cases; 4,120 new deaths, and a total of 258,317 deaths; a total of 19,734,823 cured cases; and a total of 37,10,525 confirmed cases.

The raging COVID-19 epidemic in India not only drags down the country’s economic recovery, but also affects the supply chains of many industries around the world, and the textile industry is one of them. Recently, there has been news that a large number of textile orders from India have been transferred to the Chinese market. However, the reporter’s investigation found that although many domestic companies did receive some transfer orders, these orders were not as “good” as imagined.

Xu Dong, the person in charge of a large textile company in Shandong, told reporters: “Return orders are not all placed by Indian customers, but are placed directly by European and American customers, and some are placed through Southeast Asia. The customer changed hands. We also received a small order last month. The production volume of this order was not large, but the delivery time was short, only 3 weeks, so the profit was not high.”

As for the return of orders from India, some textile export traders in coastal areas do not feel strongly. “These so-called return orders are mainly for mid- to low-end processed products, and most of them are ‘small bulk and short-term’ orders, so we generally do not If you can take it, the profit is not high and the risk is high, because once the epidemic situation improves, these orders will be transferred back, and you may end up spending time with your wife and losing your troops.” Mr. Chen, general manager of a company in Ningbo, Zhejiang, told reporters.

The epidemic has caused orders to shift to China

Since April, the number of confirmed cases of COVID-19 in India has hit new highs every day. According to data from the World Health Organization, India had the highest number of newly confirmed cases in a single day on April 23 and 24 in the world. On April 5, the number of daily confirmed cases in India exceeded 100,000 for the first time, exceeded 200,000 on the 15th, and exceeded 300,000 a few days later. As of now, the number of newly confirmed cases in India in a single day has remained above 300,000 for 22 consecutive days.

As we all know, India is the world’s largest cotton producer, and the textile and apparel industry is one of India’s largest sources of foreign exchange earnings. The textile industry accounts for about 15% of India’s total export revenue. As a labor-intensive industry, textiles and clothing have been severely affected by the epidemic this time. Data provided by Wozil Consulting Company shows that in the major garment towns of Delhi and Bangalore, the labor absenteeism rate in the garment industry is as high as 50%; last year, consumption and exports in the Indian garment industry decreased by 30% and 24% respectively.

As a result, many international buyers have taken notice and shifted their orders to China. Tang Shuangshuang, an analyst at West China Securities, pointed out to reporters that India’s yarn production capacity accounts for more than 20% of the world’s total. If Chinese companies can successfully win more orders lost in India, the domestic textile industry may also receive benefits in the short term due to the Indian epidemic.

Market data shows that in mid-April, cotton futures prices recovered 15,000 points and have steadily risen since then. In the last week of April, it hesitated below 16,000 points. However, after returning from the May Day holiday, bulls once again exerted their strength, and finally on May 7, cotton futures successfully reached 16,000 points and hit a two-month high.

Cotton yarn prices also rose across the board after the May Day holiday. The main contract of Zheng Cotton rose from 15,530 yuan/ton to 16,250 yuan/ton, and the cost of cotton yarn increased accordingly. In addition, the “city closures” and unstable freight channels in India, Pakistan and other Southeast Asian countries have not only led to the return of short-term orders, but also the gradual overflow of long-term orders from Europe, the United States, Japan and other countries. Domestic textile and clothing companies have become less worried and their order-taking sentiment has increased.

In fact, as early as October last year, when India showed signs of a second wave of epidemics, many textile orders turned to China. A textile factory in Hebei said that since September 2020, the company’s overseas orders on the Internet platform have increased rapidly, mainly from the Indian market. Orders for towels reached 2 million in just one month, which is equivalent to twice the same period last year. A private enterprise in Jinhua, Zhejiang Province even received a large export order of hundreds of thousands of tablecloths from the international brand ZARA, and this order was originally produced by a printing company.

Blum Oriental, the domestic leader in colored spinning, showed strong growth in the first quarter due to the dual benefits of the recovery of overseas orders and the expansion of production capacity. According to the company’s performance forecast for the first quarter of 2021, net profit attributable to the parent company increased by 135 million yuan to 164 million yuan, a year-on-year increase of 190% to 230%.

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, and it is close to full production. 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.

The accelerated transfer of orders has also directly boosted my country’s textile and apparel exports. Data show that in the first quarter of this year�, China’s textile and apparel exports amounted to US$65.1 billion (approximately 421.4 billion yuan), a year-on-year increase of 44%. Among them, textile exports were US$31.81 billion (approximately 206 billion yuan), a year-on-year increase of 40.3%; clothing exports were US$33.3 billion (approximately 215.5 billion yuan), a year-on-year increase of 47.7%.

Return orders are mainly “short-term and small”

Regarding the news that a large number of Indian textile orders have been transferred to the Chinese market, in the view of professionals, it is normal for multinational companies to adjust order production globally and for international buyers to select suppliers based on production capacity. market behavior.

Xu Dong told reporters that although there has been a resurgence of overseas orders recently, the contract prices of these orders are mostly uncompetitive, and they are all mid- to low-end processed products with little profit. high.

An industry insider also analyzed to reporters: “Upstream brands can get out of the business as long as they cancel the order, and they don’t have to pay the balance. Such orders are transferred quickly, and buyers More emphasis is placed on price and delivery speed. When India’s domestic production capacity recovers, it remains to be seen whether orders can remain in the country for a long time. The textile industry is a labor-intensive industry and is very sensitive to labor costs. In recent years, as China As labor costs increase, many brands have relocated their factories to Southeast Asian countries such as Vietnam.”

What’s more important is that the rise in raw material prices this year has squeezed corporate profits, so , even if many companies increase orders, they are likely to end up “losing money and making a profit.”

Mr. Chen, the above-mentioned Ningbo export trader, told reporters, “Last year, the company’s profit was still about 10%, and this year it may be less than 5%.” Therefore, he is currently very cautious in taking orders and would rather not do it than lose money.

It is worth noting that due to the raging epidemic, some ports and logistics industries in Southeast Asia have been shut down. For example, the Indian container port Kandla announced that it will close its terminal operations from April 24, and other ports in India and Thailand may be forced to suspend operations one after another due to the epidemic. Therefore, in Xu Dong’s view, Chinese companies need to be very cautious when accepting orders from India, Myanmar and other countries. Due to various reasons such as the epidemic, port shutdowns, and logistics delays, buyers may not be able to receive the goods on time, resulting in delays, breaches of contract, or even abandonment. single phenomenon.

Under the impact of the epidemic, the supply of India, the second largest textile manufacturer and exporter, ” stalled “, accelerating the start of a new cycle of the global textile and apparel industry. China is the country with the most complete textile industry chain in the world, but its current advantages are mainly reflected in the stability and security of the supply chain. The upgrading of the industrial chain in recent years has also enhanced the competitiveness of the textile industry.

In addition, according to the forecast of China·Keqiao Textile Index, although exports will still maintain growth in the second quarter of this year, the growth rate will return to normal levels, and my country’s textile and clothing and other bulk commodity exports will continue achieve restorative growth. </p

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