The epidemic in India continues to spread, bringing a chain reaction to the textile industry chain.
The Indian textile industry occupies a pivotal position in the global textile industry and is the second largest textile producer in the world after China. For the Indian economy, the textile and clothing industry is also one of the pillar industries. The textile industry accounts for about 15% of India’s total export revenue.
According to reports, due to the lockdown measures during the epidemic Due to the impact, the exports of India’s garment industry have shrunk severely. In 2020, the exports of India’s garment industry will decrease by 24%. In the new round of the epidemic, related Indian companies have lost a large number of garment export contracts because workers are unable to come to work.
This brings opportunities to China, the world’s largest textile country. A large number of textile orders that had previously been transferred from China to India began to return.
“Affected by the epidemic, the textile industry in India and Southeast Asia has come to a standstill, and some orders have been transferred to the country, bringing some orders to the company.” Vosges Shares (002083. SZ) recently responded to investors on the interactive platform.
21st Century Business Herald reporter’s investigation found that many textile companies have successively accepted return orders from Southeast Asia. However, companies are also cautious about this part of orders, because once the overseas epidemic situation improves, the return orders will also leave.
Some companies started operating at full production in the fourth quarter of last year
Vosges is China’s largest Home textiles exporter, mainly exports towels, bedding and other home textile products. At the end of April this year, Vosges stated on the investor interaction platform that the company was operating at full capacity and orders had been placed until July.
21st Century Business Herald reporter learned from Vosges that the company’s orders are continuing to grow and are now scheduled until August.
The relevant person in charge of the company told reporters, “We have indeed undertaken transfer orders in Southeast Asia, most of which are from India, mainly mid- to low-end. But the There are not many parts, accounting for at most 10%. The company’s orders have always been mainly from old customers, and new customers account for a small proportion.”
The person said that in fact, The transfer of orders to upper Southeast Asia has begun in the second half of last year, and since the first quarter of this year, the return flow has become slightly more obvious. “The epidemic in India has been more severe this year. Other overseas customers are worried about carrying the new coronavirus on textile products, so they are afraid to place orders in India.”
Lianfa Co., Ltd. (002394.SZ), the global leader in yarn-dyed fabric manufacturing, also mentioned the return of orders. It said on the interactive platform that the new crown epidemic in Southeast Asia has caused some clothing orders to return to China, but it emphasized that this was “short-lived and limited.”
The company also stated that the company’s orders are characterized by small batches, multiple varieties, and fast delivery. At the same time, the new coronavirus pneumonia epidemic is still spreading around the world, and there are major challenges in the external environment. Uncertainty makes it difficult to predict the order situation throughout the year.
An increase of 213%.
Blum Oriental insiders said in a recent interview with the media 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 Very good, running close to full capacity. 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.
While paying attention to the return of orders, investors are also paying attention to the production of textile companies in overseas factories. Previously, due to factors such as cost and trade policies, many textile companies chose to set up factories in Southeast Asia.
Footwear manufacturer Huali Group said, “The company does not have a factory in India, and its mass production factories are mainly in Vietnam. The Vietnamese factory has formulated relatively strict epidemic prevention and control measures. Measures have been taken to control the epidemic quite well.”
Liu Tiantian, chief analyst of Dongxing Securities’ textile, clothing and light industry industry, pointed out that the epidemic situation in Southeast Asia, including Vietnam and Indonesia, has recently intensified. The epidemic continues to spread in these areas and will have an impact on the global supply chain. The overseas production bases of my country’s textile enterprises are mainly in Southeast Asia. Companies where there is no epidemic in the factory or the factory has done a good job in epidemic prevention can better undertake the transfer of this round of orders, and are expected to seize the opportunity to expand production capacity against the trend. In terms of core customers, Share increased.
Reshoring is only a short-term dividend
Although there are opportunities for overseas orders to return, in many places From the perspective of business people, many orders are simply “unprofitable.” “A lot of home textile orders came back to India last year, but the prices were not high and the profits were low. These low-end products will be made at a loss, so our business staff will also judge whether to take them on. Moreover, looking at it now , this part of the reshoring orders has little impact on performance, but is caused by the fluctuation of the RMB exchange rate.Movement has a greater impact on the company. “A person in charge of a large textile company in Jiangsu told reporters.
The aforementioned person in charge of Vosges also said, “India’s textile production is mainly mid- to low-end. , since the company still has relatively strong bargaining power abroad and cannot catch up with its own orders, it is also selective about these transfer orders and tries to select some products with high added value. ”
The person said that this part of the transfer orders has been predicted for a long time, and the dividend must be temporary. First of all, the quantity is not large. Once the epidemic situation in India improves, Will still return to India.
Lin Xiangyi, textile and apparel industry analyst at Galaxy Securities, believes that “in the long run, if the epidemic in India is controlled in the future, orders may still be Back to India, because India has lower costs than my country in terms of manpower, taxation, trade environment, etc., Chinese textile companies have obvious advantages in management experience, technological manufacturing, labor efficiency, etc., which can be used as an advantage for domestic textile companies to build factories overseas. Base. ”
However, the epidemic has accelerated the start of a new cycle for the global textile and apparel industry. China is the country with the most complete textile industry chain, and its current advantages Reflected in the stability and security of the supply chain.
“At present, China’s textile manufacturing industry is basically in a mature stage. Leading companies have benefited from the increasing industry concentration trend with their technology, experience, and scale advantages. At the same time, affected by the epidemic in 2020, some small and medium-sized enterprises have cleared out, and industry concentration is expected to further promote. With the rapid upgrading of domestic industrial technology and the increasing machine replacement rate, the long-term development space of domestic leading textile enterprises is still broad. “Lin Xiangyi said.
Export data also confirms the advantages of China’s textile industry chain. According to customs statistics, from January to May this year, national textile and clothing exports US$112.69 billion, a year-on-year increase of 17.3%. Among them, textile exports were US$56.08 billion, a year-on-year increase of 16.1%; in the month of May, clothing exports were US$12.20 billion, a year-on-year increase of 37.1%.
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