In the past peak season, fabric manufacturers would “sing a song and I’ll appear on stage”. Orders of 100,000 meters were commonplace, and orders of hundreds of thousands or even millions of meters were not surprising.
However, in the past two years, with the advent of the era of fast response, “small batch, multiple batches” has gradually become the mainstream ordering mode, and the volume of orders has greatly shrunk. At this time, if there is a fabric with an average monthly sales volume of 500,000 meters, then this fabric will definitely be considered a hit.
Not long ago, a textile boss revealed to the editor the “burden” behind this sweetness…
Although there is support from popular products, risks are inevitable
This is a textile enterprise integrating industry and trade, with more than 360 looms, mainly engaged in elastic fabrics and functional fabrics.
From a product perspective alone, the company’s main fabrics are relatively popular varieties. It seems that it is not difficult to understand that there are hot products. It is understood that the above-mentioned SPH deep-processed fabric is often used to make high-end suits in women’s clothing. The reason why it sells so well is because this fabric has been recognized by a cross-border e-commerce platform and has reached a long-term cooperation.
Although a relatively stable cooperative relationship has been achieved, it is not easy to maintain it for a long time.
First of all, in order to better meet procurement needs, it is imperative to transform spot goods. But the spot model also has hidden risks. For example, textile companies will inevitably “gamble” when stocking up. Once the bet is lost, the unsalable finished products will become inventory, and it is inevitable to “cut the flesh” when going to the warehouse to recover blood.
Secondly, many overseas countries have successively announced closures, bans, and restrictions on live streaming e-commerce. As we all know, clothing is an important part of the e-commerce platform. These measures will be directly affected after they are implemented. How can the upstream textile companies be immune? Moreover, since this year, the shortage of foreign trade orders has become a fact. If even cross-border e-commerce platforms experience changes, textile companies that focus on foreign trade may become increasingly difficult.
In the opinion of this textile boss, these risks alone are enough to make him worry. What’s more, the general environment of the textile industry is not optimistic, and subsequent companies may still face many unknown risks.
Face the external impact head-on and get your money back after paying off the price
For local textile companies, in addition to dealing with various risks, they also need to face the impact of peripheral production capacity.
Since 2017, production capacity in the coastal areas of Jiangsu and Zhejiang has gradually been transferred to the inland areas of the central and western regions, and the actual production capacity has far exceeded the original production capacity. In addition, the threshold for engaging in filament weaving is relatively low, resulting in a blowout of peripheral production capacity. increase. As a result, overcapacity followed and became more and more serious.
As the relationship between supply and demand further deteriorates, peripheral production capacity gradually erodes the market share of local textile companies with its own advantages (lower costs, larger productivity, more powerful subsidy policies…). Among them, the most commonly used method is price involution. Whether it is active competition from peers or passive price reduction from customers, fabric prices have gradually become easier to fall than to rise, and profits have become increasingly thin.
In order to grab orders, it is not uncommon for companies to make profit concessions, and there are also many companies that extend the payment period. Preliminary research shows that since this year, the payment collection cycle of textile companies has generally been extended by 1-3 months, and some spot companies have even changed from cash settlement to monthly settlement for regular customers.
Faced with the difficulty of getting money back, how can a textile boss be so worried? After all, the more the market goes bad, the higher the risk of bad debts. If he meets an old man, he will lose his wife and his troops. A while ago, this textile boss had a problem with repayment. A customer asked him to use clothing to pay off the debt because he was unable to pay the remaining payment.
Taken together, if textile companies want to develop, they cannot do without the support of orders and profits. This year, most companies may not be thinking more about how to grow and develop, but how to survive.
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