Rising Cotton Prices Result In Cash Trading In Clothing Purchases

Dayong Town, Zhongshan City, Guangdong, is a major textile industry known for its jeans and denim clothing. It's very easy to build a garment factory here. It's very easy to buy a few machines, recruit a few workers, and then rely on familiar and reliable friends to recommend it, and find the owner of the cloth to pay 30% of the deposit, so that the cloth can be first transported back to the factory, processed into clothing and then paid for cloth money. But at present, such trading rules are quietly changing.

In fact, not only is Zhongshan a place, no matter in Henan Zhengzhou or Shandong Dongying, the garment industry raw material purchasing transaction mode is undergoing a revolution. This transaction mode has gradually spread from the acquisition of cotton to the processing of cotton yarn and the sale of cloth, and behind this phenomenon, it reflects the change of supply and demand caused by the power supply and emission reduction policy of textile enterprises in addition to the raw material factors such as the sharp rise in cotton prices.

Boss of clothing factory: payment after advanced goods ends


Around 2006, Li Ke set up his jeans processing factory in Dayong Town, Zhongshan, Guangdong, to take orders from others. According to a reporter's survey, jeans produced in Li Ke factory were also sent to WAL-MART's supermarket in China by dealers, but Li Ke did not deal directly with WAL-MART.

Zhongshan city is famous for its jeans and denim clothing, which has about 5 WAL-MART jeans suppliers. In 2007, the way in which garment factories enter raw materials mostly rely on credit. As long as there are familiar and reliable friends to recommend, the boss of cloth cloth can pay 30% of the deposit, then the cloth can be first transported back to the factory, and then processed into clothing, and then the cloth money will be cleared again. But at present, such trading rules have changed.

In Zhengzhou, Henan, there is also a clothing factory in the middle and old age women's clothing wholesale market. The event in 2007 impressed him deeply. "At that time, because of their poor management, clothing manufacturers did not give fabric to fabric suppliers, which led us to make a lot of money when purchasing clothes for clothing companies." Although this situation has experienced a period of time and has resumed its original reliance on credit transactions, the situation has changed again recently.

Ti Yingli said that in the second half of this year, the energy conservation and emission reduction measures implemented in all parts of the country and the power restriction and production restriction measures implemented in some localities have greatly affected the textile enterprises as the major users of electricity. The production of raw materials has gradually decreased, but the demand has not been reduced in the whole market, which has resulted in a situation in which the supply of raw materials is in short supply. "Since the cloth is ready to sell, the cotton spinning enterprises are certainly willing to sell the goods to the buyers who pay cash." As a result, when it comes to buying goods, it also uses cash to settle accounts, so that the financial pressure of enterprises will naturally increase.

The downstream of Ti Yingli is a clothing seller. Besides Henan, its clients also involve Beijing, Shandong and other places. "Now for small distributors, we also adopt the way of cash settlement. Large or good distributors will still give us a certain amount of credit, but the amount of credit sales is also decreasing."

Jia Wantun, who is doing wholesale clothing business in Dahongmen, Beijing, is the dealer of the company. He is also selling other businesses. He said that in the past, the gross profit of clothing wholesale was about 25%, and this year's impact on the price of raw materials and the wages of personnel doubled, so that only 20% of gross profit was left, minus the rent of water and electricity, and only about 10% profit margins were left. He said that this year's strategy is to make fewer factories, and to downstream retailers, big customers can enjoy 80 thousand to 100 thousand of the accounts. Small customers need cash settlement.