Recently, the General Administration of Customs released a set of data: my country’s textile and apparel exports in September were US$26.20 billion, a year-on-year decrease of 4.8%, and the decline further narrowed by 3.6 percentage points. The market has recovered significantly from the previous months. Among them, textile exports were US$11.64 billion, a year-on-year decrease of 2.4%; clothing exports were US$14.56 billion, a year-on-year decrease of 6.6%.
It can be seen from the above picture that the decline in both textile exports and clothing exports is narrowing. In other words, textile foreign trade orders are increasing! However, when visiting companies this year, many people said that it is difficult to do foreign trade business due to the impact of the international situation. Why is this?
01Order profits continue to narrow
We have recently entered the end of October, and the peak season is gradually fading. Many business owners said that currently most fabric orders in the textile market seem to come from the domestic trade market, while foreign trade orders have shown no improvement. But in fact, according to our research, recent foreign trade orders are still acceptable, but profits are constantly narrowing.
According to a foreign trade person, there were basically no orders received in September. This month is a little better, with several orders of 30,000 meters, 50,000 meters, and 100,000 meters, but these orders really make no money. The company needs funds to circulate, so taking these orders is purely for the company’s operation.
In fact, not only foreign trade, but also domestic sales this year have shown a decline in ex-factory price profits. At present, the global economic situation is not optimistic and the consumption index is declining. Even if there is a desire to consume, people still want to buy at low prices. Therefore, the price of clothing has dropped, and the price of fabrics has fallen to the bottom.
02The clothing ordering model has changed, and large orders are hard to come by
A large part of the reason why the textile foreign trade market has deteriorated is that the sales model of clothing companies has changed. In the past, a foreign order had at least one cabinet, but now it is common for a foreign order to only cover a few kilometers. In the past, clothing companies sold clothes by pre-sales, but now clothing companies adopt a pre-sale model to purchase fabrics when they know how many clothes will be sold. This can avoid a large amount of fabrics piling up at the clothing end. . Therefore, the large-volume ordering model no longer exists, and it is difficult for people to experience the feeling of busy loading cabinets.
03Overseas demand is sluggish and global competition is increasing
Thirdly, sluggish demand for overseas terminal consumer goods also affects my country’s exports of intermediate products. In recent years, the textile industry in some countries in Southeast Asia and South Asia that mainly export clothing has developed rapidly and has caught up with my country. The prices are low, and coupled with geopolitical factors, more terminals have transferred orders to Southeast Asia.
But what is frustrating is that some countries in Southeast Asia, South Asia and other places that mainly export garments are also facing shrinking external demand. The reduction in terminal orders has weakened the demand for intermediate products, thus reducing the import of intermediate products from my country. Textile companies with factories in Southeast Asia said that local factories’ orders on hand have dropped significantly compared with previous years, resulting in a significant slowdown in the growth rate of my country’s exports of intermediate products to these regions. In general, terminal demand is still difficult to boost and needs to continue to recover.
The person in charge of a weaving company that produces elastic fabrics said: “We have recently received some foreign trade orders, totaling about 100,000 meters. However, we are not confident about this market. On the one hand, this is because these 100,000 meters are not enough for the entire year’s foreign trade orders. On the other hand, it is because the traditional peak season is coming to an end and will only become lighter in the later period, and the demand for fabrics will shrink again.”
Textile and apparel exports still have bright spots in the fourth quarter
The continued weakening of the global economy will inevitably exert a drag on consumer goods exports, but looking forward to the fourth quarter of textile and apparel exports, there are still many bright spots. For example, RCEP member countries and some emerging markets performed well, effectively slowing down the decline in overall exports. In addition, the depreciation of the RMB against the US dollar and the fall in raw material purchase prices will also help slow down the downward trend in exports and expand corporate profit margins.
Some institutions said that with the overseas destocking coming to an end and the peak sales season in the fourth quarter, the performance of textile and apparel companies is expected to improve.
But having said that, domestic trade and foreign trade are the two legs of the textile market. But now, how stable and far can the textile market go if only relying on domestic trade? Still unknown. Before foreign trade orders bloom in full, the textile market can hardly be said to be improving.
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