“Gold, Three and Silver” should have been the traditional peak season for textile fabric companies, but now companies are stuck in the “quagmire” of product price cuts. It can be said that the recent price cuts in the market have exposed the current dilemma facing the textile fabric industry.
According to the weekly survey results of the China Textile and Apparel Industry Federation from March 25 to April 1, among the 190 companies that have started operations that week, the order volume reached 80% of normal conditions. Enterprises accounted for 33.7%, and enterprises with order volume less than 50% of normal accounted for 23.2%. The shortage of export orders is even more prominent. Only 9% of companies have export orders that have reached 80% of normal levels, and the proportion of companies with export orders that are less than 50% of normal levels is as high as 61.2%.
The report pointed out that insufficient orders have become the primary difficulty faced by enterprises in production and operation. According to weekly reports and cluster survey data, from March 25 to April 1, 80% of enterprises reported that There is a problem of insufficient orders, and the proportion is 23 percentage points higher than a week ago; 85.7% of industrial clusters reported that there is a problem of insufficient orders, and the proportion is 9.8 percentage points higher than a week ago.
It can be seen that the current competitive situation in the fabric industry is extremely severe. Some companies faced difficulties in recruiting workers in the early stage. After many setbacks to recruit employees back to work, they faced a sharp drop in orders and another shutdown for holidays.
At the end of March, there were orders but no workers at the Guangzhou Cloth Trading Market. Now, just in April, the workers are faced with “nothing to do”!
March in previous years is usually the season with the highest start-up of the whole year, but the situation has taken a turn for the worse in March this year: first, the start of construction was delayed due to the disaster, and then the recovery was slow due to lack of work. Don’t want to start work due to poor orders.
After many twists and turns, many bosses are currently in this state of mind, but various costs such as equipment depreciation, rent, labor, water, electricity, taxes, etc. force them to start work. Only by starting work can they have money. In terms of output value, of course, a small number of bosses choose to keep operations at a low level or even not at all.
Some factories only have 20% of the machines. Now that raw materials have plummeted and there are not many orders, the inventory is easy to depreciate and takes up too much capital, limiting cash flow. In addition, I heard that a few textile bosses who have opened factories in Jiangxi have chosen not to start operations to avoid the pessimistic market situation in the first half of this year.
In addition, out-of-town production and local distribution are ways of survival for many factories building in the Midwest. During the epidemic, due to logistics obstruction, the inventory previously shipped to local warehouses has been successfully digested. Therefore, the inventory of these small factories is not high, and some even have no inventory. It is these bosses who have chosen not to start operations temporarily considering the risks of the current market. , in order to avoid the difficulties caused by this “black swan”.
So, for many factories now, whether they are open or not, they are basically losing money. It is just a question of how much they lose or how much they lose. Many export companies have no orders and have begun to switch from export to domestic sales.
However, it is difficult for foreign trade factories to transform into domestic sales because of standards. In order to meet the supplier standards of foreign customers, generally foreign trade factories have higher software and hardware standards than domestic ones, and the costs will be correspondingly higher. There is no price advantage when switching to domestic sales.
Moreover, competition in the domestic market is actually very fierce, and domestic and foreign markets have many different characteristics, such as business models, sales channels, settlement methods, etc., and external The products sold may not be suitable for the domestic market.
What’s more, even if many cities in China have lifted their lockdown, there are still not many people who dare to go shopping or go out to spend money. The domestic market has long been occupied by companies focusing on domestic sales, and now foreign trade companies are coming in to grab the market, which is easier said than done.
Therefore, it is difficult for many foreign trade companies to survive this disaster. Dongguan’s toy factory with more than 1,000 people and the headphone factory with more than 4,000 people have begun to choose to close their factories due to fewer orders. The ability of other small and medium-sized foreign trade companies to resist risks is even more dangerous, whether it is capital or rigid cost expenditures, it will be more difficult for them. It has been 3 months now. They are very risky!
It will be difficult for newly closed stores in Europe and the United States to open within 2 or 3 months. Currently, the unemployment rate in the United States has exceeded that from 2008 to 2010 when the subprime mortgage crisis was at its worst. , the two cards that Trump is proud of, the stock market and the unemployment rate, are basically in ruins. Those consumers who choose to stay behind closed doors due to city closures or severe disasters will have a huge impact on the global economy. After all, without consumption, there will be no production and no orders. Trading companies that rely heavily on the export market will bear the brunt. ,
In the next three years, the number of fabric companies may decrease by 30%!
What is certain is that a quiet “shuffle” is underway.
Judging from the textile fabric companies recently interviewed by reporters, company leaders generally believe that the situation facing the industry may become more severe in the next period of 2020. This This unoptimistic view is still based on the judgment of the epidemic.
A textile practitioner who did not want to be named believes that in the future, the situation of “big fish eating small fish” in the textile industry will be more severe. “Although the industry’s ‘cold winter’ in 2019 has arrived, everyone still has hope for the future market and will persevere. However, this year, affected by the global epidemic, it will be further difficult for small and medium-sized enterprises to maintain basic operations. .” He predicted that maybe in the futureIn 2020, the number of fabric companies must be reduced by at least 30%.
The editor reminds that the impact of reduced orders and order cancellations by foreign merchants is destined to cause the collapse of foreign trade companies! Please cherish the jobs you have in front of you, because many people will lose their jobs this year!
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