The Global Textile And Garment Industry Under The Epidemic Situation

The impact of the new coronavirus can be felt worldwide. The clothing and textile industry around the world is facing many challenges from purchasing to retailing, and this uncertainty is affecting the business.

Although the Sino US trade war has had a negative impact on China's textile and garment industry, the threat of the latest coronavirus is causing more uncertainty in the supply chain. The unpredictability of the extent of the spread of the virus, coupled with delays in production in some areas, has brought uncertainty to the manufacturing sector of the world, which may hinder export growth and increase the uncertainty in the first stage of Sino US exports of cotton.

Textile fiber demand decline

As data from Wood Mackenzie show, an impact of the outbreak may be a weakening demand for polyester and other textile fibers, because commercial activities may stagnate. As demand is weak, producers, textile producers and weavers are likely to return home, which may lead to further destabilization of polyester chains. In addition to polyester, other related industries, such as xylene industry, may also be affected.

Global cotton consumption may be reduced by at least 500 thousand packages, resulting in an increase in end inventory and a decrease in US cotton exports, which may increase US cotton inventories by more than 1 million packages to 590-600 million packages. After the long decline in US cotton exports, China's cotton import demand has increased significantly in the past two years.

Brand closes stores to prevent losses

Apart from the textile business, many Chinese brands and fashion companies are also at risk. Some brands that have closed stores are Nike, Adidas and Capri holdings, which own Versace, Jimmy Chu and Michael Coles. These brands warn investors that sales will be hit if the virus continues to spread in China. To prevent this, Capri has closed about 150 stores in mainland China, while Nike has closed in about half of its stores, and Adidas has closed a large number of stores with Ralph Lauren and Tiffany.

Due to the epidemic, Levi Strauss closed about half of China's stores and suffered recent financial shocks. The outbreak of the virus has also affected the assessment of the world's major luxury goods groups. For example, stocks of Louis Weedon and Kering lost about 5% and 6%. The epidemic also risks making $149 billion worth of expenditure.

As fashion intensifies, the Italy National Fashion Association announces its solidarity with China. In Milan fashion week, the chamber of Commerce will launch a double event, including a special event and a number of video conferences. In the 2020/21 season, it will organize 56 runways for clothing in autumn and winter. The fashion week will be opened in February 18th, and there will be China's Solidarity movement. The fashion hub market is a space dedicated to new creators, and its opening will become the background of activities.

Some Chinese designers based in Italy and Europe usually show up in Milan fashion week. This time they will not participate because of delayed shipment from China.

Meanwhile, US activities suspended the NE materials exhibition scheduled for February 5th and 6th in Boston, and the NW materials exhibition scheduled for February 12th and 13th in Portland, Oregon. The organizer of the Asia Pacific Leather Fair, based in Hongkong, said they are considering postponing the end of March. Bangladesh's main technology exhibition, namely Dhaka international garment machinery company, has also been postponed.

Portland's premiere visual sports exhibition will be held in February 12th and 13th, but will not receive participants and partners from China.

Procurement delay

Global fashion companies are now following the "wait and see" policy. However, some delays in the order are inevitable. At the same time, transferring orders to other countries is not a fast solution at this point, because China is still the only largest supplier of textiles and clothing, and has no substitute. Other garment exporting countries, especially Asian countries, rely heavily on textile materials such as yarns and fabrics from China, and many garment factories in Asia and Africa have management teams from China. Moreover, many countries in the world have implemented travel restrictions on Chinese tourists. In fact, the current situation may prompt more companies to find new procurement destinations. Besides, for global fashion brands and retailers, procurement costs may increase because it requires more resources to transfer products and create new supply chains.