Home Textile Industry: Where Is The Profit Growth Space?

Compared with other industries, the profit of home textile industry can be called "tempting".

However, in fact, the home textile industry is facing many problems: the rise of labor costs, the continued appreciation of the renminbi, the subprime mortgage crisis in the United States, the great earthquake in Sichuan, the increase in upstream costs and the increase in export restrictions.

There are indications that the profits of China's home textile industry show a "jujube" distribution.

The sales of high-end market and wholesale market are gradually reduced under the pressure of unfavorable factors, and the "mass market" at the intermediate level has become the real profit point for enterprises.

In China's textile industry cluster, Yuhang home textiles, which is emerging suddenly, is undoubtedly the most attractive new force in recent years.

As a famous textile and Textile City in China, Yuhang has always been in the leading position in the export of products. Many unfavorable factors have made Yuhang enterprises face unprecedented difficulties.

Not only that, the adverse effects also spread to Nantong, Haining and Binzhou.

It can be said that 2008 is the most difficult year for the home textile industry. This is also the view of many home textile enterprises.

High-end products profit thinning

Jiang Guoping, general manager of Jiangsu global textiles company, said that in the first half of this year, the company's research and development of functional high-end products encountered many resistance in marketing.

This is the best time to sell bed products in summer. Functional home textiles have not yet reached the peak of sales. In fact, this high-end product is far from being sold quickly in mid-range products.

He also pointed out that the prices of other products in the other industries are rising, but the prices of home textiles are not rising or falling, and the profits of high-end products are getting thinner and thinner when the prices of all kinds of raw materials are raised.

Because of the lack of functional conceptual differences in China's home textile industry, the homogenization competition situation is obvious, and the operation means tend to be identical. To stand out from many brands is to "get a little green in the green", avoid homogenization competition, create brand differentiation, and occupy the minds of consumers with distinctive brand image.

Low end market profits are close to zero.

Recently, a large number of small home textile manufacturing enterprises have been closed down in the Yangtze River Delta region, and other home textile enterprises which are struggling to support are almost in a state of no profit.

As a recognized leader in the home textile wholesale market, Wu Yuewu, chairman of Beijing Wei Zhong home textile company, said: "as the low-end market has been in a price war for a long time, the profit of home textile wholesale is almost zero. We are considering pforming to a special store and a special store."

These have little technical advantage, no independent design power, no strong brands, and small businesses that earn only a small amount of processing fees will eventually fail because they can not cope with the sharp rise in operating costs.

90% of the profits come from popular products.

In fact, Meng Jie, Luo Lai, Kasen and other well-known home textile enterprises which have outstanding performance in terminal management, their real profit point is concentrated on the popular products based on running volume.

It is understood that the profits of high-end products of these brands account for only 10% of the total profits, while 90% of the profits come from popular products.

In view of this situation, many home textile industry clusters timely adjust their market strategy and focus on the mid end products.

This phenomenon confirms the "jujube kernel theory" in Economics: in a certain period of time, when the profits of the high and low end of the commodity decline, the moderately priced popular products will become a new profit growth point.

Under the influence of many unfavorable factors, the reshuffling pattern of the home textile industry has been accelerated, and many home textile enterprises obviously feel the pressure of survival.

If the home textile enterprise wants to occupy a place in the fierce market competition, it is the best choice for the home textile enterprises to adapt to the changing situation and meet the challenge.