There is a word that has become very popular recently, called “involution”.
I often see that when discussing issues, someone comes out and says, involution, involution, East Asia is an involution society…
996 is due to involution.
The reason why young people are content with the status quo is because of involution.
The solidification of classes is of course due to involution.
The reason why the top scorer in the college entrance examination could not get into Tsinghua and Peking University was because of involution.
……
What exactly does “involution” mean?
The word involution first appeared when anthropologists lived on a paradise-like island and found that their agriculture had remained simple and repetitive without progress. At a low level, this stagnant phenomenon is called “involution.”
▲Dunhuang mural “Part of the Maitreya Sutra Transformation·Farming”
To put it simply, when you are farming, everyone pays attention to each You pay more and more attention to every detail, but in the end the output has nothing to do with your investment, or even negative growth. If you go to a wilderness to reclaim wasteland and cultivate it extensively, the ratio of your output to your input will actually be higher. Regarding the textile industry this year, the most common feeling is that “people are very busy and no money is made.” Does this mean that there is also a phenomenon of involution in the textile industry?
China has always been a large manufacturing country with a large population, and textiles are an industry with low thresholds and homogeneous production capacity and severe overcapacity. In fact, the phenomenon of involution has always existed. The trade war and the epidemic have greatly suppressed domestic and domestic consumer demand, and China’s normalization of resumption of work and production has aggravated the involution. Especially recently, the textile industry has ushered in a “warm wave”, but it also has side effects.
The more orders we have, the more money we lose
“We have been working overtime for several months. The land is busy with production, and we are grateful for the substantial increase in orders. However, the sharp appreciation of the RMB has shrunk our profits by a large amount. The more orders and good revenue a company has, the more serious the losses will be. Who can bear this?” November 27 , Li Yong, the head of Zhejiang Textile Enterprises, complained bitterly to reporters.
On November 18, the central parity rate of the RMB exchange rate in the inter-bank foreign exchange market rose to 6.5593 yuan per US dollar per dollar, officially opening the “6.5 yuan era.” At the same time, the onshore and offshore RMB exchange rates against the US dollar have successively hit new highs in the past two and a half years. Compared with the low of 7.1765 yuan onshore RMB against the US dollar on May 27, the RMB has risen by more than 6,000 points, an increase of 8%.
But this is not the highest point of the RMB. Zhu Haibin, chief China economist at JPMorgan Chase, predicts that the RMB exchange rate is expected to rise to around 6.25 next year.
Towards the end of 2020, China’s foreign trade surplus hit its highest level on record, exceeding US$75.4 billion in November. Behind this figure was the 21.1% export growth rate that month. , in May, this data was still negative.
China’s foreign trade situation has reversed within half a year. In June 2020, the General Office of the State Council also issued a document supporting export products for domestic sales. Relief for foreign trade companies was a topic at the time.
How did the comeback happen?
Data show that the “turnaround” of the textile and apparel industry will mainly occur in the second half of 2020. Data show that from January to August, the national textile and apparel export volume was US$187.41 billion, a year-on-year increase of 5.6%, and the growth rate was 1.3 percentage points faster than that from January to July. In the month of August, the national textile export volume was US$14.72 billion, a year-on-year increase of 47%; the clothing export volume was US$16.21 billion, a year-on-year increase of 3.2%, achieving positive monthly growth for the first time this year. Since May, the number of orders for fabrics and textile raw materials in China has increased by more than 100%; the number of orders in the clothing industry has increased by more than 200% year-on-year, and the clothing industry has tripled its growth in July.
The reason for this is that on the one hand, the peak season for foreign trade has arrived; on the other hand, many overseas orders have been rapidly transferred from India and other countries to domestic production recently. Many large export-oriented textile companies in India are unable to guarantee normal delivery due to the epidemic. Many orders originally produced in India have been transferred to my country for production, among which the order volume for towels, bed sheets and other products is relatively large. For example, Luo Liangjian, the owner of Gide Leather Co., Ltd., said that the company received a batch of orders to be transferred to India in August. Because the epidemic in India was severe, customers did not dare to produce there, so they chose to hand over the orders to his company in Shandong. factory produced. In addition to home textile orders, some other foreign orders in the textile industry have also been transferred to domestic production. Luo Liangzhen’s company mainly produces handbags, luggage, belts and other products. Around August, a customer suddenly gave the company many orders that were originally in India, mainly wallets and handbags.
