2020 is a magical year. Under the impact of the new coronavirus, textile people first experienced an “extremely long winter vacation” that they have not experienced since their student days, and now they are enduring the so-called textile industry. The toughest market ever in business.
A fabric boss engaged in foreign trade said: “If the order volume in 2019 is lower than that in 2018, If it is reduced by 30%, the order volume in 2020 will not even be half of 2019.” However, as the domestic epidemic has been basically controlled, the domestic trade market has begun to recover rapidly. However, because the size of China’s textile industry is benchmarked against the global In the world market, even with a huge domestic market of 1.4 billion people, textile production capacity is still excess.
The final result is that the inventory is getting higher and higher, but the price is getting lower and lower. Since July, the textile industry has gradually entered the traditional off-season. The production-to-sales ratio of both the upstream and downstream industries has declined. Orders have decreased, the operating rate has dropped, the production-to-sales ratio has dropped significantly, and the financial pressure on enterprises has increased. In order to relieve financial pressure, some enterprises have begun to partially lower their selling prices. To maintain the capital turnover requirements required for normal production.
Sino-U.S. relations have deteriorated, and the United States is extremely vicious: “killing” textile companies
At the same time, Sino-U.S. relations have become tense again. Especially after the mutual consulates between China and the United States, Chinese investors’ concerns about U.S. President Trump’s “unreliable” style have once again heated up. Although the textile industry is not a high-tech industry in people’s minds, and is even ridiculed as a “sunset industry” by those working in this industry, it does not affect the United States’ “drug attack” on the textile industry.
On July 20, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced that 11 Chinese companies would be added to the “Entity List.”
The 11 Chinese companies include three textile companies: Changji Esquel Textile, Hotan Taida Clothing, and Nanjing Xinyi Cotton Textile Printing and Dyeing.
As of 2018, China’s textile and apparel exports to the United States accounted for 16.6% of total exports. Therefore, the U.S. market is very important to China. As far as the textile and apparel industry is concerned, it indeed occupies a pivotal position.
The export volume of textile and apparel in the first half of 2020 is actually not low, but we still see a large decline in the year-on-year export delivery value. Exports in the first half of the year actually contained a large amount of anti-epidemic materials, such as masks and protective clothing. It can be considered that the benefits and disadvantages brought by the epidemic were partially offset. However, in terms of export delivery value, the recovery from March to June failed to make up for it. There was a vacancy in February, so the cumulative year-on-year growth has not improved.
At this time, changes in Sino-US relations have once again expressed concerns about future export demand in the market. But in fact, judging from the game between the two sides in the trade friction in the past two years, no one is willing to touch the cake of the textile and apparel market. The United States has also set this as the last part to impose tariffs, as the final bargaining chip. Because textiles and clothing are industries that really involve people’s livelihood, imposing excessive tariffs will force people to pay for it, thus affecting people’s daily consumption, which is not a wise move. Therefore, Sino-US relations are not the biggest factor affecting textile and apparel exports. What we should really worry about is the lack of improvement in the epidemic in the United States, and whether the U.S. clothing consumer market still needs a large amount of textile and clothing products from China under this impact.
With demand suppressed due to the resurgence of the epidemic, market shutdown and production reduction operations have gradually begun
From the current perspective of the global epidemic, as of July 23, the cumulative number of confirmed cases of COVID-19 in the United States has exceeded 4.1 million, and the cumulative number of deaths has exceeded 140,000, accounting for nearly one-third of the global number of confirmed cases.
The new coronavirus has had a huge impact on the development of the US economy. In the first quarter of this year, the US GDP fell by 4.8% , U.S. GDP is expected to decline by as much as 30%-50% in the second quarter. The epidemic situation in Brazil and other countries is still severe, the epidemic in Europe is gradually easing, and the epidemic in India can be described as a “ticking time bomb.” Generally speaking, the demand for fabrics in the foreign trade market dropped sharply in the first half of the year due to the impact of the epidemic.
The textile fabric market, which relies on “30% domestic demand and 70% foreign trade”, is also “moving forward with injuries” in this “war epidemic”. As the domestic market enters the seasonal sales off-season, the lack of foreign orders has an increasing impact on enterprises.
“In the past half month, we really have no orders. We have opened fewer machines every week. Now we only open a few machines.” A knitted fabric manufacturer Mr. Wang, the boss of the company, said. In fact, the knitted fabric company where Mr. Wang works has more than 20 circular knitting machines, and sales have been relatively stable in previous years.
In his eyes, orders will continue to be placed whether it is domestic customers or foreign customers, so there are few holidays throughout the year. But this year the situation is different. Since the start of construction in March, in the past, the United States, Japan and other places have�Customer orders have “disappeared”, but before June, the company’s domestic sales orders were relatively stable, and more than 400 tons of fabrics were shipped in more than two months. However, in late June, the market took a turn for the worse, and Mr. Wang was unable to ship goods every day. There are fewer and fewer. In July, only a few tons of goods are shipped out a week. The number of machines in operation in the factory has also been reduced from more than 20 to 15 to 10… to the current 4.
“This year, none of our American customers have placed an order for one meter. Recently, I have also communicated with customers that their own orders have shrunk severely. One customer said that the order volume has shrunk by 90%. , my order has come to nothing, I really can’t hold on anymore, and I have to prepare for a holiday!”
In fact, Mr. Wang’s experience is also the experience of many textile bosses this year. At present, the market shutdown and production reduction operations have begun to gradually begin.
There are too many uncertain factors, and textile companies have to choose between cost, efficiency and risk
Under the influence of the epidemic, the textile industry is facing the dilemma of weak short-term demand and weak long-term external demand. The shrinking of trade and demand may continue to affect domestic employment. Most textile bosses are cautiously optimistic about the “Golden Nine and Silver Ten” period that once had high hopes. Although domestic demand and foreign trade markets are still slowly recovering, there are still many uncertainties in the market, making it difficult to keep track of the textile peak season. The arrival date has also become confusing, and the large amount of clothing inventory left over from last year has not been fully digested, which will inevitably affect the speed of the new round of replenishment. Textile companies have to make choices between cost, efficiency and risk.
We still need to continue to pay attention to the following:
1. The development of overseas epidemics has an impact on the economy. Closing the lockdown means standing still. Even going backwards, beware of the recurrence of the epidemic and the phenomenon of a shutdown;
February 7-August is in the traditional off-season, and demand recovery is not expected. Even if the gold, September, and silver ten days, can it bring demand as expected? Research;
3. Although the domestic epidemic situation is controllable, it still has many restrictions on the textile industry;
4. Yarn, The start-up and funding status of weaving, printing and dyeing enterprises will have a subtle impact on the industry;
5. The potential impact of bilateral trade disputes on the industry;</p
