Saying goodbye to the “Golden Nine and Silver Ten”, it is inevitable to sigh that this traditional peak season seems to be “cool” again, and the negative effects brought by the market have made the industrial chain “clouded”. The changing face of the industrial chain has led to “unsatisfactory” performance in the final battle in October. Many textile bosses are wondering what to do in the coming days.
Opportunities exist in crises, and difficulties may be alleviated
According to the 16th Global Textile Industry Survey of the International Textile Federation (ITMF), the operating conditions of the global textile industry deteriorated in September 2022, and the global new order index, undelivered order index and operating rate all showed a downward trend. The report shows that the current performance of all links in the industrial chain is relatively negative, but the global apparel industry is expected to have stopped its downward trend in the future, and expectations have improved in South Asia, North and Central America, and Africa, which indicates that difficulties may be alleviated.
Not only does this survey report predict that future expectations will improve, but the textile and clothing export data released last week also brings good news. According to data from the General Administration of Customs, in US dollars, under the influence of downward factors in major market demand, 9 Monthly textile and apparel exports declined year-on-year and month-on-month, but cumulative exports in the first three quarters still maintained a rapid growth rate of 9.1% year-on-year.
In the second half of this year, affected by the conflict between Russia and Ukraine, high inflation in many countries, and adjustments to monetary and fiscal policies in various countries, the purchasing power and consumption structure of major overseas markets have undergone significant changes. However, the arrival of the European energy crisis has brought the possibility of “breakdown” to the textile industry. . Data show that from January to August, my country’s textile and apparel exports to the EU were US$34.04 billion, a year-on-year increase of 13.2%. Among them, the export growth rate to Italy and Spain reached about 25%.
A down fabric spot company said that this year’s “Gold, Three and Silver” sales were not only hampered by the epidemic, but also more helplessly because of the conflict between Russia and Ukraine. The operator’s port for receiving orders was forced to stop operating, making the company’s important export market ( Russian market) lost. I thought that due to this impact, the export business would be unable to recover, but the sudden energy crisis in Europe brought about a turn for the better. In late June, a large number of European orders made the data rebound steadily. By October, the total order volume was almost the same as last year.
It can be seen that although the market is full of difficulties, no one can conclude that the “emergency” will definitely have a negative effect. After all, “danger” and “opportunity” naturally coexist.
Orders shrink? Maybe the reason behind it is…
Farewell to October, factors such as weakening demand, high raw material and energy prices, and geopolitics are still the main challenges facing the global textile industry. Due to the frequent and violent fluctuations in the upstream raw material market, the entire textile industry chain is conservative in placing orders. The current procurement strategy of most downstream companies has shifted to a new model of “small orders, multiple batches”. Regarding this purchasing model, fabric companies said that the number of orders placed by regular customers has significantly “shrunk” compared with previous years.
A certain autumn and winter fabric spot company revealed that since this year, although the order volume has increased by about 20% compared with last year, the order volume of old customers has been significantly reduced. For example, one customer placed an order of about 500,000 meters last year, but this year he only ordered 500,000 meters. Down 400,000 meters. Therefore, in order to maintain the total order base, it is not enough to rely solely on maintaining old customers. The 20% of orders added this year are basically contributed by new customers. Nowadays, the order ratio of the company’s new and old customers is 2:8, but it should be noted that these new customers are basically developed through recommendations from old customers, and through hard work such as sending color cards and sample cards and other follow-up work.
A post-processing company analyzed that the overall environment this year is not good, and payment arrears have been delayed by 1-3 months, resulting in increased pressure for payment collection. The company has now improved its order screening standards and generally adopts a cash model to reduce the financial pressure caused by slow payment to a certain extent. Although this measure will lead to a reduction in order volume, the benefits to the overall operation of the company still outweigh the disadvantages.
Therefore, looking at the “shrunk” order volume is sometimes a way to protect yourself. After all, for many companies this year, “just stay alive.” In the reshuffle of the industry, only by living well can we have a chance to usher in the “spring blossoms”.
To sum up, difficulties occur every year, and they are different every year. Even in the “cold winter”, the overall market demand still exists. The polarization shown in the current market is a good illustration. Although performance in traditional peak seasons is average, there is no need to be overly pessimistic. If you develop customers through multiple channels and accumulate more cash flow, you will be better able to cope with crises when they come.
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