“Recently, a customer placed an order for four-sided elastic. My quotation itself was not high and there was no profit. However, the customer still lowered the price with me. I directly said that if the price was lower than my quotation, I would not do it. In the end, I did not accept it. This is the order,” one trader complained.
In fact, there are many examples of losing orders due to customers lowering prices. Especially for four-sided elastic, which has become very popular recently, there are more and more weaving manufacturers and traders producing it, and the price competition is quite fierce. If you don’t accept the order, naturally someone will be willing to accept it at a lower price. Therefore, despite the popularity of four-sided bombs, Boss Bu’s actual profit is very thin, just to maintain the operation of the factory.
Although the sales volume of four-sided taffeta is the best, its profit may actually be lower than that of polyester taffeta. Because it sells so well, most factories have no inventory. While the price of spandex has risen to new heights and costs continue to soar, the price of gray fabric has barely changed.
01
Gray fabric profits decline
In July, many varieties of gray fabrics began to appear After all, there are only a few gray fabrics that can sell as smoothly as elastic fabrics, so the pressure on the entire industry during the off-season is increasing. Spin mills, weaving mills, and garment factories are reducing and suspending production more and more frequently due to inventory and financial pressures. “Reducing inventory and revitalizing cash flow” has become a top priority for some textile companies. From the perspective of profit level, the current profit of gray fabrics is low. The main problem is the lack of orders and high financial pressure. Especially in recent days, polyester filament has experienced sharp rises and falls, and the profits of gray fabrics have also declined, and some specifications of gray fabrics have even suffered losses.
The person in charge of a four-way elastic weaving manufacturer said: “The price of spandex has increased by about 13,000 yuan/ton so far, but currently our factory The price of four-sided stretch fabrics has not increased at all, and some even have discounts for large quantities. The price increase in the current market cannot be increased at all. The quantity is there, but as soon as the price increases, the customers leave, and there are many factories that do not increase the price. You can buy it anywhere. According to the past, if the original price increased by 500 yuan/ton, the price of gray fabric would increase by 0.02 yuan/meter. Now you can only absorb this part of the cost yourself. So you can’t make any money at all, so you can reduce the price in cash Collection is just for capital turnover.”
02
The payment collection cycle is delayed again and again
The payment cycle in the domestic trade market has always been a pain point for textile companies. There is much variability and extended cycles have become the norm. After experiencing an order shortage in May, orders improved significantly in June, but cash flow has become another problem. In previous years, the payment collection cycle for domestic trade generally ranged from 1 to 3 months, but there are also some longer periods, such as 3 to 6 months, or even 1 to 2 years or bad debts. Under the influence of the epidemic and the economic environment, the payment cycle has been continuously extended. This year, the payment cycle will be extended by at least one month, and at most by several months.
An owner of a company that produces T400 gray fabric said: “To be honest, business is not doing well this year. Although the shipment volume is okay, the payment is really a headache. Many very good old customers are starting to be slow to return payment. , cash turns into arrears in two days, arrears become arrears in two days, and monthly balances become 3-4 monthly payments…”
Bubo’s profits are gradually diluted by pressures such as costs, market conditions, and payment collections. It is not easy to reduce profits again and again just to reduce inventory and return funds. As the off-season deepens, the shipment of gray fabrics slows down, payment collection may be extended, and fewer and fewer customers pay in cash. The boss of Youbu also said that the money back will be worse in the future, so manufacturers are discussing lowering prices and cash promotions.
Editor’s Note
The market price has been very chaotic. Although it is not easy for the cloth boss, he also hopes to keep the bottom line of the price. Don’t just cut prices. If the price defense line is high, customers will not lower the price at will!
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