Since the beginning of 2020, the COVID-19 epidemic has greatly affected people’s production and life, and the silk industry has inevitably been affected. From the gradual resumption of work and production by silk companies after the epidemic was effectively controlled in China, to the reduction, postponement, and cancellation of foreign orders caused by changes in the international epidemic situation, various problems have arisen, and the silk industry is facing severe challenges.
Epidemic Impact
Enterprises face survival test
As the epidemic spreads around the world, our country The silk industry is undergoing severe tests. According to the “Research on the World Silk Industry and Consumer Market Trends During the New Crown Epidemic” launched by World Silk Network, since 2020, the price of 3A grade raw silk has dropped from 380,000 yuan/ton at the beginning of the year to 270,000 yuan/ton, a drop of nearly 30%. . Silk prices continue to fall. Fabric manufacturers are facing a shortage of orders and are unable to continue production. Silk reeling companies have increased inventories, which affects the purchase price of spring cocoons. For this reason, many companies and organizations have called for the purchase of reserve silk to cope with the turmoil in silk prices. Faced with the unexpected impact of the epidemic on silk companies, many silk companies have adopted measures such as “four days off and three days off”, “rotating holidays”, and “lowering wages” to cope with the crisis; some silk companies said that existing orders only meet Production by the end of May. Export orders to Europe, the United States, Japan and South Korea are mostly delayed or cancelled. Foreign trade companies are actively taking orders from Southeast Asia and Africa, or switching to domestic sales; some companies with sufficient liquidity choose to continue production.
“During the epidemic, it was the off-season for silk sales. The main losses came from rent and employee wages. Domestic trade companies above designated size are expected to lose 200 million yuan. In the future, domestic trade companies will face The main challenge is that overall consumption is suppressed, which in turn affects silk sales. Sales are expected to drop by more than 10% throughout the year. Silk is a luxury product among textile products and is not a daily necessity. The overall shrinkage of consumption will affect silk consumption. Scale of domestic silk trade enterprises It is relatively not very big. There are mostly traditional enterprises with low financial leverage ratio and strong risk resistance. It is not expected that the epidemic will cause large-scale closure of domestic silk trade enterprises.” Vice President of China Textile Business Association and Silk Professional Committee Meeting Chief Yu Yuenan analyzed.
In the Guangxi Zhuang Autonomous Region, the impact of the epidemic has been transmitted to the sericulture industry. Farmers have begun to cancel their subscriptions to small silkworms. Breeders have begun to reduce the number of silkworm seeds they co-breed, and silkworm breeding farms have begun to reduce silkworm seed production. It is expected that the output of silkworm seeds in the first half of the year will decrease by 20% to 30% compared with the same period last year. Silkworm seeds raised by silkworm farmers will decrease by about 20% compared with the same period last year. The situation in the sericulture industry is like this, and the production and management of silk enterprises is even more difficult. Due to the impact of the epidemic, my country’s main silk sales markets such as the United States, Europe, and India have basically stopped imports, and domestic silk companies have also successively reduced or canceled orders. After March 20, raw silk sales of silk reeling companies have basically stagnated. According to monitoring data from the Guangxi Cocoon and Silk Industry Association, from January to March 2020, factory silk production and sales dropped by 28% and 33% year-on-year respectively, and sales dropped by 31% year-on-year. The inventory pressure of raw silk is high, and the industry generally predicts that the average inventory of raw silk will be about two months of output, and all of this inventory is left over from last year’s high-priced cocoons. If production continues at the current output, some companies will be unsustainable. At present, Guangxi silk reeling companies are passively adopting methods such as taking turns to reduce production and limit production to carry out self-rescue. In order to prevent risks, the two trading markets have also reduced the cocoon silk pledge financing business this year. Coupled with the lack of sales revenue, the reserve funds of silk reeling companies have basically dried up, and the pressure on spring cocoon acquisition funds is huge.
Workers of Guangxi Shanglin Dayanfang Cocoon Silk Co., Ltd. are performing production operations. (Photo by Lu Boan)
Nanchong, as one of the four major sericulture production bases in my country, has also been affected to a certain extent: Nanchong Silk Export Enterprise External orders have been cancelled, and there are no orders to be made. Industry insiders say that as time goes by, some silk companies may stop work and production. At the same time, Nanchong silk domestic sales enterprises are also facing the problem of closing down and suspending production due to poor sales channels, increasing inventory backlog, and difficulty in capital turnover. At present, Nanchong silk enterprises are facing difficulties in capital turnover and high labor costs, and they urgently need to solve funding problems. According to analysis by industry insiders, if a company has difficulty operating and stops production, the number of laid-off workers will continue to increase, which will not only increase the employment pressure on society, but also increase the cost of waiting for the company. Judging from the current situation, during the epidemic from February to March, During this period, the treatment issues of those waiting for work have not yet been fully resolved. If the company’s shutdown time is longer in the future and more people are affected, the company’s ability to withstand will be tested.
