Since mid-March, offline sales of textiles have been suspended in most parts of the world, especially in important markets such as Europe and the United States, and the global textile supply chain has been disrupted. Extreme damage, textile companies’ extreme uncertainty about future development has increased. 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 COVID-19 impact survey in March, the number of canceled and postponed orders globally has increased 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 orders in East Asia fell by 28%, which is obvious. 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 Sales Expectation
An average decline of 33% is expected
Compared with 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
Future uncertainty brings heavy pressure to 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 what most companies are most concerned about question. 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.
Uncertainty about the future is a big problem in the medium to long term. 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. , It is becoming increasingly difficult to retain jobs and retain talents. We are worried that we will not be ready when demand recovers and will not be able 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 their reliance on foreign raw material supply and market demand, companies in some countries Consideration is being given to centralizing production and streamlining its organization and production processes; rethinking dependence on global supply chains and promoting companies to recognize the importance of local/regional supply chains, which will change the current pattern of textile supply chains.
Maximum expectations
Win-win cooperation to overcome difficulties
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, and obtaining low-income Interest rate 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 short-time work plan. The basic principle is that businesses lacking demand can reduce working hours and a certain percentage of employees’ wages can be covered 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 is gradually controlled, companies in many countries hope to learn from China Based on the experience of resumption of work, it is expected that work will resume on May 11 or at the end of May. The situation of unilateral cancellation of orders by retailers and brands will gradually improve. This will promote the structural adjustment of international textile suppliers, win-win cooperation, and overcome the difficulties together. !
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