The COVID-19 epidemic has spread across the world, and the economies of various countries have been greatly affected, and the textile and apparel industry has not been immune. Businesses in developed countries such as the United States and Europe have been shut down on a large scale. As a result, many domestic export companies have suffered from overseas customers canceling orders and abandoning goods, and the export situation in the textile industry has become more severe.
Exports are expected to decline by 20% in the first quarter
According to the survey of the China Home Textiles Industry Association, from Starting from March 18, many export companies have received notices of delayed shipments from European and American customers, and some overseas customers have canceled orders for the past two months. Downstream export companies have had a large number of orders withdrawn, causing domestic suppliers upstream of the industrial chain to also face pressure from reduced orders. According to a survey conducted by the China Cotton Textile Industry Association on more than 120 key enterprises from March 16 to 20, 35% of the surveyed enterprises reported insufficient orders, an increase of 12.1 percentage points from the survey a week ago.
According to statistics from the China Chamber of Commerce for Import and Export of Textile Products, from January to February 2020, my country’s textile and clothing exports amounted to US$29.83 billion, a decrease of 20%. The decline was slightly higher than the national average decline in goods trade exports (17.2%) by nearly 3 percentage points. Among them, exports of textiles such as yarn, fabrics and finished products were US$13.77 billion, down 19.9%, and clothing exports were US$16.06 billion, down 20%.
In the past 20 years, China’s textile and apparel exports have declined only in four years, namely a decrease of 9.8% in 2009 and a decrease of 4.89% in 2015. %, dropped by 6.15% in 2016, and dropped by 1.9% in 2019. The decline has never exceeded 10%. The cumulative exports from January to February this year dropped by 20%, which is unprecedented.
According to the China Chamber of Commerce for Import and Export of Textile Products, under the epidemic situation, affected by many uncertain factors such as delayed start of construction, insufficient labor, rising costs, restrictions on exhibition participation and personnel exchanges, exports in the first quarter will decline. It is expected to show a large decline, with a decrease of about 20%. At the same time, as the epidemic breaks out around the world, buyer confidence declines, orders are reduced and canceled, and companies are unable to carry out normal product marketing plans, which will have a more serious impact on companies’ order acceptance and production in the first half of this year and even throughout the year.
Business closures have dampened consumer confidence
This can be imagined from the fact that foreign brands have closed stores one after another. As the largest textile and apparel exporter, it has been affected. Recently, Spanish fast fashion brand Inditex, the parent company of Zara, announced the closure of 3,785 stores in 39 countries and regions around the world. Among them, all stores of Inditex’s brands in Spain have been closed. Swedish fashion giant H&M Group has also temporarily closed all its stores in the United States, Germany, and the United Kingdom. The store closing measures took effect on March 21. Adidas has closed stores in North America and Europe, and Nike has closed its stores in the United States, Canada, Western Europe, Australia and New Zealand.
And the most worrying thing is Consumer confidence determines how long the market slump will last. Foreign media pointed out that the most direct impact of the epidemic is that it has affected consumer confidence. The United States is the world’s largest consumer market. As the epidemic continues to spread in the United States, many Americans are at risk of losing their jobs. The U.S. Bureau of Labor Statistics reported that the number of people applying for unemployment benefits in the United States surged to 3.28 million last week. The number is the highest since October 1982. According to the latest survey by the U.S. Cotton Company, during the COVID-19 epidemic, 34% of consumers said they would consume less than before.
How serious is the shrinking of orders?
On one side, stores are closed, and on the other side, consumption is weak. These factors are superimposed on the shrinking orders of my country’s foreign trade companies.
China Textile City, located in Keqiao District, Shaoxing City, Zhejiang Province, has been reopened for more than half a month, but business is far less than expected. “All our foreign trade orders have been cancelled.” On March 24, relevant staff of Shaoxing Keqiao Naxu Textile Co., Ltd. said that the company’s products are mainly exported to more than 10 countries and regions including the United States, Italy, and the United Kingdom. Now with the European As the epidemic continues to ferment, many orders have been cancelled, and related production has had to be suspended.
A staff member of another local garment foreign trade company said that around March is the peak summer delivery period. Due to the impact of the epidemic, the start of work was 20 days late, and the factory experienced order delays. “Costs have increased, and we have to pay order liquidated damages. Now the factory’s cash flow is tight, and orders from South Korea have been cancelled. We are facing a life and death test.”
Located in Nanling, Anhui A clothing company whose main export markets are Europe and the United States. The person in charge of the company said that all new orders have been suspended. The current orders can only be produced until April 10-15 at most, and orders have dropped off a cliff. At the same time, we also encountered problems such as orders not being shipped, customers rejecting orders on the way, and overseas payment terms being extended.
A foreign trade company in Shandong said that when the epidemic broke out in China, it encountered complaints from foreign customers and even requested returns because it could not deliver goods in time. Now, after the overseas epidemic became serious, about 10% of customers directly canceled their orders, and some orders were even rejected. It’s the order season now, but company personnel cannot move around and cannot visit customers, so they are worried about subsequent orders.
In this regard, Zhang Xian, vice president of the China Chamber of Commerce for Import and Export of Textiles, pointed out that the current textile and apparel foreign trade situation is very complex, with the epidemic, Sino-US trade friction, the downturn of the world economy and other factors superimposed. The difficulties and challenges will be extraordinary. However, China’s core position in the global supply chain and industrial chain is difficult to shake. As the epidemic has been effectively controlled at home and the epidemic abroad has become increasingly severe, we have reason to be more optimistic about China’s domestic demand market.
There are concerns about switching exports to domestic sales
Many foreign trade companies have expressed their hope to switch to domestic sales. However, , they know that it is not a simple matter for foreign trade companies to switch to domestic sales. “We are facing problems such as channels and brands. At the same time, it is understood that the domestic market is not optimistic.” “Of course we hope to switch to domestic sales, but the main difficulty in whether we can switch is that there are no familiar customers in the channels.”
Compared with switching to domestic sales, what is more urgent for small and medium-sized foreign trade companies is the tight capital chain. They hope that the relaxation of loan policies for small and medium-sized enterprises will reduce corporate financing costs and that the government can introduce more tax relief policies.
Compared with the plight of small and medium-sized enterprises, large enterprises are obviously slightly more relaxed. The impact of the epidemic on the present has made Zhao Huanchen, chairman of Shandong Daiyin Textile and Garment Group, more clear about the future layout of the company. “Enterprises will increase their efforts to explore emerging markets, especially countries along the ‘Belt and Road’, strive to build a diversified export pattern, and avoid trade risks; they will increase their efforts in research and development of new products, and insist on specializing in and producing refined products. Improve the added value and competitiveness of products; vigorously promote intelligent production, accelerate the implementation of key projects such as intelligent spinning transformation and advanced customization of suits, and promote the transformation and upgrading of production and operation models; follow supply chain thinking and rely on the advantages of the entire industry chain of the group to further integrate Industry upstream and downstream resources to create a global textile and apparel supply chain cloud platform.”</p