The turning point has not yet appeared
Cultivation of internal strength to overcome difficulties
The global epidemic crisis has not yet seen an inflection point, and the supply chain has been interrupted, which has seriously affected the sustainable development of the silk industry. Industry experts call that as the domestic epidemic situation improves, China’s silk industry should build strong confidence, seek opportunities amidst challenges, innovate traditional models, standardize operations and management, expand sales channels, enhance brand concepts, and improve the market’s rapid response mechanism. Facing the current market uncertainty, we hope that the industry will unite to fight the epidemic and stabilize the production and trade of the silk industry.
Yu Yuenan said that with the development of the international epidemic,Due to the large-scale outbreak, China’s full resumption of people’s movement has been delayed, which has affected the recovery of consumption, and the losses of silk domestic trade production and marketing enterprises are increasing. Reducing corporate expansion and developing online sales will become important strategies for domestic trade silk companies this year to reduce losses and tide over the difficulties.
Wang Xiaohui, President of Chongqing Cocoon and Silk Industry Association and Chairman of Chongqing Hongmeida Xinxing Industrial (Group) Co., Ltd., believes that , facing the current market, companies should “help themselves.” “Strengthen product category docking, communicate with multiple parties, and develop and innovate some products and customer groups suitable for multi-region, multi-level, multi-attribute, and price tiers. In view of the current swarming medical product market, this market is small and has no price Advantages, no consumption value, time and space limitations, it is impossible to form a new round of silk consumption peak. In response to the current changing global epidemic, what companies should do is to survive effectively, reduce investment and expansion or even not invest.” Wang Xiaohui said.
“Enterprises must make changes in their sales models. Rebuilding consumer relationships in the Internet environment, this reconstruction The premise is to have a brand, a certain production scale and a relatively strict product quality control system; secondly, changes in product sales and innovation models, using the cultural endorsement of the long history of traditional products, cross-industry cooperation, and expanding the brand while reaping benefits visibility to achieve a win-win situation; expand the scope of product services, carry out online standardized customization + offline personalized customization business, and deeply explore the segmented demand market.” Curator of Chengdu Shu Brocade Weaving and Embroidery Museum, Executive Director of Chengdu Shujiang Jinyuan Weaving and Embroidery Co., Ltd. Zhong Bingzhang said.
Faced with the impact of the epidemic on Guangxi’s silk industry, the Guangxi Cocoon and Silk Industry Association proposed corresponding relief measures: Suggestions Launch the national raw silk reserve as soon as possible, and also require the Guangxi Zhuang Autonomous Region to activate the raw silk reserve mechanism, allocate special funds to purchase and store raw silk, ensure the liquidity of market entities, and help cocoon silk processing enterprises maintain production operations; it is recommended that government departments coordinate financial institutions to set up cocoons during the epidemic The special emergency loan mechanism for silk focuses on increasing the loan amount and interest discounts for cocoon and silk processing enterprises to ensure the normal operation of cocoon and silk processing enterprises and the acquisition of fresh cocoons from silkworm farmers; it is recommended to integrate poverty alleviation funds and establish special funds for subsidy for the acquisition of silkworm cocoons in poor areas through subsidies Loan interest and direct subsidies for silk reeling enterprises will be used to purchase cocoons in poverty-stricken areas and registered poor households to ensure that poor households planting mulberry and raising silkworms can get out of poverty as scheduled; tax burdens and social security fees for cocoon silk processing enterprises will be exempted or deferred during the year to reduce The operating costs and burdens of enterprises can be reduced to help enterprises tide over difficulties.
The Guangxi Cocoon and Silk Industry Association expressed hope to enterprises: “Each enterprise can arrange production and operation activities according to specific circumstances and take advantage of rotating holidays. Reduce production and limit production to improve internal strength and improve product quality. At the same time, we will guide local silkworm farmers to improve the quality of cocoons and seek long-term development of the enterprise.”
Fei Jianming, Honorary Secretary-General of the International Silk Union and Honorary Chairman of the Hangzhou Oriental Silk Culture and Brand Research Center, said: “Silk colleagues from all over the world must join hands to fight the epidemic and help each other. Chinese silk companies are already capable of producing masks and protective clothing to assist those in need. Foreign silk companies; we must also discuss and plan how to build a better world silk industry after the epidemic passes.”</p
