Export Orders Pick Up And Encounter High Costs. Can Textile Foreign Trade Enterprises Resolve These "Uncertainties"?

2021 has entered September. At present, the foreign trade situation is still uncertain. Most export textile enterprises are cautious about orders in the second half of the year. According to the analysis, the positive factors of China's textile and clothing export mainly include the expected further improvement of global economic growth, and the international market demand is expected to continue to warm up. At the same time, the risk factors still exist: the foreign epidemic situation has not been fully and effectively controlled, and the local rebound may have an impact on the recovery of the international market; The price of international bulk commodities fluctuates greatly, which increases the purchasing risk of front-end products such as textile raw materials; The rise of international shipping price will also have a profound impact on transportation costs; In addition, trade friction, exchange rate fluctuations and other factors also have an impact on the future trend. Whether the textile foreign trade enterprises can successfully resolve the uncertain risk, stabilize the orders and stand firm in the market is a crucial issue at present.

　　 Can order backflow continue

At present, the European and American markets are gradually warming up and consumer demand is growing; Affected by the epidemic situation, textile enterprises in Southeast Asia and South Asia stopped production and their production capacity was greatly limited. As a result, a large number of orders from Europe and the United States returned to China, and the number of orders received by textile enterprises increased significantly.

A person in charge of an enterprise mainly engaged in the export business of knitted garments in Guangxi said: "in order to complete the orders on time and with good quality, the workshop has opened a high-speed operation mode of 24-hour continuous operation." he said, the enterprise mainly processes and produces sweaters, and the products are exported to the European and American markets. In the first half of this year, there were a lot of orders. By the end of July, 3.6 million pieces had been delivered, with a total value of more than 17 million US dollars. The output increased by 25% compared with the same period last year. At present, the workshop can produce more than 10000 pieces of products every day, because of the soaring orders, some orders need to be outsourced for processing.

"At present, we have received the return orders from India, mainly for colored fabric, with a total of 2 million meters, and the quantity is OK," said the person in charge of a Zhejiang enterprise that produces elastic fabrics.

It is worth noting that "although many orders received in the first half of this year are transfer orders from Southeast Asian textile and garment enterprises, as the global epidemic situation tends to stabilize, these orders will still flow out." according to a staff member in charge of the development of coat processing business in Jiangsu Province, the situation of receiving orders in the second half of this year is not ideal, to a large extent, because some Southeast Asian countries The textile production capacity of South Asian countries has recovered, especially the export of India and Bangladesh has recovered.

"Last year's situation is quite special. China was the first country to organize the resumption of work and production after the outbreak of the epidemic. In many countries, normal production can not be carried out, and overseas customers can't wait, so they can only come to China to place an order." the staff member said that at present, the epidemic situation abroad has eased, and the production capacity of Southeast Asian and South Asian countries has been restored, Customers will follow.

"Delivering orders on time, with quality and quantity, is a prerequisite for retaining more resources. In the future, the company will actively implement issues related to improving production capacity and production efficiency to meet the production demand of orders," he said

In addition, China's export textile enterprises also need to highlight the uniqueness and irreplaceable products, pay attention to the technical content, strengthen innovation, and enhance customer stickiness. Only in this way can we stand firm in the international market and stabilize orders.

　　 Increased risk of front-end procurement

Thanks to the recovery of the international market, the prices of various upstream textile raw materials caused by global inflation rose rapidly.

It is understood that since the end of June this year, cotton prices started a new round of trend rise, so far the cumulative increase of more than 15%. Although polyester prices began to decline gradually, they rose again at the end of June, reaching the highest price of this year at the end of July. Spandex Products market demand has been a lot, the price has not seen any signs of decline. In addition, the price of wool has also reached a new high for many years. The market demand in autumn and winter in the second half of the year will drive the price of wool to continue to rise.

