The second wave of pressure on foreign trade companies
The rapid spread of the overseas epidemic has put textile foreign trade companies under a new round of tremendous pressure. In the last week of March, China’s foreign trade factories are suffering from the outbreak of the new crown epidemic. the second wave of pressure since.
It has been half a month since China Textile City opened in Keqiao, Shaoxing. More than 80% of the business households opened their doors to welcome customers, but the doors were deserted. Before the epidemic, 100,000 people came in and out here every day, but now there are only 10,000. A local industry survey report showed that 78.4% of textile companies said orders were decreasing, and 64.8% reported that existing orders had been canceled by customers.
“Nearly 50% of our company’s business is in Europe. If the epidemic continues to spread in these countries, it will be meaningless for us to start operations. Now we are considering whether to adjust the proportion and focus on China.” Light Textile A city owner said.
On the same day, information came out from the “International Economic Situation Outlook” online video conference organized by the China Development Research Foundation: Although the Yangtze River Delta and Pearl River Delta currently have a resumption rate of more than 90%, there is really no work to do. Only about 30% of them are due to lack of orders.
In fact, the loss of orders began when tariffs were imposed in May and June last year. A textile company has a large American customer. The order volume in 2018 was US$1 million, but in 2019 it was less than 500,000 US dollars. It was “cut by more than half.” Because Sino-US trade has imposed additional tariffs, and Southeast Asian countries such as Vietnam, Bangladesh, Cambodia, etc. have zero tariffs, customers have transferred their orders to Vietnam. Vietnam’s textile exports have increased steadily in 2019. It is also the East Asian country with the most impressive economic growth in recent years.
In February, due to concerns about the epidemic and transportation restrictions, some purchasing managers and designers of well-known brands in the clothing industry were unable to travel to China. Many brands have begun discussions to transfer the production of new season products to Turkey. Hadi Karasu, head of the Turkish Garment Manufacturers Association, estimated that about 1% of China’s total orders were transferred to Turkey; the new orders transferred at that time had already made Turkey’s sewing machines run at full capacity – ―Production capacity has reached 85%. If Turkey cannot complete technological updates such as digital transformation and increase production capacity, its textile industry will not be able to accept more orders.
Since early March, a large number of clothing stores in Europe and the United States have stopped operating. The stock prices of almost all clothing companies, clothing-focused department stores, and clothing e-commerce companies have been cut in half, and the stock prices of a large number of companies have fallen below their net assets. The impact of global epidemic prevention and control on total market demand has already occurred, and the textile industry is only a highly sensitive barometer.
Chinese foreign trade companies, which have just emerged from the first wave of pressure due to domestic delays in resuming production and work, will face the second wave of pressure: delayed consumption, shelving or cancellation of orders due to foreign epidemic control, I had to press the pause button as soon as I started working. Factory rents and taxes have to be paid, workers’ wages have to be paid, and some workers may be laid off… China’s nearly 50 million foreign trade employees are collectively bearing the pressure. In 2019, China’s foreign trade companies contributed 10% to GDP.
The popular joke that China plays the first half in January and February and the world plays the second half in March and April has become embarrassing due to the butterfly effect. In the field of economy and trade, the global supply chain has been severely disrupted due to the epidemic, and “hot and cold” is a reflection of reality.
Some foreign trade companies may be on holiday
“After the efforts made some time ago, factory production has fully resumed. However, with the rapid spread of the overseas epidemic, the situation has taken a turn for the worse. In the past few days, we have received many calls from the United States, Notice from European customers to postpone or cancel orders.” Sun Jianbo, general manager of Zibo Hongxu Textile Co., Ltd. told reporters. Hongxu Textile is an infant clothing manufacturer that has maintained rapid development momentum in the past two years, and its products have entered the mid-to-high-end markets in the United States and Europe.
The person in charge of a Zhejiang export company that focuses on the European market and specializes in men’s jackets said that Europe is becoming the new center of the epidemic. The closure of many countries’ routes has led to poor logistics and export goods shipments. Seriously hindered. At the same time, the epidemic continues to spread in European countries, affecting residents’ lives. Demand in the local clothing consumer market is sluggish, and orders have dropped significantly.
“It started on Monday. Now many European and American customers are not going to work and are working from home.” When the reporter asked if there were any suspension or cancellation of orders, He Hui (who is engaged in the clothing and textile trade industry) Pseudonym) expressed this way.
