A large number of our textile foreign trade orders will be transferred to Southeast Asia from 2020 to 2022, including not only low-end products, but also some high-end products. However, with the optimization of China’s epidemic prevention measures in 2023, some orders have begun to return. But it is obvious that some orders will never come back.
The terminal companies for this part of the orders have stable supply channels in Southeast Asia. At present, these parts are low-end products, and an old master in the textile industry said: “In the outflow orders, high-end products and low-end products The product ratio is 3:7, which means that nearly 70% of outbound orders may stay in Southeast Asia forever.”
Changes in the foreign trade situation have always been the focus of the textile industry. The transfer of foreign trade orders to Southeast Asia from 2020 to 2022 is one of the important changes in the current foreign trade situation. There are many reasons for this trend.
The profit from selling cloth is getting lower and lower
First of all, the cost of the textile industry in Southeast Asian countries is low, mainly because the labor costs of workers are relatively low, so they can provide more competitive product prices. In addition, the textile industry in Southeast Asian countries has achieved significant development in overall level due to the massive transfer of industrial chains in the past few years, and its production technology and quality have also been significantly improved. These factors make the transfer of foreign trade orders to Southeast Asian countries an inevitable trend.
Secondly, the textile industry has been in a state of rapid growth in the past few years, and textile companies have also become accustomed to high-speed growth production methods. The current overcapacity is a hidden danger planted in those years, and the reduction in orders has a serious impact on companies. .
In addition, due to factors such as supply chain shifts, companies can only win orders through more active strategies such as grabbing orders. However, this strategy will also lead to competition between companies, lower product prices, lower profit margins and other issues, putting tremendous pressure on companies. A boss who specializes in conventional products said: “The profit of my one-meter 300T pongee fabric is only 20 cents, so I use low prices to attract customers.”
Nearly 70% of orders cannot be returned
As China’s epidemic prevention measures are optimized in 2023, some orders will begin to return, but it is foreseeable that some orders will never come back. These orders have established stable supply channels in Southeast Asia, and it is obvious that this part of the orders are low-end products. As mentioned above, among the outflow orders, the ratio of high-end products to low-end products is 3:7, which means that 70% of the outflow orders will stay in Southeast Asia forever.
In addition, textile companies also need to face fierce competition and other uncertain factors in domestic and foreign markets. Competition in the domestic market has gradually intensified. Various companies not only need to compete for customers, but also face multiple pressures such as rising labor costs and raw material prices. This has also caused the production costs of textile companies to continue to rise and their profit margins to become smaller and smaller.
At the same time, the situation in the international market is also very complex, especially due to the outbreak of the epidemic, the global economy and trade have been greatly impacted, and many countries have adopted trade protectionist policies, which has also made the foreign trade situation of textile people even more severe. Therefore, the attitude of textile enterprises is currently relatively cautious. The current operating rate in Jiangsu and Zhejiang is around 75.6%.
This year’s price war among textile companies has not yet ended, and the problem of overcapacity has not been resolved. Although the time has entered the golden third period, the overall atmosphere of the market has not been boosted. It is expected that in the short term, gray fabric inventories will still rise slightly, while weaving starts The rate will still remain volatile.
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