China’s textile industry’s foreign trade experienced “unexpected” growth in 2020. However, behind this is the embarrassment that it is difficult for companies to make profits.
Wealth has shrunk
Although the signing of RCEP and new progress in foreign vaccines have supported the , but there are still many textile company owners who say that due to the devaluation of the US dollar and the increase in shipping prices, there is not much profit left.
Currently, the production capacity of overseas factories has shrunk significantly due to the epidemic, making Chinese products have a strong global presence.The busiest month in 114 years, handling more than 980,000 TEUs.
But this person from the freight forwarding company believes that the most important reason is that shipping capacity has not returned to pre-epidemic levels, while exports have rebounded to better than normal levels. “Many routes used to have three ships operating, but now there is only one ship left, or there were originally three big ships, and now there is only one small ship left. This cannot be entirely attributed to the shipping company. In April, May, and June last year, three ships were operating. In March, there is no cargo to transport, and the ships are running empty. Now there are only so many spaces available, and the supply is less than the demand. It makes sense from the perspective of the shipping company to increase the price to make up for the shortfall.”
But when talking about the impact of rising shipping prices on textile exports, Yan Liangmin bluntly said, “It’s terrible, it directly ‘eats’ our profits.”
” Textiles take up more space, and the value of a container, or the added value, is not high. For example, the value of a container of machinery and equipment may be hundreds of thousands of dollars, while the value of a container of textiles is around thirty to forty thousand dollars.” As mentioned above. The person in charge of the logistics department of the home textile enterprise said.
“Most of our orders are FOB (customer bears freight) model, but there is a customer in Europe who adopts CIF (export company bears freight) model. A container used to cost more than 3,000 euros, but now it costs more than 3,000 euros. It became more than 7,000 euros, and the freight accounted for 22% of the value of the goods. This is terrible, and it has already suffered a serious loss.” The person in charge of the aforementioned home textile company told reporters that the home textile industry is inherently low-profit, with gross profit between 10% and 15%, and net profit Profits are only 3% to 5% in normal years. “Even the FOB model is uncomfortable for customers. It is actually difficult to pass on the increased costs to consumers because retail prices dare not increase too much.”
Retail It is difficult for prices to rise. Similarly, the increase in ex-factory prices of enterprises is also limited. Even so, Wang Qijun said that the prices of products were still increased by 2% to 6%, mostly by two or three points. “Especially since the exchange rate has risen in recent months, if prices are not raised, the impact on profits will be obvious.”
For the Vosges Group, which adopts the FOB model in most cases, It is said that the factor that “eats up” profits comes more from the appreciation of the RMB.
“The thin profit in the second half of 2020 is mainly due to the exchange rate. The rise in the exchange rate directly ‘ate’ our profit by seven or eight points. In the second half of the year, we lost 5,000 yuan due to the rise in the exchange rate. About ten thousand yuan.” The person in charge of the aforementioned home textile company also lamented, “The currencies of our competitors are depreciating. For example, Turkey is a competitor of high-end products. In the past three years, the exchange rate against the US dollar has depreciated from more than 3 points to 7.8.”
After breaking through the 7 mark in mid-2020, the RMB exchange rate against the US dollar has now risen to close to 6.5.
“Profits have basically been swallowed up by rising shipping costs and the appreciation of the RMB. In addition, cotton prices have increased by about 20% from the lowest point in March and April 2020. We are biting the bullet. Working on it, especially the two months at the end of the year, is simply difficult. Most of our orders come from large customers and old customers. It is good to have orders under the epidemic situation. We also need to keep the business running and feed the workers, which is also to maintain long-term customer relationships. .” The person in charge of the company said that the cycle of receiving orders in the industry is about two months, and the company does not know the trend of the exchange rate when receiving orders.
He said, “The entire fourth quarter was basically in a state of low profit or loss. Even the more we exported, the more we lost.”</p
