September 2021 has entered. At present, the foreign trade situation is still uncertain, and most export textile companies are cautious about orders in the second half of the year. According to analysis, the positive factors facing my country’s textile and apparel exports mainly include further improvement in global economic growth expectations, and international market demand is expected to continue to pick up. At the same time, the risk factors we face still exist: the foreign epidemic has not yet been fully and effectively controlled, and local rebounds may have an impact on the recovery of the international market; international commodity prices fluctuate significantly, increasing the procurement risk of front-end products such as textile raw materials; international shipping prices The rise will also have a profound impact on transportation costs; in addition, factors such as trade frictions and exchange rate fluctuations will also have an impact on the outlook. Whether textile foreign trade companies can successfully resolve uncertain risks, stabilize orders, and gain a foothold in the market is a crucial issue at present.
Can the return of orders continue
Currently, the European and American markets are gradually recovering, and consumer demand is growing; affected by the epidemic, textile companies in Southeast Asian and South Asian countries have Production was suspended and production capacity was greatly restricted. As a result, a large number of European and American orders returned to my country, and the number of orders received by textile companies increased significantly.
The person in charge of a company in Guangxi that is mainly engaged in the export business of knitted garments said: “In order to complete orders on time and with high quality, the workshop has started a high-speed operation mode of 24 hours of continuous operation.” He introduced that the company mainly focuses on processing and production. Mainly sweaters, products are exported to European and American markets. There were a lot of orders in the first half of this year. As of the end of July, 3.6 million pieces had been delivered, with a total value of more than 17 million US dollars. Production increased by 25% compared with the same period last year. Currently, the workshop can produce more than 10,000 products every day. Due to the surge in orders, some orders need to be processed outsourced.
“Currently, we have received orders from India, mainly for satin fabrics, with a total of 2 million meters. The quantity is not bad.” said the person in charge of a Zhejiang company that produces stretch fabrics.
It is worth noting that “Although many of the orders received in the first half of the year were transfer orders from Southeast Asian textile and apparel companies, as the global epidemic situation stabilizes, these orders will still flow out.” A Jiangsu company is responsible for development Staff in the coat processing business said that the order-taking situation in the second half of this year was not ideal, largely due to the recovery of textile industry production capacity in some Southeast Asian and South Asian countries, especially the recovery of exports from India and Bangladesh.
“Last year’s situation was quite special. Our country was the first to organize the resumption of work and production after the outbreak. In many countries, the epidemic was still in a serious situation. Normal production could not be carried out, and overseas customers could not wait. You can only go to China to place orders.” The staff member said that now that the epidemic abroad has eased and production capacity in Southeast Asian and South Asian countries has resumed, customers will follow suit.
He said: “Delivering orders on time, with high quality and quantity is the prerequisite for retaining more resources. In the future, the company will actively implement related matters to improve production capacity and production efficiency to meet the production needs of orders.”
In addition, my country’s export textile companies need to highlight the uniqueness and irreplaceability of their products, focus on technological content, strengthen innovation, and enhance customer stickiness. Only in this way can we gain a firm foothold in the international market and secure orders.
Front-end procurement risks increase
With the support of the recovery of the international market, the prices of various upstream textile raw materials caused by global inflation have rapidly increased.
It is understood that since late June this year, cotton prices have started a new round of upward trend, with a cumulative increase of more than 15% so far. Although polyester prices began to gradually fall, they rose again at the end of June and were once close to the highest price this year at the end of July. The market demand for spandex products has always been high, and prices show no signs of falling. In addition, the price of wool has also reached a new high in many years. Market demand in the second half of autumn and winter will drive wool prices to continue to rise.
Commodity prices have increased significantly this year, which is good for companies in the upstream of the industrial chain. If it can be transmitted to the terminal, it will not have much impact on mid-stream and downstream companies. However, the current situation is that the cost increase of front-end products has not been effectively transmitted to the export price of finished products. Therefore, most of the price increase costs are borne by the intermediate links in the industrial chain, and a considerable number of export textile companies are under pressure. The person in charge of a children’s clothing processing company in Shandong for the European and American markets said that the prices of cotton and cotton yarn increased sharply in June and July, and some export orders even subsidized the costs, so the enthusiasm for accepting orders, arranging orders, and delivering goods was not high.
“The price of raw materials in recent times has been the highest in two years. It doesn’t matter if you can’t receive orders, otherwise you will also lose money. After all, clothing processing and exports make small profits.” He said that at present, the company has Start taking orders and producing selectively. For example, some new products have higher profits and can withstand the current high costs, so they will be given priority; orders for regular products and old products, due to thin profits, may be waited until the price is suitable, otherwise they will be put on hold for the time being.
“Since July and August, the orders received have been mainly from developed countries in Europe and the United States, mainly targeting the Christmas and Easter peak season markets, with large quantities and thin profits. Many of them are taken to ensure production. As long as there is no loss after cost accounting, we will still accept it.” A person in charge of the casual wear export business in Guangdong said that the current increase in raw material prices has forced companies to increase order quotations, but after the price increase, many overseas customers chose to reduce or Cancel the order, in order to survive, �The industry has no choice but to accept orders at the original price, which also aggravates the situation of low profit on orders.
Logistics costs continue to be high
The skyrocketing sea freight and shortage of containers have become the biggest difficulties and blockages faced by all textile foreign trade companies.
The relevant person in charge of the China Chamber of Commerce for Import and Export of Textiles said that the main reason for this phenomenon is that since the second half of last year, the epidemic has continued to worsen, resulting in the cancellation or postponement of shipping schedules, serious loss of seafarers, and backlog of goods. Hong Kong, a cabinet is hard to find. The rampant domestic “scalpers” have also further pushed up freight rates.
According to reports, since the beginning of this year, the China Chamber of Commerce for Import and Export of Textiles has conducted intensive research and visited enterprises in Jiangsu, Zhejiang, Fujian, Jiangxi, Henan, Hubei, Jilin and other places. When it comes to the issue of sea freight, textile companies from all over the world report that the problem of shipping routes in the United States is more serious, and shipping rates remain high and are still rising, while the performance of other regions is acceptable.
“In May, some textile companies reported that the price of a container had risen from US$3,000 in normal times to more than US$10,000. The increase this year has exceeded 150%, and freight has accounted for 40% of the value of goods. to 50%. By July and August, textile companies in Jiangsu, Zhejiang and Shandong reported that the number of containers shipped to the United States had risen to more than 20,000 US dollars.” The person in charge said that due to the impact of rising shipping prices, textile companies’ profits have shrunk severely and they have fallen into A state of zero profit or even loss. “Many large companies are gritting their teeth and persisting, not to mention the situation of small and medium-sized enterprises.”
Compared with the increase in freight costs, the problem of difficulty in finding a container and being unable to order a container is more prominent, which seriously affects textile enterprises. Delivery time and reputation lead to default risks due to delays. Some textile companies have to add money to find “scalpers”, further increasing logistics costs.
The current trend of rising freight rates still shows no sign of slowing down. In order to maintain orders and the market, many small and medium-sized textile companies are struggling to maintain their position, and the time it takes for funds to be withdrawn is increasing.
Ministry of Commerce spokesperson Gao Feng said recently that the Ministry of Commerce has worked with the Ministry of Transport, the Ministry of Industry and Information Technology, the State Administration for Market Regulation and other units to increase container supply, improve shipping capacity, and strengthen international cooperation. Actively take measures to jointly face challenges. It is understood that various regions have also increased shipping service guarantees for small and medium-sized enterprises to help enterprises reduce costs and losses.
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