Indian Orders Return, See Big Order Again, Spring Of China'S Textile Industry?

Overnight, China's textile industry suddenly blowing a warm wind.

In China's Oriental Silk Market in Shengze Town of Suzhou, the "No.1 cloth Market in China", Zhou Jianchun, a cloth merchant, was keenly aware that the textile industry had begun to recover rapidly since September. In September, he received a foreign trade order of about 1 million meters, which is very rare under the overall pressure of the textile and clothing industry this year.

But Zhou Jianchun's big orders are not the most popular in the industry. Hundreds of thousands of Zara orders from a home textile factory in Jinhua, Zhejiang Province, are the key to boiling the whole industry.

In recent years, due to the soaring domestic labor costs and the repeated trade relations between China and the United States, a large number of low-end textile orders were transferred to Southeast Asia, India and other countries in the past few years. This time, due to the impact of the epidemic on many large-scale export textile enterprises in India, the orders received could not be produced normally, so they had to transfer a large number of orders to Chinese factories for production, and even some enterprises began to purchase directly in China.

"There are about 100 factories in the capital's New Delhi development zone that have not returned to work. They are mainly engaged in the processing of clothing and textiles, and many people have changed jobs." Dr. international relations of Peking University and director of the BRICs think tank in New Delhi, India, was pleased to tell the media.

It's not just India. Since September, China's foreign trade orders have entered the active period again, and the order return trend is obvious. On the domestic trade platform, Chinese textile enterprises have been receiving orders from India to "ask for help" from their peers to jointly carry out production.

"According to our research, some enterprises have reported that they have been transferred from India, but the industry is still cautious at present." China Household Textile Industry Association Industry Ministry said to reporters. It is understood that foreign trade orders have entered the active period recently, and domestic enterprises are also preparing goods for the double 11. In order to guarantee the fulfillment of Indian orders, many Chinese factories have opened up new production lines and expanded their staff several times, working overtime every day and working all night.

However, analysts also pointed out that order backflow is only a short-term behavior. To ensure China's position in the international market, we should focus on high-end products to further enhance the irreplaceable nature of China's textiles.

Order backflow

According to the data released by Alibaba international station, since May, the number of orders for fabrics and textile raw materials in China has increased by more than 100%; the number of orders in the clothing industry has increased by more than 200% over the same period last year; on October 14, the Ministry of Commerce announced the operation of China's foreign trade from January to September 2020. In the first three quarters, China's total import and export volume reached 23.12 trillion yuan, an increase of 0.7%, and the cumulative growth rate turned negative to positive Both export and export scale reached a record high in the same period.

Dongfang Shenghong, a well-known textile leader in the industry, has been working overtime recently. Miao Yunlong, director of foreign trade of chemical fiber plate, said that India's textile orders did play a significant role.

According to the world's second largest producer of jute yarn, India has the largest production capacity of jute yarn in the world. In 2019, the size of India's textile and clothing market is about 250 billion US dollars. The textile and clothing industry is also one of the largest sources of foreign exchange income in India, accounting for about 15% of India's total export revenue. It attracted us $2.97 billion worth of foreign direct investment between 2000 and 2018.

However, after the outbreak of the epidemic, India did not do a good job in prevention and control, leading to a great impact on the industrial chain. Many factories in India could not start work as scheduled, so more and more textile orders were cancelled or transferred to China and other countries.

Unlike other countries, China has both raw materials and a large number of chemical raw materials, and its supply chain is complete, which has also become one of the main reasons for the return of orders from India. At the same time, China has a high degree of industrial automation, can complete orders in the shortest time, and through mechanized mass production, regardless of raw material supply and other links, production costs will be cheaper.

At present, many domestic textile and foreign trade factories have burst orders, and even some factory orders have been arranged to May next year.

"The transfer of orders and industries is a spontaneous market behavior. China has taken the lead in the prevention and control of the epidemic situation, and achieved remarkable results in the international supply chain recovery. At present, almost every day in China, foreign trade orders from some industries and places are transferred to other countries and markets for production. " Li Xingqian, director of the foreign trade department of the Ministry of Commerce, said.

