The Euro Crisis: China'S Textile Export Market Is Clouded Again.

Not long ago, some experts pointed out that under the current EU economic uncertainty, China's textile and clothing exports to the EU over 10% growth momentum may occur in the second quarter of the inflection point.

The recent problems that plagued China's export enterprises are far more than a series of problems triggered by the European debt crisis. The external market, the unemployment rate in the United States and Japan is still high. In terms of internal factors, the rising cost of raw materials and the shortage of labor resources really make enterprises headache, and the appreciation of the renminbi will also become a worry for export enterprises.

From the beginning of the market full of vision, and now to the internal and external factors caused by the market volatility, in some of the export enterprises in the interview, reporters feel that they are not optimistic about the market trend in the second half.

The export market with multiple factors superimposed has been overshadowed by just showing its warmth.

European debt crisis - another black swan

No one can imagine that the financial crisis will not be easy to pass, but no one expected that the second wave would happen in the form of sovereign debt crisis.

The product of this post financial crisis era is not only dragging down the pace of recovery of the EU economy and even the global economy, but also likely to affect the recovery of China's textile exports in the second half of the year.

Huo Jianguo, President of the Ministry of Commerce, pointed out that the growth rate of China's exports to Europe is still at 25%. However, because the impact of the rapid devaluation of the euro may be lagging behind, China's export growth rate in May is likely to fall. In June, the growth rate of EU exports to Europe will be more obvious, and the next step may be further down by 6% to 7%.

At present, the EU is China's most important export market, accounting for 16% of China's trade.

At the same time, the European Union is also the largest market for textile and clothing exports in China.

Affected by the European debt crisis, the euro has depreciated in disguise of about 15% this year. For small and medium-sized textile companies with an average profit margin of only 3%~5%, the profit margins for orders settled in euros have basically been offset.

On the other hand, the unemployment rate in the euro area has reached the highest level since 1999 because of the decline of the EU economy.

This means that the overall consumption capacity of the EU will decline, and the further impact is likely to be the shrinking demand for consumer goods such as textiles and clothing.

"Since the beginning of this year, orders in the European market have not been improving. For a short period of time, most of the orders with short delivery dates and small amounts are one or two months. Because of the uncertain future, European buyers are trying their best to control risks."

Ms. Lee, sales manager of a fabric export company in Jiangsu, admitted.

Inner Mongolia Daxing Cashmere Products Co., Ltd. mainly exports yarn, fabrics and clothing products to Italy cashmere.

Yin Weiling, manager of the company, said: "the order now being done was signed in August and September last year. Due to a certain lag, we have not yet felt the volatility of the market."

For the second half of the year, whether the market can return to the level before the outbreak of the financial crisis, Yin Weiling's answer is still reservations. "The recovery of the market will ultimately depend on the rebound in demand, and the debt crisis is likely to weaken consumer enthusiasm to a certain extent."

Rising costs and difficult bargaining are two sides of profit margins being blocked.

Compared with the weak European market, the US market looks slightly better.

According to customs data, the amount of textile and clothing exported to the United States increased by 20.61% over the 1~4 months this year, 4 percentage points higher than that in the European market.

However, some enterprises have indicated that although the US market has improved, customers are also continuing to place orders, but the general bid is low, forming a strange phenomenon of increasing orders and increasing profits.

The main export product of Hebei new Dadong textile printing and dyeing Co., Ltd. is elastic denim, and its products are sold to the United States 80%.

Zhang Zhanhui, a deputy general manager who has just returned from the US inspection, summed up the current situation in the US market with four words "volume rise or fall".

"Now the company does not worry about the order, but the price is not going up."

Zhang Zhanhui said that after the financial crisis, consumers in the United States turned their attention to low-end clothing products. Now the most popular clothing sales market in the United States is supermarket stores like WAL-MART.

The price of terminal products is difficult to raise, and the price of raw materials is soaring all the way.

The soaring price of raw materials represented by cotton is devouring the profits of the middle and lower reaches of enterprises such as new big east.

It is estimated that the rise in cotton prices will drive the price of finished fabrics to rise by at least 5%~10%, resulting in a 2% decline in corporate profits.

This has made the textile enterprises with little profit margins even more difficult.

"The cost burden brought by the rising price of raw materials makes us have to consider raising the price, but in such a price sensitive period, enterprises are going to risk the purchase volume being reduced or the order being withdrawn."

Zhang Zhanhui said.

If the price is not rising, it must bear the loss of profits, and then worry that foreign businessmen will not buy it after the price rises.

It is still difficult for small and medium-sized textile enterprises, mainly OEM, to hope to shift the pressure of rising costs to raise prices.

According to Zhang Zhanhui, 20% of the price increase is basically the limit, which is limited to foreign businessmen who have a good foundation for cooperation.

When the external market has not yet fully recovered, buyers are particularly vulnerable to the price tolerance due to the suppression of terminal consumer prices.

Expected appreciation of RMB -- pressure from buyers and sellers

In the interview, most enterprises indicated that the current export orders were settled in US dollars, and the proportion settled in euros was very small.

Zhang Junli, manager of Tianjin garments import and export Limited by Share Ltd, told reporters that the company's export business has been converted to us dollar settlement since last year, and that the current settlement in Euro accounts for less than 10% of the total market.

When it comes to the impact of the depreciation of the euro, Zhang Junli said that when signing a contract, there will be restrictions on the exchange rate fluctuation range of settlement currencies.

"If we exceed this scope, we will coordinate with foreign investors and we can not afford to share the pressure.

But now we are more worried about the appreciation of the renminbi. "

How much losses will be brought to the profits of export enterprises? According to estimates, when the cost and price of other production factors are constant, the RMB profit will be reduced by 1% if the value of RMB rises by 1 percentage points.

As an export-oriented industry, the prospects for recovery of the textile industry will inevitably be affected by the appreciation of the renminbi.

"If the RMB appreciation is controlled within 3% within the year, the company can safely go through the border. If it reaches 5%, it will be more obvious negative impact, so we will have to give up some orders to eliminate the low value customers to digest the cost."

A sales representative of a foreign trade company said.

Another industry pointed out that, because the main exchange rate risk is borne by buyers, it is likely that they will not dare to make big orders and long bills, and then turn down small bills and short lists, thereby reducing the volume of China's exports.

It can be predicted that when the appreciation of the RMB breaks through a certain limit, the profits of the enterprises will not only be squeezed, but the accumulated order resources may be pferred to other countries or regions for a long time.

Faced with heavy pressure, the recovery of textile and garment export enterprises is not smooth.

Unlike the external market, China's domestic market has maintained a steady upward trend.

A number of recent institutions have predicted that the domestic market for textile and clothing in the second half of the year can be maintained at a growth rate of more than 15%.

Under the shock of the external demand market, enterprises have been aiming at the domestic market, hoping to make up for the loss of overseas business caused by RMB appreciation and trade friction by expanding the domestic market.

In addition, we should not neglect the emerging markets such as ASEAN and Latin America, which have strong growth since the beginning of the year. Under the crisis, we should create a diversified pattern of export markets, increase the added value of products, and adjust products in a timely manner, so that the ability of enterprises to resist risks can be effectively improved.