Difficult To Break The Curse Of Cotton Price, Guangdong Apparel Enterprises "Roller Coaster" Stimulation

Once in place, it is impossible for us to make all the goods at once. "We slowly make and slowly deliver goods, so in general, raw materials are also purchased by the following subsidiaries according to their respective orders. We store less cotton yarn. After all, we must consider the cost of capital for enterprises. "

However, the former order pattern, which is famous for its flexibility, has made Guangdong's garment enterprises fall into the trap. Predicament 。 Ling Fangcai said that the price of cotton related varieties almost doubled last year and has a great impact on export business. The most direct reflection is that if the receipt is not prepared in time, it is likely to result in loss or decrease in profits; and the price to be received will probably not come down because of the rising price.

　　 Clothing companies dare not take orders

Facing the cost pressure brought by the rising price of upstream raw materials, garment enterprises seem to be hard to pass on to the terminal brands and purchasers, and the parts transferred to consumers are also very limited.

Some manufacturers plan to raise prices, some have even raised the price by 20% to 30%. Gain Far below the increase in cotton prices, customers can not afford it. Ling Fang admitted that customers, especially international customers, could hardly accept such a high price increase: "they signed contracts with us, so we could not change the price at will. They can't say that the price of cotton has gone up now, and you sell it to me. In foreign retail markets, competition is also fierce. Retailers do not dare to raise the price at will. If it is mentioned, they will be able to get their fixed customers to their competitors. However, we do not dare to pick up the list without raising the price. If we take a single loss, we can not afford to lose the new bill. At this time will wait and see, a wait and see will cause customers to order more hesitant, the number of orders will be more, the single period will be more urgent. For example, the price of this variety of skirt is relatively high, and it costs ten yuan a piece. In the past, it was ten thousand pieces at a time. Now the customer will probably get half of it and become very cautious. After all, it is bearish when it rises. What if it fell in two months? We all have this mentality.

Chen Mingxing said that if the client recognised his style of clothing and raised his price, the other side could still accept it, but the degree of acceptance was not as high as before. Fluctuations in raw material prices directly lead to fluctuations in customer orders.

Xu Zhou, an analyst with East Asia Futures agricultural products, said that the rise in clothing prices has led to a continuous decline in orders in the textile and garment industry and a further decline in raw material purchase intention. Facts have proved that during the rise of cotton prices, many customers, especially international buyers, have reduced the amount of clothing purchased in China and transferred to Vietnam, Kampuchea and other places.

　 Cotton prices have prompted buyers desire to lower prices

During the rise of cotton prices, Zhongshan Xia Hu Shijia dress Co., Ltd. (hereinafter referred to as "Xia Hu Shi Jia") was lucky to escape.

Xia Lake family was founded in 1997. At present, the annual T-shirt production capacity reaches 5 million pieces / sets, sportswear 1 million pieces / sets, sweaters 1 million pieces / sets.

"Before the cotton price rose last year, we hoarded a lot of cotton yarn. 80% of what we sell now is stored before. But this year it has been used up. How much is it now? " Guo Changqi, President of Xia Hu Shijia, still worries about the market environment this year. He believes that there is a misleading market now that cotton prices have been reduced so much that the cost of garment enterprises will also drop a lot, requiring clothing companies to cut prices too.

"Cotton prices will cause panic in the market, others dare not place orders, orders will lower prices, clothing companies actually reduced profits." Guo Changqi said that the impact of cotton prices on clothing enterprises depends on the proportion of cotton in the products. The more complex and fashionable clothes, the smaller the proportion of cotton, and the proportion of labor and design will increase correspondingly. The larger the amount of clothing is, the less labor costs will be, and the proportion of cotton will increase. "Generally speaking, cotton accounts for only a few percent of the cost. More than 80% of things did not fall, only a dozen or so of things fell, making the market misleading as the cost of clothing enterprises fell a lot. Now cotton has fallen by 30%, and the cost of clothing has dropped by only 3% to 5%. However, in the garment production cycle, labor costs and rents rose 3% to 5%, so that cotton prices dropped 30%, but the cost of clothes is the same as that of last year's clothing.

Huang Jinquan, President of Guangdong Household Textile Industry Association, agrees with this view. He said that raw materials are only part of the cost of clothing enterprises. And for brand making enterprises, the cost is not mainly in raw materials, but in labor, R & D, design, management, brand promotion and so on.

Guo Changqi said frankly: "if cotton price does not drop, we still have reason to raise part of the price to customers. But now that cotton prices have gone down, we will not only have no reason to raise prices, but people will feel that they should reduce their prices. A little cheaper is not enough for today's market. Cotton dropped (ten thousand tons per ton), which dropped 30% for cotton and only 3% to 5% for clothing, but clothing ordering business wanted you to drop 10% or even 20%. Our profit is 10% to 15%. Good manufacturers, if you say, can not fall, but if you do not say so, so reluctantly fall down, next year is even more difficult to do.

