On May 17, India had 281,000 new confirmed cases of COVID-19. In the past 24 hours, India had 281,386 new cases of COVID-19, bringing the cumulative number of confirmed cases to nearly 25 million.
The raging COVID-19 epidemic in India not only drags down the country’s economic recovery, but also affects the supply chains of many industries around the world, and the textile industry is one of them. Recently, there has been news that a large number of textile orders from India have been transferred to the Chinese market. However, the reporter’s investigation found that although many domestic companies did receive some transfer orders, these orders were not as “good” as imagined.
Xu Dong, the person in charge of a large textile company in Shandong, said: “Return orders are not all placed by Indian customers, but are placed directly by European and American customers, and some are placed through Southeast Asian customers. Change hands. We also received a small order last month. The production volume of this batch of orders is not large, but the delivery time is short, only 3 weeks, so the profit is not high.”
For Indian orders Some textile export traders in coastal areas don’t feel strongly about the reshoring situation. “These so-called reshoring orders are mainly for mid- to low-end processed products, and most of them are ‘small bulk and short-term’ orders, so we generally won’t accept them. The profit is not high and The risk is greater, because once the epidemic situation improves, these orders will be transferred back, and if not, you will lose your wife and lose your troops.” said Mr. Chen, general manager of Zhejiang Ningbo Shuntong Export Trading Co., Ltd.
The epidemic has caused orders to shift to China
As we all know, India is the world’s largest cotton producer, and India’s textile and apparel industry is One of the largest sources of foreign exchange earnings, the textile industry accounts for about 15% of India’s total export earnings. As a labor-intensive industry, textiles and clothing have been severely affected by the epidemic this time. Data provided by Wozil Consulting Company shows that in the major garment towns of Delhi and Bangalore, the labor absenteeism rate in the garment industry is as high as 50%; last year, consumption and exports in the Indian garment industry decreased by 30% and 24% respectively.
Figure 1: India’s cumulative growth rate of textile and garment exports since fiscal year 2020-2021
Source: China Textile Federation Industrial Economics Research Institute
As a result, many international buyers have taken notice and shifted their orders to China. Tang Shuangshuang, an analyst at West China Securities, pointed out to reporters that India’s yarn production capacity accounts for more than 20% of the world’s total. If Chinese companies can successfully win more orders lost in India, the domestic textile industry may also receive benefits in the short term due to the Indian epidemic.
Market data shows that in mid-April, cotton futures prices recovered 15,000 points and have steadily risen since then. In the last week of April, it hesitated below 16,000 points. However, after returning from the May Day holiday, bulls once again exerted their strength, and finally on May 7, cotton futures successfully reached 16,000 points and hit a two-month high.
Cotton yarn prices also rose across the board after the May Day holiday. The main contract of Zheng Cotton rose from 15,530 yuan/ton to 16,250 yuan/ton, and the cost of cotton yarn rose accordingly. In addition, the “city closures” and unstable freight channels in India, Pakistan and other Southeast Asian countries have not only led to the return of short-term orders, but also the gradual overflow of long-term orders from Europe, the United States, Japan and other countries. Domestic textile and clothing companies have become less worried and their order-taking sentiment has increased.
In fact, as early as October last year, when India showed signs of a second wave of epidemics, many textile orders shifted to China. A textile factory in Hebei said that since September 2020, the company’s overseas orders on the Internet platform have increased rapidly, mainly from the Indian market. Orders for towels reached 2 million in just one month, which is equivalent to twice the same period last year. A private enterprise in Jinhua, Zhejiang Province even received a large export order of hundreds of thousands of tablecloths from the international brand ZARA, and this order was originally produced by a printing company.
Blum Oriental, the domestic leader in colored spinning yarn, showed strong growth in the first quarter due to the dual benefits of the recovery of overseas orders and the expansion of production capacity. According to the company’s performance forecast for the first quarter of 2021, net profit attributable to the parent company increased by 135 million yuan to 164 million yuan, a year-on-year increase of 190% to 230%.
Blum Oriental insiders said that the company undertook a wave of reshoring orders in the second half of last year. Since the fourth quarter of last year, the company’s order situation has been very good, and it is close to full production. Based on the order and production situation, it is prudent to estimate that the performance in the first half of this year will increase significantly compared with the same period in 2020, which has a relatively low base, and even be better than the same period in 2019 before the epidemic.
The recovery of demand in the international market and the stability of the domestic supply chain have directly boosted my country’s textile and apparel exports. Data show that in the first quarter of this year, China’s textile and apparel exports amounted to US$65.1 billion (approximately 421.4 billion yuan), a year-on-year increase of 44%. Among them, textile exports were US$31.81 billion (approximately 206 billion yuan), a year-on-year increase of 40.3%; clothing exports were US$33.3 billion (approximately 215.5 billion yuan), a year-on-year increase of 47.7%.
Return orders are mainly “short-term and small”
About India’s large number of textile ordersNews about the Chinese market has suddenly changed. According to professionals, it is normal market behavior for multinational companies to adjust production orders globally and for international buyers to select suppliers based on production capacity.
Kandla Port in India announced the suspension of operations on April 24
Xu Dong said that although there has been a return of overseas orders recently, most of the contract prices for these orders lack competition. power, and they are all mid- to low-end processed products, and the profits are not high.
An industry insider also said: “Downstream brands can get out of the house as long as they cancel the order, and they don’t have to pay the balance. Such orders are transferred quickly, and buyers pay more attention to price and delivery speed. Transfer The sustainability and profit situation of orders are not very optimistic.”
What’s more important is that the rise in raw material prices this year has squeezed the profits of enterprises. Therefore, even if orders increase for many enterprises, it is likely that they will In the end, it’s also “losing money and making money”.
The above-mentioned Mr. Chen, an export trader in Ningbo, said, “Last year, the company’s profit was still about 10%, and this year it may be less than 5%.” Therefore, he is very cautious in accepting orders at present, and would rather not do it than lose money. .
After India’s vizag declared force majeure from May 5 to May 19, according to Global News, Tamil Nadu in southern India will be affected from 4:00 a.m. on May 10. A two-week lockdown was implemented until May 24 to curb the spread of the COVID-19 epidemic. Karaikal, a port in Tamil Nadu, also declared force majeure from May 10 to May 24. In view of the above situation, the operation/operation of Karaikal port (including but not limited to unloading, loading, shipping and receiving) has been seriously affected.
Therefore, in Xu Dong’s view, Chinese companies need to be very cautious when accepting orders from India, Myanmar and other countries. Due to various reasons such as the epidemic, port shutdowns, and logistics delays, the buyer may not be able to receive the goods on time, thus Resulting in delays, breach of contract, and even abandonment of orders.
Under the impact of the epidemic, the supply of India, the second largest textile manufacturer and exporter, has stalled, accelerating the start of a new cycle for the global textile and apparel industry. China is the country with the most complete textile industry chain in the world, but its current advantages are mainly reflected in the stability and security of the supply chain. The upgrading of the industrial chain in recent years has also enhanced the competitiveness of the textile industry.
According to the forecast of China·Keqiao Textile Index, although exports will still maintain growth in the second quarter of this year, the growth rate will return to normal levels, and my country’s textile and clothing and other bulk commodity exports will continue to achieve restorative growth. </p
