When the world enters the capital era, an economic crisis will occur every once in a while due to overcapacity. The biggest problem encountered by the textile industry at this stage is also overcapacity.
Although individual companies can obtain enough orders to survive through technological improvement, for the entire textile market environment, how to find a way out for excess production capacity is an immediate problem.
Control production capacity and wait for demand to pick up
According to the law of supply price, in a fully competitive market, the higher the production capacity, the lower the price. The textile industry at this stage is such a fully involved market. A large number of conventional products can only be sold at low prices, and it is not uncommon to sell them at a loss.
If we follow the most traditional model, when dealing with overcapacity, companies need to control production capacity and wait for demand to pick up. Indeed, many textile companies are doing this now. But the problem with this is that although production capacity has been controlled, sunk costs such as rent, labor, and machine depreciation have not been reduced. There is a lack of marginal benefits to reduce unit costs. In the fierce competition in the market, profits are very thin. Reducing the start-up often means that Losing money.
What’s more, starting from 2020, the international economic situation has been declining due to the epidemic. European and American Western markets are facing severe inflation after the epidemic “spread money”, but residents’ income growth has not been stable. It is far unable to keep up with the speed of inflation, which has led to a sharp decline in residents’ purchasing power for goods, and the situation of my country’s textile exports is grim.
More importantly, although the problem is already serious, only one boot has landed. Not only has the fundamental problem not been solved, but it has become more serious. Real demand recovery is still far away.
On the one hand, there is a constant consumption of funds, and on the other hand, there is an elusive vision of recovery. Although controlling production capacity is also a way, it can only be achieved if the company’s own financial resources are strong enough.
build new business
Since old markets are shrinking, developing emerging markets is also a good way.
The country started its layout more than ten years ago. By this year, RCEP and the Belt and Road Initiative have shown certain effects. Coupled with changes in the international situation, the Russian market has grown rapidly in recent years. Quickly and indeed digested part of the textile production capacity.
But we must also realize that market cultivation takes time. Although these emerging markets have sufficient populations, most of their economies are underdeveloped and their consumption capacity is limited. Their consumption capacity is growing at the same time as the size of their economies. Even if these countries can reap the dividends of China’s development and their economies can develop rapidly, demand growth will still take time.
In addition, the textile industry is often the best choice for emerging markets to develop their economies. The new markets now will become competitors like Vietnam to some extent in the future.
In addition to overseas markets, the domestic market is also the focus of textile companies. However, due to the situation in the past few years, residents’ willingness to save has increased, and residents’ leverage is too high. This sense of crisis makes it difficult to fully release the consumption potential of the Chinese market.
Fabric spot supermarket
In recent years, the number of fabric spot supermarkets has continued to increase, which has become a major trend visibly visible to the naked eye.
The editor has also interviewed several fabric supermarket owners. They entered the industry for different reasons. Some saw its prospects, some followed suit, and some because there was too much inventory in the factory that they could not digest.
But no matter what the reason is, fabric spot supermarkets have indeed become one of the most important ways to digest inventory in the textile industry at this stage.
Conceptually, the fabric spot supermarket is indeed a form that can be perfectly integrated with the future of the textile industry. With the development of new technologies such as the Internet, AI, the Metaverse, and the Internet of Things, it is easy to construct a new textile ecological chain.
The requirement of this ecological chain for the textile industry chain is “fast”, from the customer placing an order to picking up the ready-made fabrics at the supermarket. If digital printing is used, it will enter a specialized garment factory. If the speed is fast enough, the finished product can be produced within a few days.
The basis of all this is that the fabric spot supermarkets have a complete range of varieties and sufficient stocks. Correspondingly, the funds required for inventory must also be large enough.
Now, fabric spot supermarkets are still in the development stage. They often rely on stores, and have not broken away from the shackles of the old model and have not formed a complete industrial chain.
A large amount of capital is required, homogeneity is serious, and at the same timeThe new consumption channel has not been opened up, which has led to the current stage of fabric spot supermarkets opening more, but also closing many.
In a sense, the economic crisis is a crisis of overcapacity, and to fundamentally resolve the economic crisis is to create new consumption scenarios for excess production capacity, thereby creating new economic growth points, including technological progress and The development of the market has led to changes in consumption patterns. How to choose a way of survival that suits you in the current tide is a special kind of wisdom.
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