Ling Fang also told reporters that some clients had proposed the price reduction request. "The market can not accept the current price. Cotton price (more than 30 thousand yuan per ton), everyone struggling, the price is difficult for everyone, they were able to accept that, because the price of raw materials has gone up too much. Now the cotton price has come down. When we talk about the order again, the other party will definitely ask you to give up part of it. " Ling Fang also said that the improvement in profits brought about by the fall in cotton prices should be reflected in the second half of the year, because "the first half of this year is basically a digestion of the cotton price rise last year". "On the whole, our gross profit may be increased by 3 to 5 percentage points because of the decrease in cotton prices. It is easier to reach agreement with customers when placing orders. "

　　 Hidden dangers from raw materials

Market volatility makes clothing manufacturers helpless. Ling Fangcai said with emotion, "cotton price is still more than 10000 per ton the year before. When cotton prices broke through (thirty thousand) per ton last year, some people saw up to forty thousand (per ton), but now they fall down, (twenty-five thousand tons per ton), which is more than 10000 lower than the highest time (per ton). But is it the end? No one can be sure. Who knows the price fluctuation? "

As the downstream link of the industrial chain, garment enterprises seem unable to get rid of raw materials. Price fluctuation The bondage. In order to change the passive into the initiative, Ling Fang said that Guangdong textile import and export Limited by Share Ltd intends to control raw materials from the source, extend the supply chain to the upper reaches of the industry so as to ensure profits, that is, the implementation of supply chain. management model 。 "Our company has relatively strong financial resources, and there is a relatively sound sales network abroad. We hope that through the orders of large customers, we will exert influence on upstream enterprises such as cotton flower factory, spinning mill, textile mill, dyeing and printing plant, and establish strategic partnership with them. For example, how much cotton yarn can be sent to the garment factory, instead of sending a sheet to the garment factory, it is possible to establish contacts with suppliers at the upstream. Clothing factories sometimes have conflicts with the upstream raw materials factories because of the price, arrears and quality problems. Through our purchasing mode, the efficiency of the supply chain can be raised and the cost down. "

However, Lingling is worried about the hidden danger of high inventory. "Because the order period is relatively long, if the raw materials can not be quickly digested on the finished product, it will cause backlog, and the price will be very bad when it meets the price."

In the market of roller coaster, the management of garment enterprises is not good. Almost all enterprises want to control raw materials, and even hope that the prices of raw materials tend to be stable, but not all enterprises have the ability to improve the industrial chain.

Chen Mingxing said, clothing enterprises can go to high-end fabrics, high added value The direction of development. "Worsted Goods may be less affected. Relatively speaking, if the fabric is better and the added value is higher, the market will be more stable. "

Guo Changqi said frankly, the price of roller coaster will accelerate the differentiation process of garment enterprises. "Clothing enterprises have already passed the low threshold era. The future development trend is either to fail or to make high profits. Clothing enterprises should invest in high cost research and development design, constantly update products, in order to obtain high profits.

　　 Who is directing roller coaster market?

　 Before cotton prices rose, many people attributed it to the imbalance between supply and demand.

Last year, the export of China's garment industry surged. According to the General Administration of customs, clothing exports increased by 19% from 1 to August last year, and textile yarn, fabrics and products exported 49 billion 510 million US dollars, an increase of 32.3% over the past 80 billion 290 million years. From the domestic demand market, data from the National Bureau of statistics show that retail sales of clothing shoes and hats and needle textiles increased by 400 billion yuan from 1 to September last year, an increase of 24% over the same period last year. On the supply side, cotton production is expected to be reduced due to the reduction of cotton planting area and climate impact. Global cotton supply is also not optimistic. According to the US Department of agriculture global cotton supply and demand forecast data, from 2010 to 2011, the global cotton supply decreased by 6.6% compared to the same period, the demand statistics increased by 4.68%, and the inventory consumption ratio dropped to 36%, reaching a new low of 21 years. As a larger cotton producing country, India also controls cotton exports and reduces the supply of international cotton. The whole industry chain is in short supply, stimulating the crazy rise of cotton prices. The rise in cotton prices has also caused farmers to sell, and some enterprises have increased reserves and eaten in large quantities to throw them in better market conditions, which have further pushed up cotton prices.

Ling Fangcai said, in fact, there are gaps in China's cotton every year, but that is about 3 million tons. Cotton harvest is not good every year, but these factors were enlarged last year. "From the current situation of cotton prices down, it seems that the contradiction between supply and demand is not as prominent as the price reflects."

Chen Mingxing believes that it is precisely because of the speculation of idle funds that these needs are amplified. This year, as domestic cotton prices step by step, many foreign buyers begin to transfer textile orders to countries with more cost advantages, further reducing the demand of foreign markets. Many small and medium-sized foreign trade processing enterprises have to cut production or even stop production. Downstream slump and wait-and-see attitude have further reduced the demand for cotton. With the emergence of new textile materials such as viscose, polyester and other cost-effective products, and the expected increase in global cotton production this year, the downward trend of cotton prices has been further accelerated.

According to Yu Tianqi, Guangdong textile import and export Limited by Share Ltd, last year's surge in export orders should only be attributed to the retaliatory rise in demand after the financial crisis, and demand began to shrink this year. Ling Fangcai's experience is more obvious: "we now place orders to factories, many factories do not have lists, and last year, we are looking for people to help us make the list is very difficult."

