A sudden epidemic has caused the cloth boss to experience the most special start of the new year. It has also made the entire textile industry’s anxiety index continue to rise, and the atmosphere of panic seems to be getting worse.
The factory is facing the dilemma of unmanned production
Currently, Jiangsu and Zhejiang Many textile companies in the region have resumed work one after another, but even if they resume work, the factories still face the dilemma of no one producing. Although the Ministry of Public Security and the National Development and Reform Commission have clearly stated that highways, county roads, and rural roads must not be blocked at will. But the actual situation is that now various provinces, cities, counties and villages have been artificially blocked with dirt, walls, and railings. No one can get in or get out.
The editor’s friend Xiao Wang works in a textile factory. According to Xiao Wang, many workers in the factory come from Hubei, Hunan, Jiangxi, Sichuan and other places, leaving aside Hubei, the epicenter of the epidemic. Workers in Hunan and Sichuan, non-critical epidemic areas, wanted to go out to work, but in the end they found that they could not even leave the countryside, and the roads leading to the county towns had been completely cut off. This situation has happened in many places such as Sichuan. Now the old workers cannot come out, and there is no way to recruit new workers.
Even if some workers have returned to Suzhou, they still have to be quarantined for 14 days and can only work after approval. If a worker is found to have a fever during work, regardless of whether he is diagnosed or not, then the factory will stop working and everyone will be quarantined for 14 days. If the upstream and downstream suppliers start working during the quarantine period, but they have not yet lifted the quarantine, then it is very likely that customers will switch suppliers because they cannot wait.
So, even if work resumes, the difficulties will be one after another!
Sales on credit lead to insufficient working capital for enterprises
This epidemic has also exposed a deeper problem for textile companies, that is, the dangers of sales on credit. Although this has become the default model of the entire industry and cannot be changed in the short term, it has indeed caused many small and medium-sized enterprises to suffer, especially domestic sales. Judging from the survey conducted a year ago, foreign customers still receive payment in a relatively timely manner and the cycle is shorter than that of domestic customers.
With the economic downturn, credit sales have become very common in all walks of life. Many companies have been on the road to credit sales, accompanied by blood and tears. As competition among textile peers has become increasingly fierce in recent years, sometimes in order to grab business, they will try their best to lower prices, or even compete at a loss to grab customers. When companies face low profits, they will tie up working capital and payables, further exacerbating mutual arrears.
The profits of the textile industry are very thin. Excluding rent, water, electricity, wages and other expenses, there are only tens of thousands left every month. Yuan profit, even this profit is also a receivable. Years ago, there was not much cash left on rent, wages, bonuses, raw materials, etc., and we were just waiting for the payment to be made in the new year. “We have very little cash on our books. If we don’t start work at all, we can only sustain it for three months at most.” Many small and medium-sized enterprise owners said helplessly.
Postscript
Companies will also face logistics problems after resuming work. Now many places do not allow foreign vehicles to enter the local area, which creates problems for cross-provincial enterprises. Transportation causes a lot of trouble. But as the saying goes, when there is danger, there is opportunity. This epidemic will inevitably accelerate the reshuffle of the industry, and the polarization of the market will become increasingly obvious. Consumers’ consumption concepts will also undergo tremendous changes. The general public will be more cautious in consumption, reduce their consumption on clothing, and use their money wisely. The capable mainstream middle class may adopt a “carpe diem” consumption outlook, and suppressed consumer demand will rebound. In the future, companies must seize the ideas of this wave of mainstream consumers if they want to succeed. </p
