Pearl River Delta Textile Survey: Big Business Crisis Behind Optimistic Data

Recently,

"The Pearl River Delta estimates that 20% of the looms are closed.

From the Spring Festival to the present, I see seven or eight cotton mills closing. "

In July 21st, Ceng Xiang, chairman of the three dimensional digital textile technology Co., Ltd. (hereinafter referred to as "three dimensional textile"), told reporters, "however, only a few textile companies have been closed down, and there has been more production and production cuts."

Press survey found that orders were reduced.

Optimistic data and "shutting down tide"

Zeng Xiang has been immersed in the textile industry for 40 years and is also the first to operate in Dongguan.

"At present, more than 1/3 spinning enterprises are basically in a state of production reduction and shutdown."

Wang Qian, editor in chief of China's first textile net.

After experiencing the rise in production and sales last year, the textile market has been on the decline this year. From overnight to stagnation, the inventory pressure is serious, and the profit space is sharply compressed. Most textile enterprises are in a predicament.

"The number of small and medium-sized enterprises in China's textile industry is the main body. Many small businesses are in a state of discontinued production, and some even have been closed down."

Wang Qianjin said.

However, the open statistics are very optimistic: the textile industry's exports increased by 25.7% in the 1~5 months, the consumption increased by 18%, the investment increased by 38.5%, the industry profits increased by 46.9%, and the gross products of all major products maintained a growth rate of over 10%.

Contrary to optimistic data, enterprises feel the difficulty of operation is increasing.

"This time of year is the peak season for garment factories, but overseas orders have dropped by 40%~50% in the past two months."

Huang Peng, owner of the Wei Peng knitting mill, said that the factory's orders in the first 4 months of this year were last year's orders.

This explains the optimism of statistics, but companies feel sad this year.

Because export data often lag behind, the situation in recent months can only be reflected after a period of time.

Huang Peng has been feeling bad since May of this year. He has only received orders for two months recently.

"Now inflation, we are afraid to take a long order."

Inflation is another reason for the optimism of statistics. In the textile industry's 25.7% growth rate, the price increase factor contributed 80%, while the textile export volume grew by less than 4%, and the volume of exports actually slowed down.

"Now is more severe than the financial crisis in 2008."

Wu Haoliang, Secretary General of Foshan Textile Industry Association, said that despite the sharp decline in textile exports after the financial crisis, the domestic sales of the textile industry were very strong under the strong pull of the government.

"And now there is pressure inside and outside sales."

In addition, Wang Qian believes that the exchange rate and cotton price in 2008 are more stable and the price is controllable.

But since last year, labor costs have risen, cotton prices have fluctuated violently, and the renminbi has appreciated substantially. Textile companies are afraid to take long lists and large orders. They can only pick up short lists and small orders, and can not arrange production normally.

At present, the reason why textile enterprises are sad is attributed to "three famine, two high and one low" - - "labor shortage", "Qian Huang", "electricity shortage", high cost, high tax burden and low profit.

Next big business is big business.

Huang Peng is a native of Dongguan, and his knitting factory is located in Changping Town, Dongguan.

In the town near Liaobu, near Changping Town, recently, a well-known textile enterprise, Ding Hao, went bankrupt, and the report of the closure in July 19th caused great repercussions throughout the country.

The failure of Ding Jia company made Huang Peng sigh with emotion.

There are more than 1000 people in the Ding Jia textile mill, more than 300 computerized numerical control equipment, and a large textile mill in Dongguan.

"The local people run enterprises will not give up until the last soldier."

The main reason for the closure is the fragmentation of the capital chain.

Huang Peng said that when the company failed, it also carried tens of millions of dollars in debts.

Perhaps, the collapse of Ding Jia is a prelude to a new wave of textile enterprises' collapse after the financial crisis.

Statistics from the textile industry association show that the pressure of capital turnover has increased sharply due to the continuous tightening of money in the country.

The financial cost of textile industry increased by 39.1% over the past 1~4 months, much higher than that of main business revenue by 8.26%.

Interest expense accounts for more than 80% of the cost.

Most textile enterprises are unable to obtain loans from banks because they have no land or mortgages.

When money was not tightened last year, manufacturers could also get part of the loan through order pledge to pay for labor, electricity, raw materials and so on.

But after this year's tightening, many exporters have been unable to obtain loans through such channels, and some of them have to borrow money from the private sector.

