The "Three Axes" For Clothing Enterprises To Save Themselves: Layoffs, Wage Cuts, Stoppage And Conversion.

The clothing industry is one of the industries that have been severely damaged by the new crown. According to the National Bureau of statistics, the total retail sales of clothing and footwear categories decreased by 30.9% in the 1-2 months of 2020. Taking into account the habit of buying new clothes during the Spring Festival, the main reason for the decline in consumption is the epidemic.

In fact, the epidemic is not only an impact on buying and buying, but also a disaster for the entire apparel industry chain, which falls on the chain of bosses and workers. Guangdong, Zhejiang, Fujian and other clothing business gathering place is the first to bear the brunt.

01 Butterfly Effect of epidemic situation

Baohua is a sample worker of a private knitting factory in Fujian. The final garments are exported to Europe, America and Japan. According to her introduction, in February 11th, the first month after the factory resumed, orders and supplies were basically sufficient, and the workers worked 12 hours a day, often working overtime until 10 o'clock.

Recently, a little less overtime, Qingming Festival, the factory gave them two days off, more than in previous years.

There is also a reduction in wages. Baohua says her salary includes piecework salary, bonus, stop work, material charge, punch charge and overtime allowance. The cost of stopping work is reduced from 24 yuan / day to 12 yuan / day, the punching fee has been reduced from 1.5 yuan / hour to 1 yuan / hour, overtime allowance has been reduced from 2.5 yuan / hour to 1.5 yuan / hour. With these three changes, wages will be several hundred less than before. In the county seat, the monthly salary of women workers is usually up to 3000 yuan.

Affected by the Sino US trade war, tariffs rose, and orders in factories began to decrease from last year. In addition, over the past few years, the cost of manpower has increased, and the efficiency of factories has been declining.

"The original manager in the factory did not run to Vietnam." Baohua said. The factory has been laying off workers for several years. This year, 20 logistics staff have been laid off. This is the most concentrated one in two years.

Kang Le Village in Guangzhou is a village in the city where many people live in Guangzhou. In March, the clothing factories were resumed, and a lot of merchants took small blackboards to recruit and seek customers on the street.

Ms. Shi runs a small workshop here. There are 10 workers in the factory. According to her experience, ~5 month is the peak season in February, but the number of orders this year has been reduced by more than half. 10 days after resuming work, she has been in the "lack of people in the first two days, and the lack of list in two days".

A foreign fashion enterprise in Dongguan issued a notice and was forced to stop production and stop production. It was said that the new orders did not increase as affected by the epidemic situation abroad, and the original production order was cancelled or suspended by the customer's request. After the shutdown, employees can only receive basic living expenses and have to be semi unemployed.

Similarly, there are not many enterprises that have ordered to go wrong. Epidemic situation is force majeure, cancellation and delay orders can also be understood, but the raw materials, changeable routes, rising freight rates and returned goods have arrived at the factory. The cost and risk behind it still overcame some small and medium-sized enterprises.

In the shoe factory in Jinjiang, the original production of Nike, Adidas, Anta, XTEP and other brands of trademark components, 3~5 months, he should cooperate with the preparation of the company's intense preparations for the April Canton Fair, which is known as China's foreign trade "wind vane" international trade exhibition, but today, he contacted the foreign trade clothing factories are relatively idle.

Sportswear is regarded as a "safe haven" for the garment industry. But the 2020 Tokyo Olympic Games scheduled for July this year will be postponed for a year, and many sports events that are foreseen will be affected. Even the safety haven of leading enterprises can not be spared.

With less demand, clothes can not be sold, and in order to reduce backlog, new orders for production lines will be reduced. The epidemic has toppled the first Domino, which will affect the purchase from the end of the purchase to the end of the production line.

Customs data show that in 1-2 months, total exports decreased by 15.9% compared with the same period last year, and exports of textiles, clothing, footwear and other items decreased by more than 18%.

According to the National Bureau of statistics, the unemployment rate in the whole country increased by 6.2% in February. (according to the number of labour force in 2018, about 50 million, equivalent to 2 permanent residents in Shanghai. Last February, this figure was 5.3%, and the unemployment rate in 2019 was 3.6%.

02 transformation self rescue

Layoffs, wage cuts, and shutting down businesses are the initial three axes for clothing companies to save themselves. Exports can't get through, sell to domestic market, sell offline, switch to electricity suppliers, run out of orders and make masks for protective clothing; this is the most likely choice for clothing companies to adopt in the global pandemic.

