India, The Second Largest Textile Country, Supplies "Flameout" And Many A-Share Companies Undertake Transfer Orders

The continuous spread of the epidemic in India has brought chain reaction to the textile industry chain.

India's textile industry occupies an important position in the global textile industry and is the second largest textile producer after China. For the Indian economy, the textile and garment industry is also one of the pillar industries, accounting for about 15% of India's total export revenue.

It is reported that due to the blockade measures during the epidemic period, the export of Indian clothing industry will shrink seriously, and the export of Indian clothing industry will decrease by 24% in 2020. In the new round of epidemic, Indian enterprises have lost a large number of garment export contracts due to the lack of workers.

This brings opportunities to China, the world's largest textile country. Previously, a large number of textile orders transferred from China to India began to flow back.

"Affected by the epidemic, the textile industry in India and Southeast Asia has stopped, and some orders have been transferred to China, bringing some orders to the company." Vosges (002083. SZ) recently replied to investors on the interactive platform.

According to the investigation by the 21st century economic reporter, many textile companies have successively accepted the return orders from Southeast Asia. However, for this part of the order, enterprises also maintain a cautious attitude, because once the overseas epidemic situation improves, the return orders will also leave.

Some enterprises have been operating at full capacity since the fourth quarter of last year

Vosges is China's largest exporter of home textiles, mainly exporting towels, bedding and other home textile products. At the end of April this year, Vosges said on the investor interaction platform that the company was operating at full capacity and the orders had been arranged to July.

21st century economic reporter learned from Vosges that the company's orders are growing continuously, and now it has been arranged to August.

The relevant person in charge of the company told the reporter, "it has indeed undertaken the transfer orders from Southeast Asia, most of which are from India, with medium and low-end products as the main products. But the part that undertake is not much, accounting for 10% at most. The company's orders have always been dominated by old customers, and the proportion of new customers is not large. "

The source said that in fact, Southeast Asia's order transfer began in the second half of last year. Since the first quarter of this year, the backflow is slightly obvious“ Since this year, the epidemic situation in India is relatively serious, and other overseas customers are worried about the new coronavirus on textile products, so they are not willing to place orders in India. "

Lianfa (002394. SZ), a global leader in color woven fabric manufacturing, also mentioned the return of orders. It said on the interactive platform that the new crown epidemic in Southeast Asia caused some garment orders to flow back to China, but stressed that this was "temporary and limited".

The company also said that the company's orders showed the characteristics of small batch, multi variety and fast delivery, while the new crown pneumonia epidemic was still spreading around the world, and the external environment had great uncertainty, so it was difficult to predict the annual order situation.

Under the condition of substantial increase in product sales, Blum Oriental, the leading domestic color spinning company, achieved a net profit of 223 million yuan in the first quarter, a year-on-year increase of 213%.

According to a recent media interview, Blum Oriental received a wave of backflow orders in the second half of last year. Since the fourth quarter of last year, the company's orders have been very good, close to full production. According to the production order scheduling, it is prudent to estimate that the performance in the first half of this year will be significantly higher than that in the same period of 2020 with a relatively low base, and even better than that in the same period in 2019 before the epidemic.

At the same time, investors pay attention to the production of textile enterprises in overseas factories. Previously, due to cost, trade policy and other factors, many textile enterprises chose to set up factories in Southeast Asia.

The shoe manufacturer Huali group said, "the company has no factories in India, and its mass production factories are mainly in Vietnam. Vietnam factories have developed relatively strict epidemic prevention and control measures, and the epidemic control is relatively good."

Liu Tiantian, chief analyst of textile, clothing and light industry of Dongxing securities, pointed out that the recent epidemic situation in Southeast Asia, including Vietnam and Indonesia, has worsened, and the continuous outbreak in these areas will have an impact on the global supply chain. The overseas production base of China's textile enterprises is mainly in Southeast Asia. If there is no epidemic situation or the factory has done well in epidemic prevention, it can better undertake this round of order transfer, and is expected to seize the opportunity to realize the reverse expansion of production capacity and increase the share of core customers.

Return is only a short-term dividend

Although there are opportunities for overseas orders to return, many orders are "unprofitable" in the eyes of many business people.

"India had a lot of home textile orders back last year, but the prices were not high and the profits were low. These low-end products will make a loss, so our business personnel will also judge whether to undertake. Moreover, from now on, this part of the return order has little impact on the performance, but the fluctuation of RMB exchange rate has a greater impact on the company. " A person in charge of a large textile company in Jiangsu told reporters.

The former person in charge of Vosges also said, "India's textile production is mainly in the middle and low end, and its own orders are still unable to catch up with them. Therefore, we have also selected these transfer orders, and try to select some products with high added value."

The source said that the transfer order had been predicted for a long time, and the dividend must be temporary. First of all, the quantity will not be large. Once the epidemic situation in India improves, it will return to India.

Lin Xiangyi, an analyst in the textile and clothing industry of galaxy securities, believes that "in the long run, if the epidemic situation in India is controlled in the future, orders may return to India, because India's costs in terms of human resources, taxation and trade environment are lower than those in China, and Chinese textile enterprises have obvious advantages in many years of management experience, technical manufacturing, labor efficiency, etc, It can be used as a favorable basis for domestic textile enterprises to set up factories abroad. "

However, the epidemic has accelerated the opening of a new cycle of global textile and garment industry. China is the country with the most complete textile industry chain, and its current advantages are reflected in the stability and security of the supply chain.

"At present, China's textile manufacturing industry is basically in the mature stage, leading enterprises benefit from the increasing trend of industry concentration with their advantages of technology, experience and scale. Meanwhile, affected by the epidemic situation in 2020, some small and medium-sized enterprises will be cleared out, and the industry concentration is expected to be further improved. With the rapid upgrading of domestic industrial technology, the machine substitution rate is higher and higher, and the long-term development space of domestic leading textile enterprises is still broad. " Lin Xiangyi said.

Export data also confirmed the advantages of China's textile industry chain. According to the statistics of the customs, from January to May this year, China's textile and clothing exports reached 112.69 billion US dollars, an increase of 17.3% year-on-year. Among them, textile exports reached 56.08 billion US dollars, an increase of 16.1% over the same period in 2019; In May, clothing exports reached US $12.2 billion, up 37.1% year-on-year.

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