"Most of the loans for small and medium enterprises now come from small loan companies or private usury. Monthly interest rate of 5 points is a popular market for private lending, with an annual interest rate of 60%.

The highest has reached 1 cents per month.

The average gross profit of textile SMEs is not more than 10%.

Wang pointed out that along with the increase in the amount of money paid by banks, which must be tied up before the end of July, the textile enterprises had to sell their money and repay their loans at a loss. They became the main reason for the excessive pressure on the enterprises, which was a great blow to market confidence.

In fact, once the enterprise fails to return the funds in time, the capital chain of enterprises may be fractured.

Huang Peng pointed out that small enterprises are weak in strength and easy to be eliminated during crises.

Because of the rising cost of raw materials and labor, big enterprises are more likely to fall into difficulties.

"The same amount of money can cost 1000 workers only one and a half months, and 300 workers may spend three months.

Once there is a problem, big enterprises will fall faster.

The survival opportunities of medium-sized enterprises in textile industry may be relatively large.

Huang Peng's enterprise is a medium-sized enterprise: there are more than 200 employees in the factory, and four property plants with property rights.

When a reporter asked Huang Peng if his business would go bankrupt, he answered frankly, "it's hard to tell. It depends on the next two months."

He hopes to get bank loans, and what he fears most is that he can not get enough orders in the next few months.

Therefore, Huang Peng, who has only received high-end orders, is now receiving low profit orders.

"As long as these orders are enough to feed workers."

"Now the gross profit of garment factories is less than 10%."

Huang Peng said that in the past happy times, the clothing factory exported 30%~35% gross margin.

At present, gross domestic orders are 15%, and foreign orders are down to 5%~10%.

Statistics show that although the overall benefit of the textile industry is relatively good in the first quarter of this year, 1/3 enterprises have achieved more than 90% of the profits of the whole industry, and the small and medium-sized garment enterprises of 2/3 can only be divided into 10% profits.

The way out for pformation and upgrading

In fact, in a depression, the market still has plenty of opportunities for competitive enterprises.

They benefit from early pformation and upgrading, and some textile and garment enterprises can still lead a good life this year.

"We are the best year this year."

Zeng Xiang told reporters that three dimensional textile orders this year were mainly military supplies, and received a large number of cotton yarn orders for us camouflage clothes.

Military uniforms have special requirements for cotton yarns. In recent years, three dimensional textiles are mainly developed for new, multi-functional and environment-friendly textiles. This has enabled him to seize the opportunity of orders for military uniforms this year.

"Our gross margin this year is 18%."

Zeng Xiang told reporters in an interview last July that the profit of 3D textile was only 4%.

In just one year, the profits of 3D textiles have doubled.

Zeng Xiang said that last year, he made a round shirt, 1 dollars a piece, and the raw material was expensive and the profit was very low.

"Without pformation and upgrading, we would have closed long ago."

Three dimensional textile is still a large number of foundry products, but its ultimate goal is to build its own brand.

Three dimensional textile is planning to launch its own three garment brands in China, Hong Kong, Taiwan and Europe and the United States.

"We have been preparing for more than two years to develop all kinds of new fabrics, and ask Hongkong designers to design and plan to make 500~1000 yuan / pieces."

Three dimensional textile, from upstream cotton yarn, cotton cloth to downstream garments, has opened up the entire industrial chain of textile, forming a "one-stop" situation.

In fact, three-dimensional textile is not a special case.

After the financial crisis in 2008, part of the textile and garment industry has been pformed and upgraded.

For example, the creative fox dress Co., Ltd. of Humen, Dongguan, is another successful case.

In the 2008 financial crisis, creative fox invested experts to redesign business models for them, and finally decided to adopt the B2C mode, set up the "creative Fox" dress brand, and opened the official website, Taobao shop, opened Alibaba, eBay and other sales platforms, and promoted competitive bidding at home and abroad in Baidu, Google and other popular search engines.

These measures make the products of creative fox face the terminal consumers directly, reduce the intermediate links, and the price has great advantages.

"For example, before creative fox came to the overseas consumers through several intermediate links, a dress cost US $500, and now it goes directly to overseas consumption through the Internet, which only costs US $300."

Zhou Bo, an Internet marketing consultant for creative fox, said that in the short span of a few years, the sales of creative fox brands had grown from over 100% to over 50 million per year, with online sales accounting for over 80% of total sales.

In a haze, enterprises will still live in the sunshine.