Textile And Garment Industry Chain &Nbsp; Facing "Cotton" Dilemma.

The price of cotton has been at a historical high in recent years, but it still does not seem to have reached its peak. How will it be interpreted in 2010? Will it become the favorite of speculators?

When the cost pressure caused by the rise of cotton prices continues to hit, how should we face all aspects of the textile and garment industry chain? Who will become the most unfortunate person?

"The future will be more expensive."

After seeing a large number of product catalog faxes and more than 10 telephone enquiries, Li Hongnian, a Singapore textile and garment merchant, hastily boarded the flight to China shortly after the 2010 lunar new year.

With more than 10 years of experience, Li Hongnian is "nervous" to feel that his clothing business is facing a severe challenge -- the further rise of raw material prices. At the end of 2009, signs of yarn and cloth prices had been driven up by the sharp rise in cotton prices. In early 2010, he was convinced that further changes in the price of textile and clothing raw materials would damage his clothing business in the past.

This made him feel necessary to come to China earlier.

Nightmare of fabric purchasing

Li Hongnian hurriedly made his itinerary. He first came to Jiangsu. In Zhangjiagang, he frequently met with his old local partners. At the same time, he also deliberately visited "new friends" who had not seen each other in previous years but knew something about them.

Spinning is the focus of Li Hongnian's inspection. A considerable proportion of his clothing factories are cotton products, so the price fluctuation of spinning will directly affect his profits.

In the exchange and communication with new and old friends in Zhangjiagang, Li Hongnian's first visit to China gradually transformed his worries to China into reality. At the end of 2009, the new high cotton prices had passed the cost pressure to the yarn and cloth products he had to buy.

As famous in China Do spinning The cluster is also an important purchasing place for Li Hongnian's raw materials. His friends in Zhangjiagang told him that it would be totally unfeasible to buy last year's average purchase price of spinning.

"They even warned," I will be more expensive in the future. " Li Hongnian said helplessly.

As cotton prices have risen rapidly since 2009 and there has been no sign of stagnation in 2010, the field of textile fabrics has begun to rise sharply, or even more than the increase in cotton prices. According to a set of data released in the middle of March by the national cotton market monitoring system, such as pure cotton combed 32 yarn, air spinning 10 yarn and pure cotton combed 40 yarn only increased by more than 500 yuan / ton compared with the beginning of March, and the difference between pure cotton combed 32 yarn and domestic standard cotton price is also 366 yuan / ton than that of early March.

"It's going too fast for us." Li Hongnian, who runs an enterprise with an annual output value of less than 10 million dollars, is worried that the remaining profits will be squeezed out of the rapidly rising cost. "In fact, this has become our focus at the moment. We do not have a retail brand. Therefore, it (raw material prices)" pressure "enterprises like ours have to look for cheaper procurement channels.

With this goal, Li Hongnian did not stay in Jiangsu for too long. After having no much fruitful "emotional friendship", he chose to go up north to Shandong, which he had never planned before.

Thus, for Shandong, Li Hongnian actually carried out the trip with the idea of taking a chance. In his view, there are many large textile enterprises across the country in Shandong. These enterprises are huge in scale and have strong cost control, so they may offer some purchasing opportunities for them.

"We go with such an idea, mainly in order to explore the market, but unfortunately, the opportunity is not, at least in our view, far from being an opportunity." Li Hongnian explained, "it is usually expected that some large enterprises can integrate the market through scale advantage, and the idea of providing some" special "products is always unilateral. In fact, we are clear about this, but we still have the idea of trying to see it. Of course, in the end, we return to reality. The biggest embodiment of the scale advantage of large enterprises lies in their bargaining power, not the ability to" reduce prices ".

According to Li Hongnian, during the visit in Shandong, the upper reaches of the large enterprises offered more than 10% of the price that accorded with his standard products.

"We will continue to investigate." Li Hongnian chose to wait and see in the absence of a thorough understanding of the market.

Cotton costs rise smoothly

The reporter saw Li Hongnian at the fabric exhibition held in Beijing in March this year when Li Hongnian was smoking and chatting with the domestic colleagues who came to see the exhibition at the 5 Hall of the International Exhibition Center.

