With 3% Of The Price Competitive Advantage, It Loses 10% Of The Tariff. This Year'S Foreign Trade Market Is "Hard Enough".

In the first three quarters of 2019, China's textile and clothing trade was exported to US $202 billion, down by 2.8%. The total trade volume between China and the US was 3 trillion and 400 billion yuan, down 11.1%, accounting for 11.9% of our total foreign trade. Exports to the European Union amounted to 2 trillion and 670 billion yuan, an increase of 9.5%. China's total imports and exports to the countries along the belt and road increased by 8 trillion and 350 billion yuan, an increase of 9.9%.

Statistics show that the export of China's textile and clothing trade has been blocked this year, and it is on a downward trend in a straight line. Among them, imports and exports of major markets such as the European Union and ASEAN have increased, but their imports and exports to the US market have declined. As is known to all, the textile industry is experiencing a recession this year, and the boom in foreign trade is much more severe than domestic trade. The Sino US trade war can be regarded as the biggest inducement. Textile enterprises face greater difficulties in the process of dealing with Sino US trade frictions this year.

A review of foreign trade quotes this year

First of all, look back on the foreign trade situation this year. January, due to catch up before the Spring Festival, ushered in a small wave of foreign trade orders, but the maintenance time is not long, and the total is not large.

After the Spring Festival, the "golden four silver" is in the peak season, but it still has shortcomings. The number of orders is down compared with the same period last year.

After May, the overall market entered the off-season ahead of schedule, and the off-season stage lasted for the end of August. Foreign trade orders showed the characteristics of "small batch and multiple batches", and the market mentality was relatively mild.

After September, with the arrival of the traditional peak season, the foreign trade market began to recover. Coupled with the Christmas season's rigid demand, the market ushered in a wave of "climax".

After November, the volume of foreign trade dropped again and operated smoothly.

Since December, foreign customers have completed the order of fabrics before the Spring Festival.

One

Sino US trade friction continues, cloth boss is blocked.

We can see that this year's foreign trade market is more stable, even the traditional peak season is also missing a bit of heat. The main cause of this situation is the Sino US trade war.

Since May 10, 2019, the US government has announced that the tariff rate on goods imported from China for the $200 billion list will be increased from 10% to 25%.

In August 5, 2019, the US side announced that it would levy a 10% tariff on 300 billion US dollars in Chinese exports to the US.

In September 11, 2019, the Customs Tariff Commission of the State Council announced the first batch of first elimination list of tariffs on commodities in the US and Canada.

In October 2019, the US Department of Commerce said it would start the elimination procedure on the tariff list of China's US $300 billion since October 31st.

...

As the Sino US trade war ended, and the relationship was repeated, it showed instability. Based on this background, the textile enterprises' orders are greatly reduced. In particular, every time the duty message came out, the textile enterprises were directly affected, and the order was severely or even forced to cancel.

A head of a large foreign trade enterprise in Shengze said that the Sino US trade war has far-reaching impact on our enterprises, and sometimes it will encounter customers' cancellation of orders. This is the most direct. Far away, Sino US trade relations are unstable, and the relationship between the US and the customers is also not stable. This will affect subsequent orders.

Two

China's share of textiles and clothing is Ji Zhan, a Southeast Asian country.

Over the past two or three years, the textile industry in Southeast Asia has developed rapidly, especially Vietnam, which has become the largest textile exporter in the world. In September of this year, Vietnam's textile and clothing exports amounted to about 29 billion 240 million US dollars, up 9.23% over the same period last year.

How the tariffs will be borne and the trade between China and the United States will be plagued, no matter who will bear it, no matter how much the ratio will be borne, it will weaken the competitiveness of Chinese textile and clothing in the US market. The market share of Chinese textiles and clothing in the United States will be partly occupied by the rising Southeast Asian textile industry.

A foreign trade textile chief said: "one of my main customers, the order amount last year was 1 million 500 thousand dollars, but this year's order is less than 500 thousand dollars. According to customers, they are hesitant to choose a Chinese manufacturer or a manufacturer in Southeast Asia this year, so they gave some orders to Southeast Asian manufacturers.

Another foreign trade textile salesman said, "one of my clients got the price of Kampuchea 3% higher than my offer this year, but Kampuchea imports zero tariff, China imports 12% tariffs, 9 points gap, and customers hesitate to choose Kampuchea."

Three

The exchange rate of RMB against the US dollar fluctuates greatly.

The impact of the RMB exchange rate against the US dollar on foreign trade enterprises is also very deep. In the first three quarters, the overall fluctuation of the RMB against the US dollar was relatively large, with the fluctuation range of 6.68 to 7.17, and the annualized rate of RMB to us dollar exchange rate was 2.98%. The frequent fluctuation of exchange rate has caused many problems to the boss's quotation. The price of gold has just changed, and the exchange rate has changed after a few days. In addition, exchange rate fluctuations are also a test for cloth boss's settlement. If we grasp the time of foreign exchange settlement, we can minimize the losses caused by exchange rate.

In February 1st, the central parity of RMB against the US dollar fell by 414 basis points, to 6.7495, the largest daily decline in more than six months.

In June 7th, the offshore RMB exchange rate against the US dollar fell significantly, and the subsequent decline widened. It once fell below the 6.96 threshold, hitting 6.9624, a new low since November 2018.

In August 5th, in the early morning of the Asian market, the offshore renminbi fell below the 7 integer mark against the US dollar, with a minimum value of 7.0532.

In November 5th, the RMB exchange rate against the US dollar once again returned to the "7" Yuan integer pass. After 7.0298 opening, it was pulled up from afternoon and ended up at 6.9975, the highest since August 5th.

In December 10th, the RMB traded against the US dollar at an intermediate price of 7.0400, an increase of 5 points.
...

An old mage who has been engaged in textile foreign trade for more than 10 years in Shengze thinks: "the exchange rate rises or falls is not afraid, is afraid is the fluctuation is big, this will enable the customer to wait for a long time, obstruct the order, and the price is not easy, easy to repeat. So what we want more is exchange rate stability.

Concluding remarks

This year's foreign trade enterprises are greatly influenced by external factors, and the volume of orders is not large, and the profit margins fall sharply. After a dull year, the cloth owners are full of expectations for the market boom next year. Xiaobian believes that the improvement of the foreign trade market next year will depend largely on the Sino US trade war. Although there is a certain degree of improvement in the number of enterprises from the current foreign trade orders, it is not enough to drive the whole market. Therefore, foreign trade enterprises need to pay close attention to the Sino US trade war.