“I recently received an order, and the price was relatively low. I couldn’t make it at this price in my own factory, so we bought the finished product directly from other people’s homes.” said Mr. Liu, who makes autumn and winter fabrics.
According to past experience, the same goods that can be produced at home will definitely be cheaper than those purchased from outside. After all, there is no first-hand middleman to make the difference, but the situation has changed recently.
Rising prices of raw materials are directly reflected in costs
Although the price of raw materials fell slightly this week, overall, due to the rising international oil prices, the price of polyester yarn has been rising in the past two months, and the increase is not small. In order to ensure cash flow, most textile companies generally buy and use raw materials at will, and there is relatively little stocking of raw materials.
Mr. Yuan, the head of a textile company mainly engaged in the production of pongee, said that the price of polyester yarn has increased a lot in the past two months, but he still dare not stock up on more goods. Funds are more important, and stocking up on raw materials feels like a waste. It’s almost like gambling, but I can’t afford it under the current market conditions.
Manager Wang’s company mainly produces nylon yarn. He said that the price of nylon has been rising recently, but he can’t see how the raw material prices will develop in the future, so he usually only buys raw materials for one month.
Textile enterprises generally operate this way. Without the buffer of raw material inventory, the cost of the same cloth woven one month ago will be different from that woven one month later. Although these cloths may be the same thing on the market, the psychological price of the weaving mills has changed. The psychological price of some cloths in stock is lower than that of the fabrics now woven.
Serious loss of orders
Most textile companies said that the number of orders in the first half of this year dropped very significantly, reaching more than 20%. There are three main reasons for this:
First, due to the previous wave of domestic epidemics in the spring, production and logistics were greatly affected, leading to the cancellation of a large number of orders; second, after Vietnam was liberalized, a large amount of foreign capital poured in, the industrial chain was gradually improved, and production capacity increased significantly. growth, and the current tense international political situation, many orders that could not be done before can now be done, so they have been transferred from China;
Third, due to severe global inflation, residents’ purchasing power corresponding to their income has declined, forcing them to cut back on food and clothing, which has affected overall demand.
Of course, not all textile companies have reduced their orders. Mr. Chen, the person in charge of a textile company that specializes in pongee and polyester taffeta, said that this year’s orders are not much less than last year, but profits have declined somewhat. Unlike many companies that trade through traders, their company has direct contact with buyers, cutting out middlemen and making communication more intuitive. Even if the market is not good, there are always some companies that are doing well in receiving orders. This is considered a norm in the market.
In order to reduce inventory, crazy involution
At present, textile companies are generally pessimistic about the market outlook, so they dare not store a large amount of inventory. If there is more inventory, more funds will be pressed on the inventory, and there will be less room for future operations.
But now the domestic textile market has serious overcapacity. Whatever products that sell well are sold together. As a result, the demand is absorbed soon. Not only that, some large companies have also entered the weaving industry in recent years, causing a “dimensionality reduction blow” to small and medium-sized textile companies.
The manufacturing industry has obvious scale effects. The larger the production scale of the same product, the lower the cost. In the past two years, large companies have entered the weaving industry. The same cloth costs small companies 3 yuan, while large companies may cost 2Blocks7 can be made, and they will naturally have an advantage in market competition.
Under such crazy “involution”, some companies are seizing the market in order to maintain their operating rates, and some companies have to accept unprofitable orders in order to maintain cash flow.
Mr. Li, who mainly sells down jacket fabrics, said that the price of raw materials has increased.��, the machines in the factory are unwilling to stop, and the operating rate is still 100%. In order to keep the inventory from growing, the price of the gray fabrics they produce is falling, and the profit is already very thin. Shipping costs sometimes even lead to losses.
Of course, many companies in the market have lowered their operating rates, but this is often the result of tight capital chains. When there are no problems with the capital chain, most textile companies would rather sell fabrics at a loss than rarely lower their production rates. Power on. Between orders and profits, the majority choose orders.
When will the “volume” end?
The current “involution” market is the result of the combined influence of various internal and external factors. Regarding when such “involution” will end, Boss Bu generally said that it has something to do with the epidemic and the Russia-Ukraine war. Among them, the impact of the epidemic more important.
Bubo bosses hope that after the Russia-Ukraine war ends, the tense geopolitical situation can be eased, international oil prices can come down, and the tense political situation can be alleviated; if the epidemic is controlled, consumer confidence can rebound, and the industrial chain can Prices can be effectively transmitted, and downstream companies dare to place orders.
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