Textile Industry Is Suffering A Lot. Can It Recover In May?

In 2020, which was originally expected to be highly anticipated, a sudden epidemic broke the pace of the industry. With the continuous spread of overseas epidemic situation, the domestic textile market is in a deteriorating predicament: customers are trapped in the epidemic situation or even lost contact, the finished products can not be delivered to customers or even can't rush out, orders are reduced or even refunded, enterprises stop work, lay off and even close down, which make the textile industry encounter a "great decline".

Textile enterprises stop work and reduce production recently

Due to insufficient orders and overstocking of inventory, textile enterprises shut down and reduced production. Recently, the production and marketing situation of small and medium-sized weaving factories and printing and dyeing factories in Jiangsu, Zhejiang, Guangdong and other places is very sluggish. A dyeing factory in Shaoxing said that the workshop had stopped production on April 30 and most of the employees had taken a holiday. The preliminary plan was to return to work on May 7 or may 10 (the specific time should be determined according to the receipt of orders during the May Day holiday). It is understood that some small and medium-sized textile enterprises have reported that the May Day holiday is 7-10 days, and some mills are tentatively taking 10-15 days off (the employees will be paid the minimum living security fee according to the local standard), and only a few cotton mills do not have a holiday or plan to take 1-2 days off.

The main reasons for small and medium-sized textile and clothing enterprises to resume work and stop production are as follows: first, there is a serious lack of direct or agent processing export orders in May and June; second, a large amount of working capital is occupied by the inventory of gauze, which leads to difficulties in employees' wages and other expenses; third, after small and medium-sized textile enterprises judge that there is a turning point in the epidemic situation in Europe and America, some countries have ulterior motives to raise the epidemic situation from health problems to health problems Political problems lead to the worse trade and export environment faced by China's export-oriented enterprises.

Several textile enterprises began bankruptcy liquidation

Many textile enterprises in Jiangsu and Zhejiang provinces have been declared bankruptcy and liquidation by the court, and there are not a few textile enterprises bankrupt and auctioned on Alibaba auction network.

Recently, Wujiang court issued three textile enterprises bankruptcy liquidation notice:

　　 Many textile enterprises conduct bankruptcy auctions on Alibaba auction platform

　　 Just entering may, there are so many textile enterprises that can't survive and withdraw from the battlefield ahead of time. This has to make people feel cold. What are the reasons for these enterprises' bankruptcy?

At present, most people in the industry have no money to buy raw materials, which means that they can't make full use of the raw materials after two months. In this case, many manufacturers will choose to sell goods to return their funds, but the more they sell, the more chaotic the market prices will be. Other manufacturers have to join the "price war" to seize the shrinking cake. With fewer bills of lading, the competition will become more intense. Small and medium-sized enterprises that are unable to make ends meet are forced to fight a price war, and even some enterprises even lose money. How can a virtuous circle continue? In the end, workers have no choice but to settle down their wages and settle their debts.

Will the industry recover in May?

The whole industrial chain of textile industry is in a vicious circle of weak demand and protruding overcapacity. If the market wants to get better, it still depends on the demand of clothing industry. Because the textile and clothing industry has always been "prosperity, loss", now the poor performance of the downstream clothing industry, but also inhibit the improvement of the textile industry, especially the fabric industry, the most obvious pressure.

The boss of a textile factory in Zhejiang Province said that only 20% of the machines have been opened since the construction. "Our orders have been reduced by at least 40% this spring, and we have had a 7-day holiday on May 1."

According to statistics, as of the end of April, the starting rate of Jiangsu and Zhejiang has been reduced, of which Changshu warp knitting machine is about 40%; Xiao Shao circular knitting machine is about 30%; Haining warp knitting machine is about 60%; Shengze and Changxing water spraying are about 60%. It is expected to follow the plans of local factories. During this may day, the operating rate of looms in Jiangsu and Zhejiang provinces has dropped to about 30%, and the elastic loading rate has dropped to about 40%. Most manufacturers plan to stop the loom within 3-10 days.

Although some countries in Europe and the United States said that they planned to test the water and "unseal" in May, the fact is that the recovery of economic, trade, transportation, retail and other businesses may take a long time, which also leads to the recovery of textile and clothing demand side. Experts predict that it is still difficult to estimate whether and to what extent textile and clothing orders will pick up from May to July, and it will take some time for the industry to get out of the "cold winter" of the epidemic situation.