For a long time, the textile market has been “seven percent dependent on foreign trade and three percent dependent on domestic sales.” In the first half of the year, foreign trade orders gradually declined, which had a considerable impact on the textile industry. In the blink of an eye, August is just around the corner, and the traditional off-season is about to pass halfway. The originally silent foreign trade market seems to be loosening up. A textile source revealed, “The foreign trade market has improved slightly, and a small number of orders have been placed.”
Does this mean that the foreign trade market has officially started?
After surviving the first half of the year, orders gradually became active.
In the first half of the year, various indicators showed that the performance of the textile industry was worse than expected, among which the shortage of foreign trade orders was particularly obvious.
Customs data shows that from January to June 2023, the cumulative exports of textiles and clothing were US$142.68 billion, down 8.3%, of which textile exports were US$67.7 billion, down 10.9%, and clothing exports were US$74.98 billion, down 5.9%.
Export data shows that my country’s textile and apparel exports are going through a difficult ups and downs stage. Under the combined influence of factors such as weak consumption in the US and European markets, procurement shifts, Sino-US frictions, shrinking foreign trade orders are inevitable.
A foreign trade company concluded that the first half of this year was deviated from previous years. Since our orders mainly come from the US market, we have indeed been significantly affected. Judging from customer orders, in the first half of the year, new customers basically “disappeared”, and the number of orders from old customers also decreased, by about 20%.
In fact, there are not a few companies where this happens. Earlier, a weaving company lamented that business this year has been too difficult. Orders from cooperative customers have shrunk, which has affected their orders. Not only has the operating rate continued to decline, but inventory has also remained high, and pressure from all aspects has followed.
After surviving the difficult first half of the year, the above-mentioned foreign trade company said happily that perhaps it was because its clothing inventory was almost cleared. Recently, orders have been placed in the US market, mostly for mid-to-high-end fabrics.
During market research, some textile companies reported that the foreign trade market has been slightly loosened recently, with an increase in the number of inquiries and orders, and an increase in order intentions, with orders gradually becoming more active.
Price competition is fierce, and the payment cycle is forced to be extended
When the order comes, so do the worries.
Judging from the current market situation, the ability to undertake downstream orders is generally insufficient. Faced with limited orders, buyers’ choice space continues to expand.
First of all, buyers can compare the price and quality of products in an all-round way. Many textile companies revealed that today’s customers are becoming more and more savvy, and coming to sample and inquire is not necessarily to approve the product itself, but more often just to conduct a comprehensive comparison of the products. In the past, end customers rarely lowered prices. Now, even if a cooperation intention is reached, bargaining is still indispensable when the order is actually implemented.
A foreign trade company revealed that the involution of the textile market is too serious now, and price competition among companies is fierce. Customers will pay at least 5 points when negotiating. For example, fabrics that originally cost 10 yuan/meter will usually be reduced to 9.5 yuan/meter.
Secondly, the payment period is also very easy to be manipulated by buyers. After calculating the price and quality, textile companies can only calculate another payment period. After all, buyers hope that payment will be given as late as possible. Arrears in payment have always been the most difficult “knot” to solve in the textile industry. Most companies have defaulted to the market logic of “no arrears, no business”. Especially in the stage of lack of orders, textile companies that have lowered their profile are forced to extend the payment cycle in order to facilitate the placement of orders. It is really a helpless move.
Market research shows that the current repayment pressure on textile companies is relatively prominent, and it is common for textile companies to extend their repayment cycle by more than one month compared to the past.
In general, although foreign trade orders have not yet entered the normal stage, the loose market has more or less brought some confidence to textile companies. Facing the unclear later trend, for enterprises, confidence is more precious than gold!
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