It is understood that most of the European and American customers served by He Hui’s clothing trading company are suspending or canceling orders in large numbers.
“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.” He Hui said.
Nowadays, the first thing He Hui does after getting up every morning has changed from paying attention to domestic epidemic data to paying close attention to foreign epidemic data. In the context of economic globalization, practitioners in the foreign trade industry, including He Hui, deeply feel that the global economy is a community without anyIn the production workshop of Tuan Co., Ltd., workers are making clothing products for export overseas/Xinhua News Agency Liang Xiaopeng
Promoting exports to domestic sales
In addition, with the As the epidemic spreads, more and more international exhibitions have been postponed or canceled. For foreign trade companies, orders are life, and a large number of new orders come from various exhibitions every year. An export textile company from Huzhou, Zhejiang, said that at this time in previous years, the company’s orders had already been scheduled for June and July, but now, orders after April this year have not yet been received, and he is eager to participate in the exhibition to expand the market.
Many European countries have adopted very strict prevention and control measures, further strengthening domestic social activities and entry and exit control, restricting people from some countries or denying entry to foreigners. Many countries have announced the adoption of “city closures”. “measure.
These measures have further increased the difficulty of conducting business in my country’s foreign trade industry. A shipping industry insider told reporters that many international shipping routes have been suspended due to the epidemic. Some people in the industry pointed out that the logistics systems of many countries are now at a standstill. “Even if customers want it, we can’t ship it there.”
Some experts suggest that under the current situation of effectively curbing the spread of the epidemic in my country, textile and clothing export companies may wish to give due consideration to the domestic market. In the short term, it is not a bad idea to switch from foreign trade to domestic trade. While sticking to its original position, it can appropriately develop domestic trade customers and achieve both development and maintenance. This way, the company can continue to operate and will not be unsustainable due to a lack of orders.
The person in charge of a Guangdong children’s clothing company said: “Nearly 50% of our company’s business is in European countries. If the epidemic continues to spread in Europe, our business will definitely be affected. We are now considering whether to adjust domestic and foreign trade. Proportion, focus on the country.”
Some experts also suggest that although the new coronavirus pneumonia epidemic has developed to many countries around the world, there are not many large-scale outbreaks, and the focus of foreign trade sales can be shifted to areas where the epidemic is more severe. areas with mild or no epidemic, and at the same time opened up overseas markets.
In order to actively “help themselves”, in the context of rapidly growing domestic consumption, many foreign trade companies have begun to adopt methods of exporting to domestic sales, including live broadcasts to “bring goods” and trying to sell goods on e-commerce/social platforms Online sales, receiving domestic orders, etc. According to industry insiders, this may be a new opportunity for foreign trade factories.
Industry insiders said that when the epidemic broke out abroad and my country gradually stabilized, exporting to domestic sales was indeed a way of “self-rescue”. When external demand was sluggish during the financial crisis in 2008, domestic companies tried various methods. Avoid switching to domestic sales.
According to the reporter’s understanding, after the 2008 financial crisis, the global economic growth slowed down and the willingness to consume decreased. Many export/foreign trade companies took this opportunity to successfully open up the domestic market and gradually shifted from export sales or OEM production. Go out, develop from pure export/OEM production to complete design and production alone, and even start to build brands and build self-owned channels. For export-oriented companies with absolute strength, especially technical strength, it is easier to build their own brands by switching to domestic sales.
However, switching from export to domestic sales is not easy for enterprises. This is both an opportunity and a challenge. A boss in the foreign trade industry publicly stated after trying to convert exports to domestic sales that the difficulty in converting foreign trade factories to domestic sales lies in 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.
Industry insiders said that 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 the requirements for external sales are also different. Products may not be suitable for the domestic market. However, as China’s consumption power has increased in recent years, these differences are gradually being smoothed out.
At present, in order to minimize the impact of the epidemic on foreign trade companies, the Ministry of Commerce has also “taken action” and announced that it will work with various localities and departments to We will intensively introduce policies to stabilize foreign trade, focus on using fiscal, taxation, banking, export credit insurance and other means permitted by WTO rules to support foreign trade companies to protect the market and orders, and guide companies to prevent risks.
Despite the current severe situation of the global spread of the epidemic, many textile and clothing export companies are also full of hope: “As long as the epidemic is under control, China’s complete industrial chain will still attract overseas orders. The current difficulties It’s just short-term and temporary.”</p
