Market Dynamics: The Demand Of Textile And Clothing Market Is Shrinking, And The Export And Domestic Sales Are Weak

The export growth rate of textile and garment industry stepped on the brake in August, decreasing by 14.7 percentage points. Overseas consumer market is weak, Southeast Asia shunt orders, foreign trade enterprises have felt the abnormal order.

In August, the growth rate of textile raw materials and the price of chemical fiber decreased. "Gold nine silver ten" traditional peak season is coming, many industry insiders have expressed their cautious attitude towards the future market. With more stable customers and Southeast Asian production capacity, large enterprises have a better life. But small and medium-sized enterprises have obviously felt "cold". "Many small factories have not received orders this year. We expect to enter the gap period two or three months ahead of schedule, so that workers can go home early on holiday." A clothing business owner said.

According to the customs data, China's textile and clothing export volume was 30.976 billion US dollars in August, with a year-on-year growth rate slowing down by 14.7 percentage points to 2.88% from 17.58% in July. The year-on-year growth rate of textile export volume was changed from 16.2% in July to - 0.23%, and the year-on-year growth rate of clothing export slowed down to 5.10% from 18.55% in July.

Inflation in major foreign economies is high, the pace of interest rate increase by the US and European central banks is accelerating, and the international market demand is falling; At the same time, after the price of chemical fiber and cotton textile raw materials decreased, the price of textile and clothing decreased, resulting in the decrease of export volume. The above two reasons dragged down the growth of China's textile and clothing export volume in August.

The transfer of textile orders to Southeast Asia this year has also had an adverse impact on exports. What Southeast Asia has taken away is the factories that make more basic funds in China, while the relatively high-end ones still stay in China. But in fact, for the industry, the basic fund is the most important. Although the profit is thin, the amount is large and the proportion is large, which can support the production of the factory and ensure the profit.

There are two trends in the industry: one is the higher dependence on textile and clothing exports; the other is the rapid growth of textile and clothing production capacity in Southeast Asia and Africa markets, and the domestic textile export may have a downward risk in the future.

Southeast Asia's textile export base is low, the industrial structure is not very sound, cotton and other raw materials have to rely on imports, production scale, industrial level, raw material costs and China still have a gap, so the impact of order transfer is limited.

Recently, a survey conducted by China Council for the promotion of international trade (CCPIT) on more than 500 enterprises shows that enterprises are currently facing major difficulties, such as slow logistics, high cost and low orders. 62.5% of enterprises said that the orders were unstable, with more short orders and small orders, and long orders with large orders. The market downturn and the lack of consumption intention make it more difficult for textile and garment foreign trade enterprises to obtain orders.

On the other hand, the increase of orders and exports does not directly relate to the profits of enterprises. Even if the order quantity is guaranteed, the profit of the enterprise is still eroded by many factors. For textile orders exported to Japan, first of all, the fluctuation of Japan's exchange rate is faced with. In addition, the Japanese stores basically do not increase the commodity prices. This part of the loss is borne by Japanese traders, Chinese traders and Chinese factories. Therefore, the profit drop is particularly obvious this year, In addition, the price of raw materials in the domestic market has generally risen, including the price of electricity and steam. The net interest rate of our products is expected to drop by at least 2-3 percentage points. "

Shenzhou International (2313. HK), the leading OEM manufacturer in the garment industry, also mentioned in the half year report of 2022 that the export growth in the first half of the year included the price rise caused by the rise of raw materials, which could not be fully attributed to the increase in export volume.

As far as Southeast Asian companies are concerned, they can only control the cost of production by transferring orders to Southeast Asia. This means that industry elimination is accelerating.

Compared with the small and medium-sized enterprises which are hard to survive, the leading enterprises rely on the distribution of Southeast Asian production capacity and the cooperation of medium and long-term big customers, and the current orders are relatively stable

The data shows that the PMI index of ISM manufacturing industry in the United States has accelerated to decline, and it has reached the prosperity and withering line in August, indicating that the demand is about to enter a state of contraction, and people's consumption of non necessities is weakening, which puts pressure on domestic textile and clothing exports.

Vietnam's textile exports are also affected by falling demand. According to the economic and Commercial Department of the Consulate General in Ho Chi Minh City, in the first eight months of this year, the export volume of Vietnam's textile and clothing industry was about 30.2 billion US dollars, an increase of nearly 20% over the same period of the same period last year, with an average of 3.7-3.8 billion US dollars per month. However, it is estimated that in the remaining four months of this year, only US $3.1-3.2 billion will be exported each month. Li Jinchang, chairman of Vietnam textile and Garment Group, predicts that the market downturn will continue to 2023.

From the perspective of the total export volume of textile and clothing from January to August, the growth rate remained double-digit, reaching a year-on-year growth rate of 11%; Among them, textile export was 102.27 billion US dollars, an increase of 10.2%, and clothing export was 118.03 billion US dollars, an increase of 11.6%.

Even if the peak season is not prosperous, it is still the peak season, and the increment will be guaranteed. With the arrival of the traditional peak season of "gold, nine and ten silver", China's textile and garment export volume is expected to gradually increase, and the month on month growth rate is expected to turn positive. China's textile and clothing export situation is expected to improve in the face of improved demand, inventory decline, cost stop and rebound, and RMB depreciation to enhance the international competitiveness of export enterprises.