The topic can not be separated from the reality of the price rise of clothing materials. He told the first time he met his colleagues that the whole pavilion was going up in price, while the colleague responded lightly. Then, they tried to analyze the reasons for the rise in prices, when they came down, and the emergence of new R & D products that could allow consumers to "ignore" the rising cost and enough to stimulate the consumption of the market.

Without agreement, Li Hongnian concluded his discussions with his colleagues in "not too deep". When he turned to enter the exhibition hall and continued to watch the exhibition, he invited our newspaper reporters to "inspect".

Li Hongnian told reporters. A trip to Beijing He is the last stop of his visit to the Chinese market. After the fabric exhibition, he will return to Singapore, where he will sort out the information and finally work out a future procurement and marketing plan.

"At present, the discovery of Beijing is basically out of line with my previous visits. The market is still recovering this year, but the cost pressure has also increased dramatically." Li Hongnian pointed to the many clothing materials suppliers in the exhibition hall, "the pressure in the future may be even greater, because the prices of the most upstream cotton and other products are still rising. Due to the decrease of planting area, the reduction of inventories and the increase of speculators, it is not easy to say when the time comes. However, the suppliers of clothing materials such as yarn and cloth should be better off, and what is most beneficial to them is that they have successfully raised their prices."

This is the biggest "harvest" of Li Hongnian's trip to Beijing and even China. The producer price of his direct supplier, such as spinning and weaving fabrics, has risen rapidly, and the market has not been significantly atrophied. This is partly reflected in the popularity of the Beijing fabric exhibition and its trading trend.

At the same time, it is also confirmed in the mouth of many raw materials such as yarns.

Li Hongnian pointed to some booths he had visited, telling reporters that these enterprises could take advantage of the price increase to achieve a substantial profit recovery after the financial crisis.

"For businesses like ours, a considerable part of the business is garment processing enterprises, whether the price increases can be recognized by the market is uncertain and risky, but for them, there are good signs."

Following Li Hongnian's direction, the reply of one of the enterprises, Shanghai Ding Tian Textile Co., Ltd. is like Li Hongnian's "prediction". CEO, the Shanghai Tian Tian Textile Co., Ltd., which is dedicated to providing products to customers like Li Hongnian, behaves "disagree" about the fabric price rise.

"In fact, the price of fabrics has been rising for some years, and this year, too, for us, we can digest completely through better product services." Chai Fangjun said, "the price of our fabric products is about 30-100 yuan this year, up 2-3 yuan from last year, and our sales will not be any problem."

Unlike Chai Fangjun's "conservatism", Zhou Yejun, general manager of Wuxi Yi cotton Investment Co., Ltd. is more direct. She simply indicated that this year they are expected to achieve four or five times the benefit.

"Last year, the price of raw materials is relatively low, coupled with the impact of the financial crisis, although we have achieved sales targets, but the base is not high. This year, in view of the current situation, we have formulated a new plan of four or five times sales efficiency."

Zhou Ye Jun although The confidence in doubling sales has not been directly equated with the increase in product prices, but she also acknowledges that the prices of fabrics delivered by cotton and other fabrics are now rising rapidly, giving birth to numerous market opportunities. Similarly, her concern about customer acceptance is far less than that of doubling sales.

In this regard, Zhang Shibin, managing director of Sanyang textile (Hongkong) Co., Ltd., who attended the Beijing fabric exhibition this year, explained the success of "success" in the fabric business.

"This is mainly because raw materials account for a very low proportion of clothing costs." Zhang Shibin pointed to the company's yarn products. "I don't think I can get 5% of the retail price of the brand clothing with this made garment. Therefore, even if the price of raw materials doubled, it will not become a climate."

However, when our reporter told Li Hongnian about his worries, Zhang Shibin laughed and said, "someone has to digest the cost pressure brought about by the rising price of raw materials, and some people will not be able to resist the pressure. In my view, the biggest" digestion side "is certainly a labor enhancement link, such as garment processing plants.