The past March may have been the darkest moment for those who have been working in the foreign trade industry for many years! Receive emails and phone calls from foreign customers requesting cancellation or suspension of orders, and respond to repeated reminders from domestic suppliers…
Garment processing factories: difficult to resume production
“Originally, the domestic epidemic situation was stable, and the workers had been working at home for a long time. They were very interested in working, and the construction period was only delayed by one month. , it will be made up soon, and everyone feels that the export situation this year is very good.” He Di said. She is an employee of a garment manufacturing and export company in Yuhang District, Hangzhou, Zhejiang Province. The company mainly exports high-end women’s clothing to European and American countries.
Home textiles and clothing are the dominant industries in Yuhang District, Hangzhou. It has the reputation of “good cloth comes from Yuhang”. 80% of Hangzhou-style women’s clothing is produced in Yuhang.
More than a month ago, He Di returned to the company with the same joyful mood as the workers in the garment factory to resume work. She praised the Hangzhou municipal government for its precautionary measures, saying “many things have been thought of.”
The garment industry is a labor-intensive industry. After the resumption of work, the biggest problem is the shortage of workers. He Di said that in early March, some overseas orders from its peers were canceled by customers, mostly due to failure to deliver on time. Due to control requirements, her company can only coordinate the onboarding of workers in batches.
But within a week, the foreign trade situation took a turn for the worse, and He Di’s company also faced order cancellations. At the same time, some customers were supposed to pay the balance, but at this time they were told that because the commercial department store was closed and there was no sales revenue, it was difficult to pay. “This part of the receivable will not be recovered.”
“At present, not only the clothing market, but also bags, shoes, handicrafts and other industries are facing a severe shortage of overseas consumer demand.” She said.
Yu Lei, the owner of Jieyang Shoe Factory in Guangdong, is worried. Her factory mainly produces slippers and sandals, which are sold to Thailand, the Middle East, Africa and other regions.
Affected by the epidemic, Yu Lei’s shoe factory did not start operations until mid-March, and it has only been in operation for about half a month. Since workers from other provinces accounted for 70%, and local workers could not be recruited, not only was the construction period delayed, but also huge labor costs had to be paid. Finally, the staff was in place, but the orders were reduced by half. “Customers need to see the goods in person to place orders. Now African customers can’t come.”
“I won’t have money to pay employees for another two months.” Yu Lei said. In the chaotic year of 2020, many foreign traders like him found that once orders are lost, expensive labor costs and a backlog of raw materials and goods in warehouses will cut off the company’s cash flow.
Textile fabric factory: “cabbage price” shipments and destocking
In a Keqiao textile exchange group, more fabric factories in Keqiao have shipped goods at “cabbage prices” to remove inventory. The decline in fabric prices is even greater than the decline in raw materials. . At present, the only way for the company to survive is to change the production of protective clothing. “I just want to seize this half-year time, hoping to wait until normal demand recovers.”
Data from the General Administration of Customs of China show that the products with the largest export trade volume from January to February 2020 were They are organic chemicals, textiles, electrical machinery, appliances, electrical parts, clothing, and accessories, but they fell by 16.5%, 18.6%, 7.8%, and 18.7% year-on-year. In today’s era of globalization, China, as the world’s factory, shares the same fate as the world; Chinese factories share the same fate as the global market.
The crisis of reduced orders has begun to be transmitted from downstream manufacturers to upstream textile fabric factories.
Four years ago, Zheng Mingming changed his career from clothing export to sofa fabric export. He and several friends jointly set up a factory in the Home Textile Industrial Park of Xucun Town, Haining, Zhejiang. Xucun Industrial Park is the only professional zone for the decorative fabric industry in Zhejiang Province. It is an industrial cluster integrating raw materials, manufacturing, finished product supporting products, and a full range of production and marketing services.
“China is a big industrial country and has no worries about fabrics. Jiangsu and Zhejiang can achieve mass production of fabrics, with large quantities and cheap prices.” Zheng Mingming told Southern Weekend reporters that this is the first step in China’s fabric and clothing export trade. Advantages: For example, sofa fabrics were priced at 20 yuan/meter four years ago, but now they can be controlled at around 15 yuan/meter.
