When the rainy days are long, the warm wind feels hot. In the midsummer of 2020, the natural seasons are changing as usual.
The “climate” of the textile industry is much drab. Since work resumed after the New Year, the gray fabric workshop of Nantong Yongshang Textile Co., Ltd. has only opened one shift every day. “It’s definitely too much to digest.” According to the company’s chairman Gu Xuchun, under the normalized prevention and control situation of the domestic new coronavirus epidemic, the “frost period” brought by the epidemic to the industry will last for a long time.
“It is obvious that customer inquiries this year are not as frequent as in the past.” Zhang Xiuhong, general manager of Nantong Qingyu Feifei Textile Co., Ltd. said, “The downstream will not take the goods if they can. I’d rather wait.” After resuming work, the company received orders until the end of April, and the rest of its production and operations had to be spent in the unknown.
As the main raw material for gray fabric weaving, the price of cotton yarn has been falling deeply after the Spring Festival. Taking 32-count carded cotton yarn as an example, transaction data released by the China National Textile and Apparel Industry Federation show that in early July, its sales price per ton was about 18,650 yuan, a drop of more than 600 yuan from the beginning of April.
“The global epidemic has led to the cancellation or withdrawal of textile export orders, and textile factories have accumulated a large amount of inventory.” Chen Xiaojin, director of the Economic Development Bureau of Shuangdian Town, said that the pessimistic expectations for the industry have not changed, and the market has Hard to start. More than 30 enterprises above designated size and more than 100 small and micro enterprises in the town’s textile industry have all resumed work since April. He believes that the problem of insufficient orders will continue to exist after the resumption of work, which is a bigger problem.
“In Dieshiqiao, few out-of-town customers come, and few old customers go.” Gu Xuchun said that Rudong’s textile industry has long relied on the Dieshiqiao market, and currently the primary market is still open. During the recovery, the secondary and tertiary markets below have not yet fully started to operate. He asserted, “There will be very few new orders placed this year, and more than 90% of products will become inventory.”
Zhang Xiuhong’s estimate is more optimistic. She calculated that as the epidemic prevention and control situation stabilizes in the later period, it may not be a problem for the company’s sales to reach last year’s 33 million yuan, but profits will undoubtedly be spread very thin.
Resumption of work has been delayed again and again, the supply of raw materials is not available, logistics is delayed, workers are struggling to get in place, and orders are suddenly depressed. At the beginning of the new year of 2020, the sudden spread of the new coronavirus pneumonia epidemic hit textile companies hard. What’s even more difficult is that companies in trouble still have to maintain the necessary dignity at a certain cost.
“There are fewer orders, but the management staff’s wages have to be paid, and the piece-rate workers have to pay no matter how little work they do.” Yan Lipei, secretary-general of the Chahe Town Textile Association, said that in these expenses In addition, we should also note that 80% of textile companies have loans, and the interest rates are also quite stressful.
Gu Xuchun believes that lost time is also an irreparable price. Cloth is just an ordinary daily necessities. Even if the impact of the epidemic weakens, suppressed consumer demand cannot be released, not to mention that a company’s production capacity is basically fixed. “Retaliatory rebound does not exist in our industry.”
In the first half of the year, except for non-woven fabrics, the loss ratio of textile enterprises above designated size reached 32%!
With the steady advancement of normalized epidemic prevention and control, the production of the textile industry has gradually resumed, and the decline has continued to narrow. According to data from the National Bureau of Statistics, from January to May, the industrial added value of the national textile industry above designated size decreased by 8.2% year-on-year, and the growth rate was 11.8 percentage points lower than the same period last year, but it rebounded by 3.1 percentage points from January to April this year. The growth rate turned negative to positive for the first time. Among all links in the industrial chain, the industrial textiles industry maintains a high-speed lead. The industrial added value from January to May increased significantly by 50.7% year-on-year, which was 58.9 percentage points higher than the growth rate of the entire industry. Affected by shrinking terminal demand, the apparel and home textile industries saw industrial added value decrease by 12.8% and 10.6% respectively year-on-year. The industrial added value of the textile machinery industry decreased by 20.8% year-on-year from January to May, reflecting that industry investment confidence remains sluggish.
Among the major categories of products, only the output of non-woven fabrics achieved a positive growth of 2.5% year-on-year, while the output of other products declined. From January to May, the output of chemical fiber, yarn, cloth and clothing of enterprises above designated size decreased by 3.2%, 18.1%, 27.6% and 17.9% respectively year-on-year, and the growth rate was 16.2, 19.7, 27.4 and 17.5 percentage points lower than the same period last year respectively.
According to data from the National Bureau of Statistics, from January to May, the loss rate of textile enterprises above designated size reached 32%; the total asset turnover rate and finished product turnover rate were only 0.9 times respectively /year and 10.4 times/year, a year-on-year slowdown of 20.6% and 24.7% respectively; the proportion of three fees was 7.3%, 0.3 percentage points higher than the same period last year.
Textiles place their hopes on the recovery of end demand, but the story of clothing brands has become increasingly The harder it is to tell!
The first half of this year was a turbulent half for the textile and apparel industry. This crisis was ignited by the epidemic. It started with terminal brands and will also end with terminal brands. Many domestic midstream and upstream textile companies rely on orders from brands to survive. Production was hampered in the first quarter and orders dropped sharply in the second quarter. Currently, many textile companies have to cut back on food and clothing. Terminal brands take away most of the profits of the industry chain. In theory, their ability to resist risks is stronger, and they should protect the midstream and upper reaches of the industry.But what we are seeing is the collapse of one brand after another. Can the textile and apparel industry be saved? When will it bottom out and rebound? Who will turn the tide and help the building collapse… I am afraid we still have to place our hope on the recovery of terminal demand.
However, in the past six months, fast fashion brands such as Uniqlo, Zara, H&M, GAP, and La Chapelle have announced the closure of some stores. From capital enthusiasm to store closures, stocks are on the verge of collapse. Clothing brand stories are getting harder and harder to tell.
In the first quarter of 2020, La Chapelle achieved revenue of 1.002 billion yuan, a year-on-year decrease of 57.75%. Prior to this, La Chapelle had experienced two consecutive years of performance decline. In 2019, there was a large-scale store closure and liquidation, with about 4,400 stores closed throughout the year. The large number of brands, difficult operations, difficulty in making profits in the main business, failed overseas acquisitions, defaults, debts and other financial pressures put La Chapelle in a delisting warning.
Coincidentally, the American fast fashion giant GAP has temporarily closed most of its stores around the world due to the epidemic. Although there is still 20% of online revenue, during the epidemic period, most consumers did not desire to buy. With large-scale store closures, obstacles to online transformation, and stagnant revenue, GAP suffered a fatal blow.
The situation of H&M and Zara is also not optimistic. Affected by the epidemic, H&M’s sales dropped by 46% in March this year and 3,778 stores were closed. The 2019 annual report released by Zara also shows that 50% of the group’s stores worldwide are temporarily closed.
The epidemic has caused major apparel companies to lack enthusiasm for the market in the second half of the year, and fewer order cancellations have become the norm. Whether the textile peak season in the second half of this year can arrive as scheduled has become confusing. After all, the large amount of inventory left over from last year has not been fully digested, which will inevitably seriously affect the speed of inventory digestion and will also limit the issuance of new orders. Moreover, there are no signs of improvement in the overseas COVID-19 epidemic, and the second half of the year for textile workers may be even more difficult than the first half.
Prudently lay out the autumn and winter fabric market, prepare sufficient liquidity, and prepare for the coming severe winter.
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