As the COVID-19 epidemic continues to spread around the world, many countries and regions have declared a state of emergency. For the textile industry, just when domestic demand is showing signs of stabilizing, external demand has suddenly plummeted. The most direct manifestation is that well-known brands around the world have announced suspensions of production.
In today’s world where economies and trade are closely connected, the pressing of the “pause button” for textile and apparel terminal brands in European and American countries has inevitably caused domestic textile and apparel export companies to suffer from overseas customer chargebacks and face the situation. The export situation is even more severe. Some people in the foreign trade circle even describe it: “In this ‘war against the epidemic’, the first half will be fought domestically, the second half will be fought abroad, and foreign trade people will fight the whole game.” However, it is not just downstream clothing, from the industrial chain From a perspective, all enterprises in the upstream, midstream and downstream of textiles are facing the crisis of overseas orders being cancelled, and spinning enterprises are no exception. So what is the current export situation of spinning enterprises? What measures will be taken in the face of cancellation of export orders?
Exports are in trouble
European and American customers cancel orders
Affected by the epidemic, the pace of resumption of work by domestic textile companies has been much slower than in previous years. Many textile companies have just solved the problem of staffing and are experiencing a drop in overseas orders.
“Affected by the foreign epidemic, some customers have successively canceled orders since mid-March. And those customers with large quantities have temporarily decided to postpone shipments. The impact and impact this has on foreign trade companies is indeed not great. Small.” The owner of a textile company with a complete industrial chain from spinning to garment manufacturing said helplessly.
“At present, domestic factories have basically resumed production. Due to the postponement of resumption of work, companies are working overtime to produce and ship goods for orders from the previous year. As the epidemic continues to spread around the world, a large number of foreign trade When orders are cancelled, the most troublesome thing is that orders that have already been executed are canceled midway. Since companies generally only charge about 30% of the customer’s deposit, which is far from the cost line, the company’s losses are relatively large.” Many companies said that on the one hand, We will no longer accept external orders easily. The gain outweighs the gain if the orders are canceled after they are received. On the other hand, after receiving a small number of new orders, we will strive to execute them as soon as possible to avoid changes in the process.
“Due to the impact of the epidemic, many clothing stores in Europe are closed, at least for two or three months. Moreover, even if the stores are open, business is not good, so all orders are suspended, and some new ones are placed. Orders may be canceled directly. This happens to 80% of the company’s European and American customers.” A person in charge of a clothing trading company said that most European and American customers are suspending or canceling orders in large numbers.
According to the reporter’s understanding, compared with garment foreign trade companies and fabric companies that focus on exports, spinning companies currently face relatively fewer chargebacks. Most of the customers who charge back orders are European and American customers, and for product exports, it is very important. For textile companies in European and American countries or regions, order cancellations are rare, but most textile companies are speeding up the process of making orders out of concern about the global spread of the epidemic, hoping to deliver goods as soon as possible and receive payment.
Practice your internal skills well
Adjust the proportion of domestic and foreign trade
In view of the recent “wave of order cancellations” overseas, many spinning companies involved in product exports have stated that they will appropriately adjust the proportion of domestic and foreign trade to mitigate the impact of the epidemic.
The person in charge of a spinning company that mainly handles orders from Italy and South Korea said: “Although we have not received a notice of order cancellation this year, the order volume in the first quarter has shrunk a lot compared to last year. We will dig into the domestic market. Now that the domestic epidemic is basically under control, there is a lot of waste waiting to be done. This may be a good opportunity.” Similarly, a company that exports colored yarn also revealed: “The order volume has decreased by 20% compared with last year. %, the current orders can reach the end of April. Next, we will consider a higher proportion of domestic trade. However, domestic trade also has disadvantages. It takes longer for customers to receive payment than foreign trade. Most of them take 3 months or even longer. Therefore, domestic trade also has disadvantages. It’s not easy to do, and this year’s situation will test the company’s viability even more.”
“Next, we will consider internal adjustments to the import and export ratio.” A cotton yarn production and export manufacturer in Xinxiang, Henan Province said that it is expected that the company’s order volume in the first quarter of this year will be Last year’s sales were reduced by about 30%. In the short term, the company will consider shifting its sales focus to China or areas with less severe epidemics.
When the epidemic abroad has not been effectively controlled, it is a good strategy to shift the focus of business to China. Experts in the industry believe that under the current situation of effectively curbing the spread of the epidemic in my country, export companies may wish to give due consideration to the domestic market and appropriately develop domestic customers while adhering to their original positions.
However, industry experts also remind spinning companies that the domestic market is now crowded and competition in the industry is fierce. Under this circumstance, spinning companies must pay more attention to the quality of their own products, increase innovation, and develop differentiated and functional yarns, so that they have enough strength to win in the competition.
“The epidemic will definitely have an impact on order volume. We will develop more products based on changes in consumption structure, provide unique high-quality services, meet various needs, and retain customers.” A major exporter The person in charge of companies that export yarn to Japan and South Korea said that they have not received any cancellation notices yet. The company is speeding up the production of orders and is actively developing new products.
Risk avoidance
�Determining the Southeast Asian market
The fermentation of foreign epidemics has undoubtedly increased the instability of my country’s product import and export and the global industrial chain. “The current overseas epidemic has not passed its peak period, and foreign trade companies are facing the dual impact of supply chain and shrinking demand.” Experts analyzed.
Since early March, a large number of clothing stores in Europe and the United States have ceased operations, and the stock prices of almost all clothing companies, clothing-focused department stores, and clothing e-commerce companies have been cut in half. The impact of global epidemic prevention and control on total market demand has already occurred.
Currently, the extent of the epidemic in Southeast Asian countries is not as severe as that in European and American countries. Southeast Asian countries rely heavily on my country’s supply of textile raw materials, and supply was once cut off due to the epidemic. As Chinese companies gradually resume work and production, it is particularly important to protect and stabilize market share in Southeast Asia. Experts said that while spinning companies stick to their original positions, they can appropriately develop domestic trade customers, or they can shift the focus of foreign trade sales to areas with less or no epidemics and open up new overseas markets. In this way, companies will not be affected by the epidemic. It is difficult to survive without orders.
Avoiding risks and expanding markets are the reasons why many spinning companies invest and build factories overseas. In fact, many spinning companies do the same. For example, Tianhong Textile Group Co., Ltd., which just announced its 2019 annual report, stated that Tianhong Textile will continue to adhere to the development direction of internationalization and vertical integration of the industrial chain. The construction of yarn production bases in the region directly faces overseas markets, and the continued construction of three-in-one textile and dyeing fabric production bases in Vietnam and Nicaragua. On the one hand, it can effectively reduce or avoid the impact of Sino-US trade friction. On the other hand, through Vertically integrated production of fabrics and even clothing drives overall profit margins to increase and enhances profit stability, mitigating the impact of raw material price fluctuations. </p
