In recent times, the number of new confirmed cases every day, both at home and abroad, has been slowly rising, and the transmissibility of the mutated virus has surged. 70%, and many countries have implemented stricter epidemic prevention measures.
The recurrence of the epidemic has also dealt a heavy blow to textile and garment people. As the end of the year approaches, it should have been a good time to stock up on goods, but recently, whether it is clothing Or textile companies are reducing stocking.
Clothing companies: If you clear the inventory, you win!
The person in charge of a clothing factory said: “We don’t dare to stock more goods this year. It will be good if we can clear the inventory. Now we usually make as many pieces of clothing as the customers place orders.”
Inventory problems in the apparel industry have always been a long-standing problem. Due to the short fashion trend cycle of clothing, it increases the difficulty of demand forecasting. Once the forecast is wrong, it becomes a hot potato. If it cannot be sold, it can only be put in the warehouse and wait for the next season to be sold. But in the next season, these clothing It becomes an out-of-season item, and it may not be sold even if it is sold at a discount.
In the past few years, due to misjudgment of the cold winter, clothing companies’ inventories of cotton-padded jackets and down jackets have remained high. In the end, in order to recover funds, they had to clear the warehouses and even sold them for 150 yuan each.
Clothing companies have been in the stage of vigorously destocking, and the procurement of fabrics The intention is not strong. Digesting inventory has become an inevitable problem for many clothing companies. Low-price promotions are a common method of destocking. The annual “Double Eleven”, “Double Twelve”, and the upcoming New Year’s Day are good ways for clothing companies to destock. The timing is good, but the effect is not very obvious. This can be seen from the high inventory of clothing companies in recent years. Many clothing companies have problems with capital turnover due to excessive inventory, leaving them with the only outcome of bankruptcy!
Textile enterprises: The financial impact is huge, the epidemic situation is unclear, be cautious in stocking up!
The apparel industry itself has large inventories and poor demand. Therefore, the textile market as its upstream has plummeted. Especially companies that mainly focus on foreign trade orders have no orders in the first half of the year and no orders in the second half of the year. There are orders but no profits. A textile factory manager who specializes in foreign trade orders revealed: “Orders began to recover in the second half of this year, but customer prices were very low. Coupled with the shipping costs and exchange rates, the profits were almost not much, and they were only made in October. Otherwise, we won’t even be able to pay workers’ wages this year.”
Due to the epidemic this year, the entire industrial chain will suffer both prosperity and loss. Both weaving mills, traders and clothing companies are very short of money, which has also resulted in this year’s payment period being longer than in previous years. It is understood that the payment collection cycle of downstream weaving mills, clothing factories and traders is generally 3 years. It takes about a month, or even more than half a year, and raw materials are purchased in cash, so most textile companies have tight cash flow. Furthermore, how much raw materials will be stocked by weaving companies and how much fabrics will be stocked by traders are related to the current market situation and the prediction of future market conditions.
In the face of tight capital chains and uncertainty about the future epidemic, both traders and weaving companies have reduced stocking. “Originally, stocking is to earn the price difference, but this year, both raw material prices and gray fabric prices are low. Just buy it and use it as you like. Now that the epidemic is coming again, it’s better to be safe and secure.” A weaving manufacturer with 100 looms said.
Although market orders have increased recently driven by the temperature, the impact of the epidemic at home and abroad is worrying. In addition, many overseas countries have “locked down the city” “The demand for clothing is bound to weaken further. It is still unknown whether foreign trade demand will pick up next year. At the same time, domestic sales orders have also declined significantly compared with the same period last year. Therefore, all textile workers should stock up carefully and be prepared for a protracted war!
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