Jiangsu and Zhejiang provinces are the forerunners of the recovery trend. In February 9th, the clarion call resumed, and 10 days later, a special train to Zhejiang was sent to many places to pick up workers and rush to make urgent orders, many of which were overseas customers. At present, the overseas market is also busy.

It is a good idea to get out of the sea and turn to domestic sales, but finding new buyers is not easy.

The retaliatory consumption of clothing has not yet been revealed. The appetite of the domestic market is so great that it is difficult to digest the sudden increase in foreign trade goods. When clothing is getting faster and faster, there is little time to find docking channels.

During the epidemic, there was no opening of the city, home protection and offline stores, and the "home economy" with fire had left home. Cloud consumption, electricity providers and live broadcast have also become the straw in the crisis of clothing bosses.

Guangzhou Panyu South Village town gathered many garment factories, the epidemic led to shops unable to operate, tens of thousands of regular stock backlog, capital withdrawal difficult. 2 in mid and late June, more than 30 garment factory directors joined together to open the live broadcast of e-commerce and sell a live broadcast base in 20 days.

Jarry is a member of the self rescue group. The office of the general manager of the company said that because of the epidemic, the offline channels were temporarily blocked. Making live broadcast was the first attempt of the company, and it was also a way of being forced to find it by itself. They spent two days transforming the factory exhibition area into a live room.

"The result is quite good, a little unexpected. Compared with the same period last year, although there are fewer stores next year, sales are still up, about 10%. Jarry told the south wind window that other factories that shared the live broadcast had also tasted the sweetness.

Taobao live data show that in February, the number of first live businesses increased by 7 times compared to January. Most of the traditional industries, including the wholesale market in Yiwu, Zhejiang, became the partners of live broadcasting.

Sharp decline in clothing orders has been difficult to turn the tide, but the medical supplies industry suddenly rises, strong demand, sharp boss sniffed the opportunity, began to "do not work properly" to make masks, production protective clothing, some clothing enterprises are also competing to switch production into the Bureau.

"Dachang put its own mask into operation, and the small factory produces masks, buys mask machines, and looks for government approval. After finished products inspection, the government collects part of the products and sells the rest itself." Recently, he has received orders for trademark masks to be printed, he said.

According to his understanding, N95 masks are still scarce. Most of them are export orders. Foreign customers are less likely to accept surgical masks and general respirators.

Xiao Min has been putting on mask and protective clothing before he formally restarted his work in a garment enterprise in Huzhou, Zhejiang. The cancellation of clothing orders directly reduced her financial workload, and helped her to produce masks in the workshop, becoming her temporary new job.

In addition to the price of non-woven fabrics and melted cloth, we must rely on "grab" to buy raw materials. Xiao Min remembered that when he was in a rush, there was a convoy in front of the supplier, and the deposit was no longer guaranteed, and he had to pay the full order.

According to the Ministry of industry and information technology, as of April 5th, the disposable medical protective clothing can reach more than 1 million 500 thousand per day, and the medical N95 mask has more than 3 million 400 thousand daily capacity. According to public reports, the fastest rate of mask production at present is from a Guangzhou company which claims to produce 1000 pieces (non N95) in one minute.

03 small and medium enterprises as strikers.

Consumption, investment and export are the three carriages that drive the economy. Small and medium-sized enterprises are indispensable drivers. At the meeting of the State Council in 2018, Liu He summed up the characteristics of SMEs:

More than 50% of taxes, more than 60% of GDP, more than 70% of technological innovation, more than 80% of urban labor employment, and more than 90% of enterprises have been contributed.

Translated into specific figures, according to the fourth economic census data, as of the end of 2018, China's small and micro enterprises have a total of 1807 legal person units, employing 233 million 4 thousand people, equivalent to 10 Shanghai population.

In February, the school of economics and management of Tsinghua University published a questionnaire survey of 1435 small and medium-sized enterprises. One of the data shows that 17.03% of enterprises can maintain cash balance for 3 months, and only 9.27% of those who can maintain 6 months or more. It is almost impossible for the outbreak to end this summer. This is the judgement of Zhang Wen Hong, director of the infectious disease department of Huashan Hospital Affiliated to Fudan University.

"For the small and medium enterprises garment industry, in the face of shrinking overseas orders, there is no sign of improvement in the second quarter." During the interview, Shen Ming Hao, Pearl River scholar and President of Guangdong Business Research Association of Guangdong Province, judged.

In the face of the pressure of cash flow, central and local governments have also issued policies to support SMEs and strengthen financial and financial support for SMEs, such as financial discount, loans, tax relief and exemption from social security. Some large enterprises have also reduced the rent of merchants to cushion the impact and pressure of the epidemic on SMEs.

