I won’t have a holiday until the 29th of the New Year! The Chinese New Year is coming in 3 days But many textile bosses are still working in the sales department Why are the holidays so late this year? It’s not because the refund hasn’t arrived! These days, textile bosses are sitting in the sales department, not only waiting for customers to pay, but also insisting on selling down jackets in the sales department. This year there are many companies selling down jackets in their stores, and the styles and quantities are more abundant than in previous years. This shows that there are more cases of using down jackets to pay off debts this year.
01Clothing inventory is as high as 60%-70%
Down jackets sold at a loss
We found that no matter what company is selling clothing, its price is a sell-off price, which is very cheap. According to our research, most down jackets sold in stores on the market usually cost 200 yuan/piece, but at the end of the year, the price dropped lower and lower, leaving only 80 yuan/piece. Mr. Liu, who produces down jacket fabrics, revealed: “There is really a lot of down jacket inventory this year, and the market is selling off goods. In previous years, a down jacket sold for 200 yuan, and the most it was close to 180 yuan a year ago, but this year it has dropped to 80 yuan. Yuan. Sell at a loss. If you don’t sell, you won’t have the funds, and the workers won’t be able to pay their wages!”
Yang Hua, general manager of Haining Falorun Clothing Co., Ltd., said that he has been in the clothing industry for more than 20 years and has encountered a “cold winter” in the clothing industry. The factory will produce 150,000 pieces of clothing in 2021, and currently has 100,000 pieces in stock, with only one-third sold. Yang Hua also said, “Every year, the inventory of the clothes we produce is at most 10%-15%, which means there are almost 15,000 to 20,000 pieces. However, this year only one-third was sold, and the inventory is as high as 60-70%. .”
02Cash into clothing inventory
Garment factory unable to pay final payment
Waiting for payment at the end of the year appears in the textile market every year. It is inevitable to have accounts receivable. It seems to be common in the textile industry and is also a long-standing problem. However, compared to previous years, the situation of receivables this year is even worse than in previous years. The amount of receivables is larger, the repayment cycle is longer than in previous years, and it is becoming increasingly difficult to collect.
Under normal circumstances, garment factories will start placing orders for down jackets from upstream companies in July and August every year, but this year’s orders seem to be earlier than expected. Looking back at the market conditions in 2021, June should have gradually entered the off-season, but orders have improved. Among them, winter clothing fabrics such as four-way stretch, T400, pongee, and nylon are mostly gray fabrics, and the gray fabric market is selling well again. Starting in June, some textile bosses began to stock up on down jackets, but elastic fabrics such as four-way elastic and T400 are hot-selling throughout the year, which also shows that there are garment factories producing down jackets throughout the year.
03The epidemic hinders wholesalers from getting goods
Offline clothing stores are in bleak condition
This year’s golden sales period for clothing coincides with repeated epidemics. October happened to be the time for winter stores to stock goods, but as the epidemic recurred, wholesalers were unable to go out to get goods, and local stores were unable to operate normally. These clothes were kept in warehouses and were not put on the market. In December, the epidemic became serious again. It happened to be the peak season for terminal sales. Few people went out to go shopping. Moreover, the predicted “cold winter” was still coming. The weather was not cold, and the business of offline stores was bleak.
In addition to the impact of the epidemic, factory production capacity cannot keep up, which is also a reason for poor efficiency. If a piece of clothing becomes a hot item in the market, it will definitely have to be repurchased. However, due to the epidemic, the downstream fabrics are not available, and the factory’s production capacity cannot keep up with the market demand. If the hot item cannot be produced in volume, then the profit will be very thin. .
When the garment factory placed orders in July and August, it did not pay part of the payment until October or November. However, the remaining balance was unable to be paid because the clothes were not sold and the money was in inventory. At this time, the fabric supplier can only choose to take the clothes or wait for the manufacturer to sell the clothes before paying. But similarly, the fabric business needs to pay its suppliers. In order to circulate funds, it has no choice but to take the clothes and sell down jackets in the sales department. The inventory of down jackets in one garment factory has reached 100,000 pieces. It can be seen that the clothing inventory of the entire industry has really become huge this year. For example, assuming that the cost of a piece of clothing is about 100 yuan, then 100,000 pieces, which means 10 million yuan of funds are invested in these clothes. If it does not cash in, the company will face a crisis. In addition to the failure to pay employees’ wages in time, what is even more worrying is that the capital chain is broken and the factory is not viable, which will be a big problem for next year’s production. 2022 will still be a challenge for the entire textile industry. From the market situation at the end of the year, we have seen many new opportunities and hopes, but the huge inventory is a huge difficulty, which also restricts next year’s production. If there is no funds for production, then what awaits them may be Bankruptcy, closure…
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