Due to the recent surge in confirmed cases in Vietnam and other Southeast Asia, part of the manufacturing industry may return to China. Some phenomena are reflected in trade, and there is also the fact that manufacturing is returning. A recent questionnaire survey by the Ministry of Commerce shows that about 40% of new export orders signed by foreign trade companies have increased year-on-year. The return of overseas orders has indeed ushered in unprecedented opportunities for small and medium-sized enterprises, but it has also brought considerable challenges.
Normally speaking, July and August are the traditional off-season for textiles, and the textile market will not change much in these two months. However, since August is approaching the peak season, the weaving market has always been prepared to stock up in advance, so the weaving market in August will have a clear upward trend compared to July. In 2019 and 2020, the weaving start-up rate in Jiangsu and Zhejiang began to rise sharply at the end of July and early August. However, this trend is not obvious this year, and even the start-up rates of major textile clusters have dropped to varying degrees since August.
Judging from recent surveys of the light textile market and some foreign trade companies in Guangdong, Jiangsu and Zhejiang, etc., since July, weaving, fabrics, clothing and other terminals The order receiving in each link is relatively smooth, and it can basically reach more than 80% or even start up at full capacity, showing a “low but moderately prosperous” pattern.
Many companies have reported that orders received since July and August have been mainly for Christmas and Easter in developed countries such as Europe, the United States, and Canada (particularly the return orders from Southeast Asia are obvious), which is higher than in previous years. Ordering 2-3 months in advance is characterized by large quantity, low grade, and poor profit, but the order arrangement and delivery time are long. Foreign trade and textile and apparel companies have relatively sufficient time to purchase raw materials, proofing, and start production and shipment. But not all orders can be completed smoothly.
Raw materials have skyrocketed, and orders are a hot potato
Due to the impact of the epidemic, many orders have to be In order to delay the shipment, in order to successfully complete the transaction, I can only plead with the customer in a low voice, hoping that the customer can understand. But they are still overwhelmed by customers, and some of them just watch customers cancel orders because they can’t deliver goods…
The golden nine and silver ten seasons are coming soon, and I want to develop a few more new customers and do a big job. . But what we are facing is that exhibitions have been canceled or postponed, other countries have also implemented lockdowns due to the epidemic, and the customs in the customer’s country have also begun to strictly control various imported and exported products, making import and export operations very troublesome. This resulted in a sharp drop in customer purchases.
In the first half of the year, I originally thought that this “sick” situation would improve in the second half of the year. Unexpectedly, in the second half of the year, the situation became more serious because of the new virus strains “Delta” and “Lambda”.
According to feedback from some foreign customers: Due to the epidemic, the productivity of various countries has been severely hit. Most of their products have been sold out, and the inventory in the warehouse has reached a record low. They are in urgent need of purchase. The current situation of Southeast Asian countries cannot be underestimated. Overseas orders continue to return, and some Chinese companies have gone from “order shortage to overwhelming orders.” But in the face of the increase in orders, the textile people are not happy! Because while the order volume is rising, raw materials are also skyrocketing.
▲Source: Business Society
Customers are not fools. If the price suddenly increases, the number of customers will be huge. There are opportunities to reduce purchases or cancel orders. In order to “survive”, you have to accept orders at the original price. On the other hand, the supply of raw materials has increased, and due to the sudden increase in customer demand, there has been a shortage of raw materials, which has led to some suppliers not being able to provide parts to factories in a timely manner. This directly resulted in the inability to deliver goods on time because some textile raw materials were not available in time during factory production.
I hurriedly rushed out the goods. I originally thought that the shipment could go smoothly, but unexpectedly the freight forwarder said that it is very difficult to order containers now. From the beginning of arranging shipments, a month has passed and no shipments have been successful. Shipping is tight and shipping prices are soaring. Looking at the high shipping costs, we have to stop…the finished goods can only be left in the warehouse to wait, and the time for funds to be withdrawn is also increasing.
Clearly understand the return of overseas textile orders
Upstream raw materials, fabrics, etc. Rising prices will inhibit the continued recovery of foreign trade demand to a certain extent, and this situation has begun to appear. More importantly, judging from the general trend of industry market development, the return of overseas orders is only a temporary phenomenon, lacks long-term logic, and is unsustainable. Industry insiders believe that textile and apparel companies in India and Southeast Asia have advantages in many aspects such as labor costs, energy costs, land costs, government taxes, tariffs, and environmental protection. The gross profit margin of Southeast Asian textile and apparel companies is more than 5 percentage points higher than that in China. , once the epidemic is over, these orders will definitely return there. Domestic enterprises must have a clear understanding of this and must balance short-term interests and long-term strategies. Do not mistakenly think that this is a good opportunity for the textile industry to make money, let alone blindly expand production after receiving a few overseas orders.
Textile order responseThe temporary nature of the epidemic also shows that in the global industrial chain, Chinese manufacturing still has a more important role to play. The previous competitive advantage in the mid-to-low-end product market has been transferred to India, Southeast Asia and other countries, and will continue to transfer in the future. The way for Chinese manufacturing now is to gradually increase the added value of products, further enhance irreplaceability, and open up domestic and international markets. A key node in the dual cycle to achieve sustained and high-quality development of China’s foreign trade.
While the epidemic continues to ferment, the domestic textile and apparel industry is facing new challenges and new changes, but at the same time, there are opportunities in crises and opportunities can be turned around. Industry insiders have noticed that many high-end fabrics, functional fabrics, etc. can only be made in China. Because China has a complete industrial chain, this ensures that these orders will not be taken away by other countries, and the profits are relatively considerable. Taking a differentiated route and entering the mid-to-high-end field is the advantage of the domestic textile industry. </p
