The impact of the spread of the overseas new coronavirus pneumonia epidemic has led to the closure of ports and cities in many places around the world. Recently, the textile market in Jiangsu and Zhejiang has experienced a peak of sharp reductions or cancellations of foreign trade export orders. This situation has brought a lot of trouble to the cloth boss. The gray cloth has become inventory, and the finished products have become inventory or spot goods, which is very difficult.
In response to this phenomenon of orders being canceled or reduced sharply, a special group has emerged in the domestic sales market, which the editor calls “the king of leaks.” According to the cloth boss, there are already domestic customers who want to buy at low prices the canceled foreign trade orders that have been completed by fabric manufacturers. In fact, this is a kind of opportunistic ordering, and the editor playfully calls it picking up the slack.
Most cloth owners are unwilling to sell canceled orders at low prices
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Stand still, orders may be continued in the future
Consider it from the perspective of fabric merchants , transferring canceled foreign trade orders to domestic customers at a low price, this approach will only be considered as a last resort. First of all, order cancellations are mainly due to the raging epidemic, which has led to many overseas countries closing ports and suspending production. When the epidemic is over and garment factories resume production, there is still the possibility of continuing orders. Fabric bosses have a sense of luck and look forward to receiving news from customers to continue production. Therefore, in a short period of time, most measures have been to put the troops on hold.
In addition, if the canceled orders are sold to domestic customers at a low price, it can be said that the losses will be very large. Not only will there be no profit, but the cost will be difficult to recover. Taking fabrics priced at 10 yuan/meter as an example, fabric manufacturers’ foreign trade order profits are currently around 10%, and the cost is 9 yuan/meter. If domestic customers purchase at a 20% discount, the selling price will be 8 yuan/meter, and the fabric merchant will lose 1 yuan/meter. The 20% off sale is just the editor’s ideal example, and the actual discount may be even lower, only 40% off or 50% off. After all the calculations were made, few cloth bosses could accept it.
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Canceled order It can still be resold without losing money
The editor addressed this issue during the interview I asked a cloth boss who specializes in the imitation silk trade, and he said: “I would rather keep it in the warehouse as inventory than sell it at a low price. After the epidemic is over, customers may continue to place orders. If the customer doesn’t want it, the gray fabric can be repurchased.” The finished fabrics can be sold as spot goods. Even if there is no profit, it will not be a big loss.”
The canceled orders of gray fabrics can be placed in the warehouse, which will not affect secondary sales. Even if the market is down, The cloth boss sold the goods, and the gray cloth fell by 0.2-0.4 yuan/meter. This was just a drop in profits, not a loss. The canceled finished fabrics can only be used as spot goods and sold at normal prices, and you will still make a profit. Therefore, Boss Bu will not sell canceled orders at low prices unless absolutely necessary.
Clothing Merchant In order to save costs, picking up leftover foreign trade orders
But from the perspective of clothing manufacturers, this is indeed a good approach. The quality of fabrics for foreign trade orders is generally higher than that of domestic sales orders, and the testing standards are also strictly up to standard. If used in the production of domestic sales orders, it will have good results. The finished products of canceled orders are actually inventory, and the resale price is the broken price. Clothing manufacturers can buy them at a low price, which is really killing two birds with one stone. At the same time, it helped long-term fabric manufacturers handle inventory and promoted the cooperative relationship between the two parties.
Missing foreign trade orders may affect the domestic trade market
Does not consider both buyers and suppliers Profitability issues, this approach may also disrupt the rhythm of the entire textile market. In order to save costs, domestic customers are likely to cancel the orders that were about to be placed and replace them with canceled foreign trade orders. No new orders will be placed in the short term. As a result, it will affect the order volume in the domestic market, and may also bring a series of impacts such as slow sales of gray fabrics by downstream gray fabric manufacturers and a reduction in the number of warehousing of printing and dyeing factories. Even because the seasonal climate in many foreign areas is opposite to that in China, domestic customers will purchase export orders, which may overdraft autumn and winter fabric orders, thus affecting the market conditions in the second half of the year.
Postscript
Despite some of the above influences, the good news is that Some cloth bosses expressed their unwillingness to sell canceled orders at low prices, so textile workers do not need to worry too much about the market conditions in the second half of the year. The sharp drop in orders in the first half of the year has become aAlthough it is a fact of competition, it is also more likely that demand will explode after the epidemic is over in the second half of the year. Now that we are recharging our energy, we will be better able to face the tough battle in the second half of the year!
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