This year, the price of bulk commodities has risen by a large margin, which is good for the enterprises in the upstream of the industrial chain. If it can be transmitted to the terminal, it will have little impact on the enterprises in the middle and lower reaches. However, the current situation is that the price increase of front-end products can not be effectively transmitted to the export price of finished products. Therefore, most of the cost of price increase is borne by the intermediate links in the industrial chain, and a considerable number of export textile enterprises are under pressure. The person in charge of a Shandong children's clothing processing enterprise facing the European and American markets said that in June and July, the prices of cotton and cotton yarn rose sharply, and some export orders even reversed fees, so the enthusiasm of receiving orders, arranging orders and delivering goods was not high.

"In recent years, the price of raw materials is the highest in two years. It doesn't matter if you don't receive orders, otherwise you will also lose money. After all, garment processing and export makes a small profit." he said that at present, enterprises have begun to selectively receive orders and production. For example, some new products have higher profits and can bear the current high cost, so they should give priority to them; Regular products and old product orders, due to their low profit margin, may wait until the appropriate price is made, or they will be put on hold for the time being.

"Orders received since July and August are mainly from developed countries in Europe and the United States. They are mainly aimed at the Christmas and Easter markets. They are characterized by large quantities and thin profits. Many of them are only received to ensure production. As long as the cost is accounted down, they will still be accepted," said a person in charge of leisure wear export business in Guangdong, At present, the rise of raw material prices has forced enterprises to increase their order quotation. However, after the price increase, many overseas customers choose to reduce or cancel orders. In order to survive, enterprises have no choice but to accept orders according to the original price, which also aggravates the low profit situation of orders.

　　 Logistics costs continue to be high

Sea freight soaring and container shortage have become the most difficult and blocking point for all textile foreign trade enterprises.

The person in charge of China Textile Import and Export Chamber of Commerce said that the main reason for this phenomenon was that the epidemic situation continued to aggravate since the second half of last year, resulting in the cancellation or postponement of shipping schedule, serious loss of seafarers, overstocking of goods in port and difficulty in obtaining one container. The rampant domestic "scalpers" also further promote the soaring freight.

According to reports, since the beginning of this year, China Textile Import and Export Chamber of Commerce has conducted intensive research and visited enterprises in Jiangsu, Zhejiang, Fujian, Jiangxi, Henan, Hubei, Jilin and other places. When it comes to sea freight, textile enterprises all over the world mostly report that the problem of American routes is relatively serious. The freight charges of routes remain high and are still rising. The performance of other regions is fair.

"In May, some textile enterprises reported that a container container had risen from 3000 US dollars in normal period to more than 10000 US dollars. This year, the increase rate has exceeded 150%, and the proportion of freight to the value of goods has reached 40% to 50%. By July and August, textile enterprises in Jiangsu, Zhejiang and Shandong Province reported that the container to the United States had risen to more than 20000 US dollars," the person in charge said, Affected by the increase of shipping price, the profit of textile enterprises has shrunk seriously, falling into the state of zero profit or even loss. "A lot of big companies are sticking to it, not to mention the situation of small and medium-sized enterprises."

Compared with the increase of freight, the problem that one container is difficult to obtain and cannot order containers is more prominent, which seriously affects the delivery time and reputation of textile enterprises, resulting in the risk of default due to delay. Some textile enterprises have to increase money to find "cattle", logistics costs further increased.

At present, the rising trend of freight still has no sign of falling back. In order to keep the order and market, many small and medium-sized textile enterprises are struggling to maintain, and the time of capital return is growing.

Gao Feng, a spokesman for the Ministry of Commerce, said recently that the Ministry of Commerce, together with the Ministry of transport, the Ministry of industry and information technology and the General Administration of market supervision, has taken active measures to increase container supply, enhance maritime transport capacity and strengthen international cooperation to jointly cope with the challenges. It is understood that at present, various regions have also increased the guarantee of shipping services for small and medium-sized enterprises to help enterprises reduce costs and losses.

(source: China Textile News)

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