In fact, since May, the textile and clothing industry has been gradually developing well.

"After May, exports have been recovering. In the third quarter, they began to keep pace with the same period last year. In some regions, exports were even higher than last year's growth level. In August and September, the export volume reached a record high. Nowadays, many products are in short supply. In addition, the domestic market demand recovers faster. Recently, there has been a customer queuing phenomenon in domestic and foreign trade. " Miao Yunlong said.

Compared with the first half of this year, the export volume of textiles from the General Administration of Customs increased by 3.29% to 215.8% in the first half of this year. From January to September, China's textile exports reached 117.95 billion US dollars, a year-on-year increase of 33.7%, maintaining a rapid growth trend, and the export growth rate increased by 5.9 percentage points compared with the first half of the year.

The General Administration of Customs said that since the second half of the year, the situation of clothing export has continued to improve. In September, the clothing export volume was US $15.23 billion, an increase of 6.5% over the same period of last year, maintaining a positive growth trend for two consecutive months. At present, the stable industrial chain supply chain of China's textile industry is also attracting some overseas orders to return.

Not only are Southeast Asia's orders increasing again, benefiting from the preparation of goods in the Christmas season abroad, some owners have also received orders from many European and American countries. A textile industry boss doing foreign trade said that recently, he received orders from the United States for 100000 meters of cotton cloth and 200000 meters of recycled spring Asian textile and peach skin velvet. The order volume in October was better than that in the same period last year.

The industrial structure should be further optimized

In the view of analysts, orders will generally be one quarter ahead of schedule. At present, orders in the fourth quarter have been basically completed. The epidemic situation in India is booming or will last until the end of the year. Therefore, orders in the first quarter of next year will also remain at a high level. As a result, the recovery will last at least two quarters.

However, it should be noted that this is only a special period of time. Textile and garment enterprises in India and Southeast Asia have advantages in labor cost, energy cost, land cost, government tax, tariff and environmental protection. As far as Southeast Asia is concerned, the gross profit margin of local textile and garment enterprises is 5% higher than that of domestic enterprises. As a result, once the outbreak is over, these orders will be returned to India and Southeast Asia, and some of them may even default.

"At present, the demand side of Europe and the United States has not yet recovered, and the demand can not come up. Whether it is Indian orders or domestic orders, it is short-term behavior and there is no long-term logic. Domestic enterprises also need to balance their short-term interests and long-term strategies. They should not mistakenly assume that a large number of textile industries are flowing to China, nor can they blindly expand production because of new orders. " Analysts said.

At present, Miao Yunlong has realized that the medium and low-end textile products are too low-end in China. For example, conventional imitation memory, Chunya spinning and Nisi spinning are no longer popular, while new elastic fabrics such as T400 and T800 are favored by designers.

"Many high-end fabrics and functional fabrics can only be made in China, because China's industrial chain is complete, which ensures that this part of the order will not be snatched away by other countries, and the profit is considerable. This is the advantage of domestic textile industry. " Miao Yunlong said.

Sun Ruizhe, President of China Textile Industry Federation, also believes that domestic fabric enterprises should take the differentiation route and march into the middle and high-end fields.

"The new epidemic situation accelerates the industrial economy to open a new cycle, and the domestic clothing industry is facing new challenges and changes, but at the same time, the crisis is organic and the crisis can turn. In this process, the leading clothing enterprises run through the digital transformation from point to area and from top to bottom, which is a realistic path to lead the whole industrial ecology to digital, intelligent and integrated development." Sun Ruizhe said.

In addition, the proportion of export cross-border e-commerce transactions in China's export scale is expanding, becoming a new growth point of "stabilizing foreign trade". China's local fashion e-commerce ushers in an excellent opportunity to go out to sea. Enterprises need to deepen brand building and gradually change from "flow oriented" and "product oriented" to "brand oriented".

The relevant person in charge of China Garment Association also said that at present, China's clothing industry has entered a new stage of strategic restructuring and innovation and reform, and has stood at the new starting point of participating in leading the global clothing industry reform, which can fully demonstrate the development momentum released by China's construction of "double cycle" development pattern.