On November 24, the topic of La Chapelle being filed for bankruptcy and liquidation ranked first in the hot search. Three creditors, Jiaxing Chengxin Garment Co., Ltd., Haining Mangrove Garment Co., Ltd., and Zhejiang Zhongda Xinjia Trading Co., Ltd. submitted to the court “Bankruptcy Application Form”.
It can be seen from the announcement that La Chapelle has contract disputes with the above three companies, and has not paid according to the amount and date determined in the respective mediation documents. Except that Jiaxing Chengxin has not announced the specific debt amount, La Chapelle should pay Mangrove and Zhejiang Zhongda The total payment is 1219.65W.
As a former women’s clothing giant, now La Chapelle can only be described as “down and out”. La Chapelle’s large suppliers can also apply to the court for bankruptcy liquidation, but more are small suppliers who may not have priority in receiving repayments.
Chen Shenghua, the person in charge of Dongguan Municipal Hong Weaving Co., Ltd., the supplier that La Chapelle defaulted on, did not want to mention how much money was owed, but there are many suppliers like them. Chen Shenghua, Miaoquan, Guli Town, Changshu City Chen Xuyuan, the owner of the sofa factory, said frankly, “La Chapelle’s default in payment will almost bankrupt them.” According to him, the sofa factory had previously helped La Chapelle manufacture customized sofas for use in stores. The order payment is about 400,000 yuan, but La Chapelle has been in arrears with the payment for more than two years and is still “defaulting” to this day. Of course, there are many small suppliers who have suffered the same fate as Chen Xuyuan.
A textile fabric boss joked: “The net profits of clothing brands are all obtained by lowering prices in the hands of fabric suppliers like us.”
When many of our textile companies cooperate with clothing brand companies, they often feel “inferior” due to the unequal strength of the companies. It is often not confident to talk about business with this feeling. As long as you can receive orders, you will be willing to give up a lot of your own rights and interests.
This passive situation is most obvious when negotiating prices, and another thing that is criticized by textile people is “getting goods on arrears”. Because of their popularity, brand companies often give people a feeling of trustworthiness, so cooperate with them. The first thing I think about is how to win the order. As for when to pay for the goods, or how to pay, I generally don’t think too much about it. But in fact, large companies either have no problems with payment, and once problems occur, it will be fatal for many textile companies.
Because of the trust in brand clothing companies, there is basically no deposit when operating orders, and before the payment for one order is settled, other orders are already being processed, resulting in a backlog layer by layer, and eventually a huge amount of receivables will appear. When fabric suppliers press for payment from clothing companies, they can only contact the corresponding salesmen, who find it difficult to give a definite answer to payment issues. The payment cycle can be at least 3 months in arrears, or even more than 1 year. If you encounter slow-selling clothing, large inventory, or financial difficulties, you can use the clothing inventory as payment to pay off the debt to the fabric merchant, which not only clears the inventory, but also clears the payment. The fabric suppliers’ fabric inventory and gray fabric inventory can only “rot” in the warehouse.
If we take a step back and say that if the clothing company is running normally, it is “harmless” to just delay the payment. The fear is that companies like La Chapelle will have operational problems and have no way to ask for payment.
In addition, with the crazy price increases of raw materials, auxiliary materials, factory rent, freight, and other products, the profits of fabrics are getting thinner and thinner. If you don’t get a payment for the goods, you may lose a year’s profit.
For fabric companies, in today’s overcapacity industry, “no matter how small a mosquito’s legs are, they are still meat.” Only by having orders can the normal operation of the factory be guaranteed. In front of brand buyers, it seems to have become the “savior” of the current fabric supply industry.
However, the hidden worries about arrears hidden behind it have never been resolved.
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