China'S Clothing Exports To Europe Are Tightening

According to the latest statistics released by the European Union statistics bureau, the euro area's gross domestic product (GDP) decreased by 0.2% in the 3 months ended June, especially in France.

The euro area inflation rate reached a record 4% in July, though slightly lower than the original estimate of 4.1%.

The European Central Bank recently announced that professional forecasters' expectations for longer-term inflation were the most pessimistic since the start of the euro in 1999, which further exacerbated the ECB's concerns.

After a serious blow to the global impact of the US subprime mortgage crisis, major economies in the euro area were dragged down by the impact of soaring commodity prices on consumer spending, the strengthening of the euro, the higher cost of borrowing and the slowdown in the US economy.

In the second quarter, although the US situation improved significantly and GDP grew by 0.5% during the same period, the euro area still contracted.

Two consecutive quarters of negative growth in the euro area will mark a recession that is consistent with the standard definition.

Even at the start of this century, the euro area's quarterly growth rate remained positive.

In the recently concluded international clothing exhibition held in Dusseldorf, Germany, there has been a warning from industry experts: the situation of clothing sales in Europe and the whole world is worsening due to the external economic environment.

In this context, the relationship between apparel retailers and suppliers will be tested, and it is estimated that this will have a negative impact on China's garment export enterprises.

According to the data released by the German Textile Industry Federation (BTE), the sales of German apparel industry in the first half of this year was not ideal, and the growth rate was close to zero in March and April this year.

Some small and medium-sized retail stores continue to place large orders due to failure to foresee the difficulties in sales.

Sales of many single clothing retail outlets are particularly poor.

In the face of the predicament of sales downturn, many German retail stores began selling discounts in the summer from mid May, and the discount was greater and the time was earlier than before.

According to the data of the research institutions, the pre tax earnings rate of the small and medium garment retail enterprises in Germany is only 0.9%, affected by the rising operating costs of the store, the backlog of cash flow and discounts.

The German Textile Industry Federation said that the deterioration of clothing sales was mainly affected by the slowdown in economic growth and high prices.

Oil prices, electricity prices and food prices have risen sharply this year. They have pushed German inflation to over 3% for several months. This has a direct impact on Residents' consumption intention, thereby saving money and increasing savings.

Data show that from 1 to March this year, Germany's per capita savings rate reached 14.8% of its total income, the highest level since 1993.

The situation of "tight pockets" of German people reflects to some extent the general phenomenon of the global consumption of residents.

Industry experts pointed out that the "unexpected" sales downturn in the first half of this year could exacerbate the tension between clothing retailers and manufacturers.

Clothing manufacturers have been complaining about the stringent price policy of retail enterprises, and retailers will have to lower clothing purchasing prices even if they have to sell at a discount, and fabric prices will also be affected.

At present, global apparel retailers and manufacturers are in the 2009 spring and summer clothing ordering negotiations.

Experts warned that in such a difficult period, clothing dealers could be expected to be more cautious in ordering: they may now focus more on flexible mobility than previously seeking stable supply; the number of advance orders may be reduced, and the minimum order volume may also need to be renegotiated.

At present, the manufacturing links of the global garment industry are mainly concentrated in China, and garment manufacturers in Jiangsu and Zhejiang are the main suppliers of international garment retail enterprises.

Chinese manufacturers accounted for 57% of the exhibitors in the Dusseldorf fashion show.

Therefore, China's clothing export enterprises will face a new round of pressure from global buyers.

According to customs statistics, the growth rate of clothing exports was 3.4% in 1~7 months, basically unchanged from the first 6 months, down 19.6 percentage points.

Henan entry-exit inspection and Quarantine Bureau released the first half of 2008 Henan clothing export analysis report shows that Henan clothing exports in 17 consecutive years of continuous growth, the first comprehensive decline.

At the clothing exhibition, many domestic enterprises have already told reporters that under the pressure of "internal worries and external difficulties" such as RMB appreciation, rising labor costs and international retailers' pressure, "the current life is hard."

Facing the increasingly deteriorating international sales environment, China's clothing enterprises must respond as soon as possible.