Many people engaged in the clothing foreign trade business said that most of the fabrics currently exported overseas are in the mid- to low-end, with low prices and small profit margins, and basically rely on volume. What needs to be imported are only some high-end fabrics, which have a niche market. Moreover, many high-end fabrics can also be copied domestically and then exported.
“The current situation is that there is no ‘quantity’.” Zheng Mingming said that there is currently a lack of orders and a backlog of inventory. What he is thinking about is how to remove inventory. Keqiao, Shaoxing, Zhejiang, has the largest professional light textile market in Asia. The chairman of a textile fabric factory in Keqiao wrote in his circle of friends: Due to the lack of orders from the consumer market, the goods returned by the processing plants have been piled up in the warehouse. In a Keqiao textile exchange group, more fabric factories in Keqiao have shipped goods at “cabbage prices” to remove inventory, and the decline in fabric prices has been even greater than before.�Decrease.
Carry out self-rescue: survive first
The past month has been the busiest 31 days for Zhu Xuefeng, a foreign trader who has been engaged in the foreign trade industry for 15 years. In addition to the government’s assistance, foreign traders who, like Zhu Xuefeng, wanted the company to survive began a self-rescue operation. Hope they survive this winter.
“A decrease of 70 to 80% compared with the same period last year”, Jiangsu fabric exporter Zhu Xuefeng’s order volume dropped sharply in March. Previously, his finished fabrics were exported to garment factories in Germany, France, the United Kingdom, the United States, Japan and other countries. There are also orders that have been received that have been canceled or suspended at the request of foreign customers. It is more “terrible” to be asked to cancel an order before the fabric is processed halfway than to cancel an order before production has started.
“The costs and various expenses that have been incurred have all been wasted.” Zhu Xuefeng said that payment will not be made until a 90-day account period has passed after foreign customers sign the order. During this period, Zhu Xuefeng needed to advance funds to cooperate with suppliers of semi-finished fabrics to turn the raw fabric into finished products for export, and there was an accounting period of about 30 days between them and the suppliers.
“Once the chain on the customer’s side is broken, there will be a chain reaction on my side.” Zhu Xuefeng said that some orders have moved from raw fabric to the dyeing stage. If the customer suddenly cancels the order, he will face high costs. loss. It is estimated that there are currently about 8 million yuan of orders in which similar situations have occurred, which means that Zhu Xuefeng has to pay 2.4 million yuan in supplier payments.
“I have been busy borrowing money from everywhere these days.” The reporter’s interview with Zhu Xuefeng was postponed twice. “From the end of the month to the beginning of the month, suppliers will come to press for payment, with one to twenty calls a day.”
Zhu Xuefeng told reporters that in the industry, whether the money owed to suppliers will be paid is generally determined by the “strength” and “integrity” of the trading company. “If you are strong and honest, you can give it to yourself. If you are not strong and have poor integrity, you may fail and the money will not be given. We are relatively honest and want to continue in this industry. , Now I borrow money from relatives and friends, and use house loans.”
In addition, some customers also asked Zhu Xuefeng to “cut in half” the quantity of goods originally signed. The spread of the international epidemic has added a layer of uncertainty to “suspended production” orders. Customers cannot give a definite time for restarting production, and trading companies and factories can only wait. This is even worse for the clothing industry, which pays attention to seasonality and fashion trends. “It is unknown whether customers will use these products in the next quarter.”
The global epidemic of the epidemic has also slowed down. The overall development pace of foreign trade enterprises.
From January to March 2020, the number of national import and export enterprise registrations dropped by 15.9% year-on-year. Picture provided by Qichacha
Qichacha data shows that as of March 27, 2020, the number of import and export companies in my country was more than 6.41 million, including active and surviving companies. There are 5.2 million households. From January to March 2020, the number of registered import and export companies nationwide fell by 15.9% year-on-year. During this period, 37,000 import and export companies were deregistered or revoked. </p