In terms of financial loans, Zhou Linsheng, President of the Guangdong Provincial Economic Restructuring Research Association, said that banks could be mobilized to extend loans leniently from loose loans, such as orders, business records and so on. Drip irrigation was used to tighten up the operating conditions of enterprises and make small loans for SMEs.

The temporary production of epidemic prevention materials in garment factories is on the one hand the vision and normal choice of enterprises. But in the long run, what we need to consider more is the overcapacity of mask production after the epidemic.

Although the domestic epidemic has entered the second half, foreign epidemics are still struggling in the first half, and there are still opportunities for overseas demand and exports. But for small and medium-sized enterprises, the quality standards and certification of epidemic prevention materials is still a small threshold, and the cost of adaptation should not be underestimated.

In March 31st, the three Department issued a notice requiring that the 5 categories of products, such as test reagents, medical masks, medical protective clothing, respirators and infrared thermometers, must be qualified by the state drug regulatory authorities and meet the import country (regional) quality standards.

In April 3rd, the Ningbo customs temporarily withheld 390 thousand disposable medical masks exported to the United States, because the information of the medical device registration certificate was not in conformity with the information of the manufacturer and the certificate manufacturer.

In April 10th, the General Administration of Customs issued a notice that it would carry out export commodity inspection for 11 kinds of articles, such as medical masks.

Changing and adapting more flexibly is the advantage of small and medium-sized enterprises, but in the long run, we should seek transformation and breakthroughs in the main business. 　　

"The most fundamental thing is that clothing companies need to increase revenue and reduce expenditure, transform production patterns and sales channels, and quickly empty inventories through online and offline interaction, save and store more cash to overcome the impact of the epidemic, and adopt prudent strategies to reduce costs." Shen Minghao said.

"I have always emphasized that enterprises should practise internal strength, and seldom have such time, such as improving assessment, incentive and restraint mechanisms, quality inspection and skills training." Zhou Linsheng believes that the epidemic can become an opportunity for enterprises to self adjust and upgrade.

Are the advantages of the 04 industry still there?

The world economic outlook released by the IMF since 2019 has evaluated global economic development with "global economic growth slump, slowing growth, weakening expansion and rising trade barriers".

Against this background, the clothing industry is also unscathed.

Clothing is an important part of the fashion industry. As a part of light industry, the labor intensive clothing manufacturing industry is located at the low end of the industrial value chain. In recent years, the cost of domestic labor has risen, and Southeast Asia has become a new continent of cheap labor. It has gradually squeezed domestic garment production, overlaid tariff tariffs in Sino US trade frictions, and weakened the price competitiveness.

"Over the past thirty years, China has gained enormous business opportunities in the vertical division of labor in the global industrial value chain. But now, the United States has called out the slogan of globalization, including the Reindustrialization of Europe. All countries are returning to the industry, laying the industrial chain in a more concentrated space, and the degree of globalization has not been further deepened. Shen Ming Ho said, "however, considering the costs and benefits of the investment of multinational companies, China's whole industry chain is not matched by second in the world, and the total production cost is still the most competitive advantage."

This year's China Export Commodities Fair (Spring Fair) will be held in mid and late 6. It will be postponed two months earlier than the original date. It will be held for the first time on the Internet. It will set up 10 x 24 hours online live room for exhibitors.

Global demand is still hard to recover from the epidemic in June, but the online fair can still be seen as a preview and adaptation to prepare for the normal cloud transactions after the market is reborn.

The epidemic will not end globalisation, but it will change globalization. It is optimistic to predict that every striving member in the industrial chain will have enough toughness to adapt to the new changes and create new advantages.

The survival of the fittest is regarded as the natural law of the market, which is almost ruthless. However, the epidemic makes us further introspection, or provides another way of thinking: Industrial Agglomeration and chain transformation may be more tenacity than the transfer of low-end industries and upgrading of high value-added industries, and can not be replaced easily.

However, the resilience of the economy and industry does not necessarily contradict globalization. If a state-owned capability reconstructs the manufacturing industry in a short period of time to deal with a sudden crisis, it is not necessary to sacrifice globalization and increase production costs. The global supply chain is always more resilient and cost-effective than a country's self-sufficiency.

This truth has been written in the classics of the forefathers: one arrow is easy to break, the ten arrow is hard to break; the single silk does not become a line, and a single tree does not become a forest.

The industry is so, so is a country.