Time has come to early May, the traditional peak season of the textile market has come to an end, and the off-season mode has gradually begun.
Looking back on the past “Gold, Three, Silver and Four”, the shortage of foreign trade orders has become an urgent problem for most textile companies to solve. Against the background of rising inflation, slowing global economic growth, and complex international situations, global demand for textiles and apparel has weakened. The past pattern of “seven percent relying on foreign trade and three percent relying on domestic demand” is quietly changing.
Business structure changes, domestic and foreign trade dominance switches
First, let’s take a look at some data on textile and apparel exports.
According to Caixin.com, in the first quarter of 2023, China’s textile and apparel exports totaled US$67.23 billion, a year-on-year decrease of 6.8%. During the same period, China’s exports of goods were US$821.831 billion, a year-on-year increase of 0.5%. On May 2, data provided by the Textile Chamber of Commerce showed that in the first quarter of 2023, China’s textile exports were US$32.07 billion, a year-on-year decrease of 12.1%, and clothing exports were US$35.16 billion, a decrease of 1.3%. Neither performance was ideal.
Appeal situations are also reflected in our daily surveys, such as:
A certain weaving company lamented that as a small and micro enterprise, its customers are mainly foreign trade, and its order volume has dropped by 60%-70% compared with previous years, which is an astonishing rate;
An industry and trade enterprise said that due to the normal recovery of foreign demand, their orders, which are 70% dependent on exports, have seen a significant decrease, with the US order shrinking particularly severely;
The business structure of another enterprise integrating industry and trade has directly changed, switching from focusing on foreign trade to focusing on domestic sales. In terms of orders, domestic sales orders can last until at least August, while foreign trade orders can barely maintain until the end of May. A decrease of approximately 50% compared to previous years.
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On the other hand, in terms of domestic sales, among commodity consumption, the retail sales of textiles and clothing performed more prominently, with a year-on-year growth of 12.7% in the first quarter, and a year-on-year growth of 17.7% in March. Against this background, most of the textile companies that mainly sell domestically are receiving orders well. The order volume of individual companies has increased by more than 20% compared with the same period in previous years, and the growth trend is obvious.
From this point of view, the market situation of “strong internally and weak externally” may become increasingly clear.
The volume of orders has shrunk, and holidays have become the last stubbornness
In addition to the shrinkage in the total number of orders, there are also significant changes in the volume of orders.
Through research, we found that “quick response”, “low price” and “quick volume” have become key words for goods in the textile market. At present, the volume of orders received by textile companies is generally concentrated between a few thousand meters to tens of thousands of meters. Orders exceeding 100,000 meters also appear from time to time. A company integrating industry and trade said that from the perspective of order volume, foreign trade orders remain at around 10,000 meters, and domestic sales orders can exceed 100,000 meters at most. However, most of these orders are based on volume, the order pricing is low, and profits are barely within the breakeven range.
Currently, very large orders in the textile market are almost extinct, which can also be gleaned from gray fabric inventory data. Since 2023, the fluctuations in gray fabric inventory of textile companies in the sample have been relatively limited, with values hovering around 35 days. Compared with the fluctuation range in previous years, it can be described as “calm”. Feedback from some companies also shows that textile companies with insufficient orders are also producing inventory while producing orders. This part of the inventory may be for daily stocking, or it may be to ensure the normal operation of the machines.
In addition to choosing to produce part of the inventory, extending the holiday time has become the last stubbornness of textile companies. For most companies, even if there are no orders, they will not easily suspend production and take holidays. However, during this “May Day” period, some textile companies that did not take holidays in previous years or only took one day unexpectedly extended their holidays to three days, and some companies even took five consecutive days off, which is really rare.
Postscript:
Although the off-season has begun to take shape, the just-concluded Canton Fair has brought some new inspirations to the textile and apparel industry. For example, merchants from RCEP member countries, Russia and other regions have become mainstream purchasing groups, and there is a demand for high-tech, high value-added, green and environmentally friendly products. Unprecedented growth, and a domestic demand market with huge potential…
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