　　 Cotton mills hoarding cotton, huge losses, tens of millions of funds overnight water

Commodity prices Skyrocketing In the process, speculation always becomes the most eye-catching word. But the roller coaster prices in this round of cotton prices appear to be vague.

Although there were media reports, over $10 billion of Jiangsu and Zhejiang funds were withdrawn from the fields such as coal and real estate and poured into Xinjiang for cotton speculation, but then the media denied the news. Many experts believe that in the case of bank tightening loans, if it is the capital of Wen Shang, it is not enough to stir up such a big market. Chen Shiwen, executive vice president of the Wenzhou chamber of Commerce in Akesu, Xinjiang, also admitted to the media that in 2002 to 2003, Wenzhou businessmen used more than 3 billion yuan to raise cotton prices from 10000 yuan per ton to 18000 yuan per ton. However, the sharp drop in cotton prices caused by the serious oversupply of the global cotton market in 2004 has taught Wenzhou people a lesson. So if anyone wants to do it again, he will do the whole thing. Weigh up 。

　　 Cotton textile enterprises in the sedan chair?

In the process of rising cotton prices, there is a link in the entire industrial chain, which relies on the cotton yarn that has been hoarded before and has earned a high profit. It is a cotton spinning enterprise.

According to the analysis of the insiders, many cotton hoarding hoarded cotton is far less than some large cotton spinning enterprises, and even less than the local growers, without pricing power, plus the increase in inventory costs, so it is reasonable to do nothing. "The cost of growing cotton is increasing, and the terminal's bearing capacity for cotton price has reached the limit. This has become a problem that cotton makers can not avoid. But if cotton prices can't continue to rise, their profits will be hard to come by.

Many people in the industry think that the cotton spinning company has taken over their baton. "The raw materials of clothing enterprises are mainly embodied in cotton and cotton yarns, because the use of dyed fabrics is relatively fixed, without the value of circulation. Therefore, the phenomenon of enterprises hoarding is basically in the links of cotton and cotton yarn.

Insiders revealed that many large cotton textile enterprises are hoarding cotton and pushing up cotton prices. "Because they usually have to keep stocks for more than three months, when prices rise, they will have the possibility of sitting at the starting price when they are holding cotton."

"They hoard the cotton that was originally directed to a certain customer, do not sell it, wait for the price of cotton to rise, and sell it to other buyers at a high price. At this time, we must not make any payments. It must be a full deal. " The data also confirm this view: from 1 to August last year, 32% of the profits from the spinning and weaving industry came from the cotton textile industry.

However, with the rapid fall in cotton prices this year, many cotton spinning enterprises have also paid for the consequences of hoarding cotton. In March this year, the state issued a minimum reserve purchase price of 19 thousand and 800 yuan / ton cotton. This is undoubtedly a major negative for speculators, and the futures market is also turning sharply. Many cotton spinning enterprises have bought a lot of cotton at high cotton prices, and the losses have been reduced by tens of millions of yuan.

As a practitioner of cotton spinning enterprises, Mr. Zheng is very depressed. He said that as a processing enterprise, the profit has been very low. Last year, it was forced to join the hoarding team, but the price could change too fast. The more stocks we have, the more we lose. The current price compares to the highest price, which is equivalent to a loss of ten thousand yuan per ton. A deposit of 1000 tons is a loss of 10 million yuan.

Some analysts said that the order did not improve, so that some processing enterprises panic, so they sell at a price. The downstream procurement is still on the sidelines, looking forward to purchasing at a lower price, resulting in the increasingly low purchase price of cotton.

Cotton spinning enterprises were blocked at the beginning. On the one hand, it is too expensive to take orders. On the other hand, customers prefer to pay a penalty for cancellation. The process of differentiation has begun to accelerate, and some small cotton mills unable to support them have begun to fail.

　 The brand is the big winner of the roller coaster market.

Zhu Qinghua, a light industry researcher at CIC, said that the number of cotton factories in China is more and the competition among manufacturers is fierce. However, because of the low bargaining power of cotton manufacturers on downstream garment enterprises, cotton textile enterprises bear the cost pressure caused by price fluctuations of most upstream raw materials.

He said that in fact, only 10% of the growth in the cost of raw materials generated from upstream cotton was about 10%. When facing the price fluctuation of upstream raw materials, garment manufacturers will adjust their clothing pricing or pass on the cost pressure to consumers. Because the wholesale price of brand clothing accounts for only 30% to 40% of the selling price, most of the cost of clothing is concentrated on brand promotion and store expansion. Moreover, brand clothing usually designs clothing one year ahead of time, so its fabric is stocked, and the fabric purchased is purchased before the price fluctuation of cotton. With the help of the brand clothing procurement cycle, the influence of price fluctuation can be reduced. Because of the lack of brand advantage and the low bargaining power, the cotton yarn mill has taken the most cost pressure, so the brand has become the least affected part of the price fluctuation of raw materials. So after a series of turbulence, the branding became the real winner.