“The current foreign trade export market is not good, what are the countermeasures?” “We will wait and see the situation and wait for next year. The company will survive this year first.”
Liao Yi, Assistant to the Chairman of Wenzhou Ou Diwei Clothing Co., Ltd. . He entered the export trade industry after graduating from university and has witnessed the ups and downs of the foreign trade industry with his own eyes. His 24 years of export and foreign trade experience have sharpened his composure.
Export trade encounters “black swan”
Liao Yi entered a state-owned enterprise in 1996. Later, due to the opening of foreign trade rights, Lao Liao began to think about developing in the enterprise. During this period, a Wenzhou foreign trade company had just transformed and was in urgent need of professionals with knowledge of foreign trade business, so he joined the company. The company’s main products are cotton-padded clothes and down jackets, which are mainly exported to Western Europe, North America and other regions.
The company has developed rapidly in the past few years. In 2015, the foreign trade export volume exceeded 7 million US dollars, with a total number of 700,000 pieces. In 2016, a subsidiary was established to gradually expand the business territory. When the COVID-19 epidemic broke out in 2020, the company decided to cancel its subsidiaries and transfer its production lines to Anhui in order to save costs. From April to May this year, Liao Yi worked four days a week, and resumed one week off in June. As the epidemic situation in Europe improves, overseas orders have now begun to be produced, but due to the uncertainty of the epidemic, the production quantity is still limited. Affected by the epidemic, orders dropped sharply, and the company was forced to change its business methods. First, based on cost, they adjusted warehouses and reduced rent; second, they cooperated with enterprises in Anhui and Jiangxi to establish joint production; finally, after doing some research on the Pinghu down clothing market, they decided to increase domestic sales and conduct exploratory cooperation. Liao Yi said: “Since last year, the company has considered cost reasons and wanted to adjust its business model. We made some preparations in the early stage. At that time, we just wanted to increase the production line in Anhui and slowly transfer the equipment. Once the epidemic came this year, it accelerated Process, now only a small warehouse, development department and foreign trade department are left in Wenzhou.”
As for the loss? Liao Yi replied: “It’s not easy to calculate at the moment. Due to the decrease in orders, the company’s administrative expenses, electricity bills, and shipping costs are spread out on each piece of clothing, which has doubled compared with last year. There is a saying in our industry that ‘If you don’t fulfill orders, you will slowly die.'” , orders are completed faster.’ In the early stage, fabric procurement requires funds, and production requires workers. Now the biggest pressure on enterprises is funds. In terms of warehouse procurement alone, the company purchased only 500,000 fabrics in April and just close to 1 million in May. , 4.56 million in the same period last year.” At this time, many foreign trade companies in Wenzhou are in a semi-stop state, and some have turned to making masks. Some of the foreign trade companies in Wenzhou Industrial Zone have rented out their factories, and some have rented out half of their buildings and are barely able to survive. Liao Yi bluntly said that the company’s financial pressure is still very high, and it can only be maintained through loans. “From next month, the company should be able to ship some goods, and the funds will be turned over, but this year is still relatively difficult. There is too much uncertainty in international logistics and orders, and now customers have little confidence in the market. Our main customers are from Mexico. Mexico This year’s orders are only 10% of last year’s. Now the customer’s order quantity is small. When we take the order, we are worried that if the epidemic situation cannot be controlled, their customs transportation will be stopped, and the products will not be shipped out, so they can only be stored in the Shanghai warehouse. , if the funds are squeezed, the enterprise will die.”
What is the solution to the difficulty of converting exports to domestic sales? ?
The contact with Liao Yi was interrupted for half a month. During this half month, Liao Yi was busy doing market research with designers. Liao Yi told the “Zheshang Business” reporter that the original designers were designing for foreign popular styles, color formulations and other needs. Now that they are selling domestically, designers must change their thinking to meet the needs of the domestic market. The domestic market is completely different from the foreign trade market. Domestic sales emphasize fast design and fast production. Otherwise, before your product is ready, someone will already be selling it on the market. It is urgent to quickly become familiar with the domestic market operation methods and popular styles, otherwise the market will not be fully understood and it will be easy to make detours. Currently, they have opened a store in Pinghu Wholesale Market, spending 400,000 yuan. If I have the opportunity, I will go to Hangzhou, Pinghu and Jiangsu for inspections to fully understand the domestic market and make full efforts for domestic sales.
“Now the sales focus has been changed to domestic sales, and production and processing are mainly done in the mainland. We have also tried Alibaba International Station, but the price reduction by customers was relatively low, and there was no profit margin, so we had to give up. Now the focus is To promote domestic sales, we will sell down jackets through live broadcast in Hangzhou in the second half of the year, which will become the focus of operations in the second half of the year. The live broadcast sales expenses have not yet been actually reflected. Fortunately, there is not much overseas inventory left. Now the focus is on developing new products and preparing Down jacket sales in the second half of the year.” Liao Yi told reporters.
