According to the recent reports that Vietnam’s textile and garment industry has faced delivery delays and the risk of order loss, another Southeast Asian textile powerhouse cannot hold on!
Bangladesh:
Exports have dropped significantly and the blockade will be gradually relaxed
According to “Daily Star” 》reported on August 11 that local export manufacturers in Bangladesh are facing increasingly prominent problems such as delivery delays and price increases. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), in order to avoid losses such as reduced shipments and inability to deliver on time due to re-intensification of the problem, have cooperated with Bangladesh textile mills The Association (BTMA) urgently held an online meeting.
The chairmen of BGMEA and BKMEA proposed at the meeting that spinning mills should reduce yarn prices and maintain stable supply when export orders are growing rapidly. The chairman added that yarn prices have remained high since September 2020 and have become less competitive compared to other countries. A 20-count yarn that costs US$4.30 per kilogram in Bangladesh costs only US$3.24 in other countries, a price difference of 33%. Mohammad, senior vice president of BKMEA, said that the price difference between local 30-count yarn widely used in Bangladesh and imported 30-count yarn is 60-70 cents, and the price difference of some yarns even exceeds 1 US dollar per kilogram.
Large clothing retailer brands are also facing the same problem. Shahin Ahmed, owner of local fashion brand Anjans and president of the Bangladesh Fashion Designers Association, told Business Standard, “The prices of some fabrics have increased by 10 to 15 percent in the past few months. Costs will increase more. But I cannot increase the price of our products. Therefore, profits will decrease and some people will even have to calculate losses.”
In this supply chain, there are 5,000 people across the country companies, including large and small fashion houses and designers. “These companies have an annual turnover of Tk 80-100 billion. However, their sales have dropped by more than half since the start of the coronavirus pandemic,” Shaheen said. “We estimate commodity prices by calculating the rising cost of raw materials. However, we are concerned as the recent lockdown in the country may hurt Eid-ul-Adha business .”
Entrepreneurs in Bangladesh’s textile industry said container charges, transportation costs, increased port charges, yarn quality and machinery also affect cotton prices. The gap between supply and demand is another factor. Demand for local yarn has also increased as imports from India, the main source of cotton and yarn, have fallen, they said. Md Alauddin Malik, chairman of the Bangladesh Inland Garment Manufacturers Association, said, “The owners of these garment factories cannot increase prices even if raw material prices have increased. Eid Adha sales are also uncertain due to the lockdown.” “Our organization has about 6,000 members. These factories It mainly produces clothing for the local market. “Since the outbreak of the new crown pneumonia epidemic last year, sales have dropped by about 70%,” he added.
In addition, due to the obvious economic decline, the Bangladesh government has Public places and transportation have been gradually opened. At the same time, when the supply chain breaks and Southeast Asia is no longer a stable market, customers will transfer orders to other countries, which is a heavy blow to Southeast Asian countries. Earlier reports stated that, The COVID-19 pandemic has spread globally in 2020. Many Western importers have canceled contracts or delayed payments, resulting in the closure of many textile and garment production plants in Bangladesh and a sharp decline in output. Under the influence of epidemic restrictions and the Eid holiday, 2021 In July, Bangladesh’s textile and apparel exports dropped by 11.02% year-on-year.
Overseas orders are returning?
Domestic trading companies should be wary of big rumors and small rains
Recently, there is a very lively voice in the international community, which believes that with the surge in confirmed cases in India and Southeast Asia, manufacturing may return to China again. Some phenomena are reflected in trade, and manufacturing has also emerged. The fact of reshoring. 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. It should be said that foreign demand has shown signs of improvement and the competitiveness of enterprises has increased. The reshoring of overseas orders is indeed a good news for small and medium-sized enterprises. Unprecedented opportunities also bring considerable challenges.
Currently, from a domestic perspective, China’s foreign trade companies are facing four major difficulties. One is the low efficiency and high price of international shipping; The reason is that the fluctuation of the RMB exchange rate has increased, and enterprises have appeared the phenomenon of “daring to accept orders, and exporting is not profitable”; third, the price of raw materials has increased, increasing the cost of enterprises; fourth, it is difficult to recruit workers and expensive in some areas.
At the same time, it is analyzed that the reason why orders were able to flow back smoothly last year is also because European and American countries currently do not have exclusive policies towards China for chemical fiber textile products except for cotton fabrics, which “escorts” the return of orders in terms of policy. According to relevant sources in the company , although domestic chemical fiber is currently in short supply, domestic factories do not increase prices when receiving reshoring orders. Moreover, peers do not believe that reshoring will continue and will not become a trend.
There are two reasons :
First, it is expected that the epidemic will not lead to a large-scale blockade like last year.It is only a matter of time before some areas are lifted.
Second, and more importantly, a large number of mid-to-low-end textile orders were previously transferred from China to India and Southeast Asia, mainly due to the procurement transfer of international manufacturers driven by the European and American governments. This wave of backflow is due to the epidemic causing factories to be unable to deliver on time. These European and American manufacturers have no choice but to transfer orders to China. Once the epidemic improves or for economic reasons, Southeast Asian textile production resumes, these orders will still flow to Southeast Asia.
All in all, the current work of stabilizing foreign trade has not yet been completed, because the epidemic situation in many countries is rebounding sharply. If it rebounds to a certain extent, the entire external demand will also shrink, and even affect some basic Rigid needs. Therefore, the editor believes that with the return of orders, foreign trade companies should be cautious!
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