Since mid-March, offline sales of textiles have been suspended in most parts of the world, especially important markets such as Europe and the United States. The global textile supply chain has been extremely disrupted, and textile companies have become extremely uncertain about future development. In this environment, the International Textile Federation launched its third COVID-19 impact survey in late April. A total of 600 companies from Africa, America, Asia, and Europe (including Turkey) participated in the survey. Recently, the International Textile Federation released the third survey report on the impact of the global new crown epidemic on international textiles.
Order status
The number of canceled and/or postponed orders rose to 41%
Since the first International Textile Federation new crown epidemic impact survey in March, global cancellations and the number of postponed orders rose from 8% to 41%. The third survey confirmed the expectations of the first and second surveys that the crisis was global and had continued to worsen over the past four weeks. Businesses in all regions reported significant order cancellations and postponements. Only a handful of companies can quickly adapt to changes in the situation by producing personal protective equipment (PPE).
It is worth noting that the order decline in East Asia was 28%, which was significantly lower than all other regions (41% and above). It can be assumed that this region was the first to be affected by the COVID-19 pandemic and the first to recover from the crisis. In particular, China and South Korea have successfully controlled the epidemic, and most Chinese textile companies have significantly increased production in the past few weeks. At the same time, offline retail stores have also reopened, and consumption in East Asian countries has begun to gradually recover. However, it remains to be seen how the consumption situation will change.
2020 turnover expectations
It is expected to decrease by an average of 33%
Compared to 2019, global companies expect average turnover to drop by 33% in 2020. Compared with the second survey, companies’ expectations for the future are more pessimistic. European businesses expect turnover to fall by “only” 22% in 2020, a figure significantly better than the 33% reported in the second survey. Companies in East Asia expect turnover to fall by 26%, which is similar to the 24% reported in the second survey. On the other hand, Southeast and South Asian companies’ expectations for turnover have worsened significantly. These areas were hit relatively late by the epidemic, so the impact of the epidemic was also delayed. Compared with 2019, turnover in Southeast Asia and South Asia is expected to decline to 38% and 31% respectively in 2020. Africa, South America and North America expect little change in turnover expectations.
Challenges and difficulties
Uncertainty about the future puts heavy pressure on enterprises
Currently, the biggest challenge and difficulty facing the global textile industry is how long the epidemic situation will last and when trade flows will return to normal.
Among them, ensuring sufficient trade liquidity is the most concerned issue for most companies. On the one hand, producers are unable to access cash flow as many customers cancel and postpone orders. On the other hand, the unsynchronized resumption of work by companies in various countries affects the normal operation of the global supply chain.
In the medium to long term, uncertainty about the future is a big problem. Many businesses are wondering what the post-pandemic world will look like. What will recovery look like? Will consumer spending recover as quickly as before? Will consumer behavior change as a result of this crisis? Uncertainty about the future is weighing heavily on businesses as it is impossible to predict how long this crisis will last. Many orders were canceled or postponed, and new orders were few. Will there be a second wave of COVID19 infections this autumn and winter, leading to a second lockdown?
At the same time, due to the increase in uncertainty, it is difficult for companies to plan production, retain jobs and retain talents, and worry that they will not be able to do a good job when demand recovers. Be prepared to fail to retain those loyal customers. The current lack of sales is further causing inventory backlogs in many companies, which may put negative pressure on future pricing.
Looking for opportunities in crisis
Rethinking the current industrial organization
The survey shows that many companies are currently considering diversifying operations, focusing on medical textiles. In fact, huge demand for personal protective equipment (PPE) has provided a new market for some companies.
In addition, due to dependence on foreign raw material supply and market demand, companies in some countries are considering centralizing production and streamlining their organization and production processes; rethinking their reliance on global supply chains nature, and promote enterprises to realize the importance of local/regional supply chains, which will change the current pattern of textile supply chains.
The greatest expectation
Win-win cooperation and overcoming difficulties together
In order to fight the epidemic, many countries around the world are currently providing support policies for their enterprises, such as deferring tax payments, deferring social security payments, obtaining low-interest loans and deferred repayments, etc. In some countries where the government provides electricity, companies can defer payment of electricity bills.
In Europe, a very important tool for governments to support businesses is the short-term work scheme. The basic principle is that businesses lacking demand can scale back their efforts.During this period, a certain percentage of an employee’s salary can be paid by unemployment insurance. This allows companies to retain employees and only pay them for the reduced hours worked. At the same time, compared with the original income, the employee’s income level has not dropped significantly (due to unemployment insurance as a supplement).
As the international epidemic situation is gradually brought under control, companies in many countries hope to learn from China’s resumption experience and hope to resume work on May 11 or the end of May. Retailers and brands have unilaterally The situation of order cancellations has been gradually improved, which will promote the structural adjustment of international textile suppliers, achieve win-win cooperation, and overcome the difficulties together! </p