According to data from China Customs, the garment foreign trade industry is one of the hardest-hit areas under the impact of the epidemic. From January to March 2020, my country’s cumulative export volume of textiles and clothing was US$45.265 billion, a year-on-year decrease of 17.70%, of which the cumulative export volume of textiles was US$22.694 billion, a year-on-year decrease of 14.62%; the cumulative export volume of clothing was US$22.570 billion, a decrease of 2.058% year-on-year. %.
It is not easy to switch from foreign trade to domestic sales in the apparel industry. On the one hand, the products produced by some foreign trade companies are difficult to cater to the aesthetics of domestic consumers.Price differences and different business models can easily lead to price wars. At the same time, domestic demand has narrowed under the influence of the epidemic. Once foreign trade goods are transferred to domestic sales and the total volume of goods flowing into the market increases, demand will become smaller, and the market will inevitably be oversupplied. The price war among enterprises not only puts small and micro enterprises in danger, but also the profit margins of large enterprises will be greatly reduced, or even lose money; on the other hand, the loss of the clothing industry is a net loss. The biggest pain point in the clothing industry is high inventory and low turnover. Affected by the foreign epidemic, the foreign trade clothing industry has seen a large number of unsubscriptions. There is a large backlog of both finished products and accessories, and the losses for enterprises are immeasurable. Once inventory accumulates, the cash flow pressure of foreign trade companies and shops will increase. The end time of the epidemic has not yet been determined, and its impact cannot be estimated. Domestic costs continue to rise, there is a lack of effective growth points, and the problem of overcapacity will become more acute.
The current foreign trade inventory is mainly due to customer order cancellations, and some products are already in production. This part of foreign trade will be transferred to domestic sales, or we will wait for the epidemic to improve before communicating with customers. There is also a situation where fabrics have been purchased but not cut and produced. The company tries its best to use the fabrics in products to reduce inventory. When a reporter asked how to solve the problem of cash flow, Liao Yi was silent for a while. He said: “There is no good solution at present. Sell some through live broadcast. If there is a backlog of inventory, we can only bear the pain and be acquired at a low price.”
What can companies do?
In this epidemic, many small, medium and micro enterprises failed to hold on and collapsed, but the surviving enterprises can have more thoughts.
“The company has no experience in responding to this epidemic. But I think it’s a blessing in disguise. As far as our company is concerned, when business is good, we don’t pay much attention to management issues. There are loopholes in financial accounting costs. In the past, these problems were hidden. Everyone was busy with production and had no time to analyze and improve.”
“For example, the fabric supplier sends fabrics to us through the shipping department, and the warehouse sends The driver went to pick up the goods. The next day, the production manager said that the fabrics needed to be checked first, and sent the driver to the check factory. It turned out that the check factory was only 500 meters away from the logistics. In this process, time and freight were wasted, and the transportation cost was high. I paid a few hundred. At that time, the order quantity was tens of thousands of pieces, and the cost was only a few cents per piece of clothing, and the management didn’t care. It’s different now. Each order costs 1,000 yuan to 1,500 yuan, and the cost is spread to The cost of each piece of clothing has increased significantly. Therefore, the current number of customer orders has decreased, and everyone has time to stop and think about how to divide the work in detail within the company, and at the same time maintain close contact to minimize costs and maximize efficiency. ”
Some people in the industry also pointed out that when the current epidemic situation is not yet clear, companies need to focus on their own products, explore new markets in multiple dimensions, such as attracting traffic and increasing consumer stickiness, so that both domestic and foreign trade can achieve both success and success. Correct. Producers and sellers collide with cross-border resources and logistics channels to assist sellers in developing new channels and opening up new sales. In addition to becoming a cross-border seller and supplier, nowadays distribution platforms and channels are also relatively diversified and you can try many ways.
At the same time, many foreign trade business owners have expressed their hope that the government will help ease the pressure and continue to introduce policies to reduce costs. They also expect banks to increase their efforts to provide financing support for enterprises. Recently, the State Council decided at a meeting to establish 46 new cross-border e-commerce comprehensive pilot zones on the basis of the 59 already established cross-border e-commerce comprehensive pilot zones. The epidemic has hindered traditional foreign trade exports, but demand from overseas markets still exists. It is hoped that with policy support, the unique advantages of cross-border e-commerce will be given greater play to help foreign trade companies overcome difficulties.
Although compared to the busyness before, the time now seems a bit leisurely. But every day, Liao Yi still comes to the office early as before, turns on the computer, and reads the daily reports. He gets busier at the beginning of the month when he is calculating last month’s accounts. In the morning, the managers of each department report on their work. In the afternoon, the development department and the technical department hold product (development samples, customer samples) seminars to analyze products and make cost budgets. Perhaps for Liao Yi, no matter how bad the market is, that is, the stock market has dropped to its limit, as long as the company is alive, there will always be a rebound. </p
