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The global textile and garment industry chain nearly stopped! How does China's textile and garment industry break out?

Release time:

2023-09-07 14:41

"This year is a very tough year, and what's even more frightening is that it seems difficult to say when the global epidemic will end, which means that the downturn in the textile and apparel industry may not be over this year, and the probability is that it will continue into next year." Xu Qi said.

Xu Qi, who owns a garment processing factory in Cambodia with close to 1,000 workers and is a foundry for brands such as Zara and Uniqlo, said bluntly that times are hard when there is basically no mobility in the factory. "The Cambodian government stipulates that workers still have to pay 70 percent of their wages during breaks, with the government paying 40 percent and the company paying 30 percent... Workers in Cambodia are paid about $190 a month, and with a factory close to 1,000 workers, that means I owe thousands of dollars every day when I open my eyes."

China has the most complete supply chain of textile and garment industry in the world. The textile and garment industry is also the first business card of Made in China to the world, and its foreign trade situation also affects a large number of Southeast Asian foundry enterprises, of which Xu Qi's enterprise is one of them.

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Global textile and apparel industry chain nearly stopped

The upstream of the textile and apparel industry chain involves the production of natural fibers (e.g., cotton, linen, wool) and chemical fibers, the midstream includes spinning, weaving, printing and dyeing, and the downstream includes final products such as apparel, home textiles, and technical textiles.

An Xi, who has 30 years of supervisory and observational experience in the textile and apparel industry, told the first financial reporter that China is the country with the most sound textile and apparel industry chain in the world. Especially after China's accession to the WTO in 2001, the garment export quota was abolished, which greatly promoted the development of China's textile and apparel industry, and China gradually became a global textile and apparel manufacturing center.

According to Wind Information and Jingdong Digital Research Institute, from 2001 to 2010, China's cloth production rose from 29 billion meters to 90.7 billion meters, yarn production rose from 7.61 million tons to 37.33 million tons, and chemical fiber production rose from 8.41 million tons to 48.86 million tons, all of which are the world's first.

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According to Wind Information and Jingdong Digital Research Institute, from 2001 to 2010, China's cloth production rose from 29 billion meters to 90.7 billion meters, yarn production rose from 7.61 million tons to 37.33 million tons, and chemical fiber production rose from 8.41 million tons to 48.86 million tons, all of which are the world's first.

It was during this time that Xu Qi went to Cambodia to set up his factory. His factory adopts the OEM production model, taking orders from domestic foreign trade companies, importing raw materials from China, making use of Cambodia's low-priced labor to do OEM garment production, and then selling them overseas.

Despite the trend of processing factories moving to Southeast Asia, China remains the most important exporter of chemical fibers and fabrics. According to UN Comtrade and the Jingdong Digital Research Institute, by 2018, yarn fabric exports accounted for 30% of global trade and chemical fiber exports accounted for 40% of global trade, with downstream producers such as Vietnam and Cambodia relying on imported fabrics.

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At present, the main buyers of the global garment industry are concentrated in the United States, the European Union and Japan. Under the gloom of the global new crown epidemic, the demand in the European, American and Japanese markets has fallen sharply, making the entire textile and garment chain of enterprises in everyone's danger.

Garment foreign trade enterprises and processing enterprises in a passive state. According to Xu Qi, now a lot of clothing processing plants and buyers between the use of commercial credit transactions, buyers will have a lot of space and uncertainty, the original whole single whole go mode has also become a small batch go, resulting in increased costs.

Textile enterprise payment method also led to the upstream suppliers in a special period of time in a "dare not produce" state. "Textile and apparel enterprises procurement is the first delivery, goods sold and then pay the supplier. Weaving factory to use their own money to buy raw materials, pay wages, if once there is a return, all the losses in it, some small weaving factory because of the fear of temporary customer orders canceled, also do not dare to weave, or even in order to avoid the risk, rather than open." Xu Qi said.

Clothing foreign trade enterprises "in danger, thinking of change"

China is the center of the global textile and apparel industry, and how the textile and apparel industry can combat the impact of the epidemic is receiving global attention.

At the symposium on stabilizing foreign trade on June 28, Orient International, as one of the six enterprises invited to participate in the symposium, had a dialogue with the Premier through video link.

Orient International is a Shanghai-based textile group and China's largest textile and apparel group and largest textile and apparel exporter, while Shanghai used to be the home of China's textile and apparel industry.

"In the 1980s and 1990s, Shanghai was the most red-hot city for textiles in China. At its peak, Shanghai had nearly 500 textile enterprises, 550,000 industrial workers and 13 textile subsectors. At that time, China needed a lot of foreign exchange to buy international advanced machinery and equipment, and Shanghai's textile and garment industry made great contributions to China's export earnings. Now, Shanghai has completed the transformation from production-based to trade-based." An Xi told CBN.

After 1994 by the impact of industrial layout adjustment, processing enterprises moved out of Shanghai gradually transferred to Zhejiang, Jiangsu, Anhui, Shandong and other places, Shanghai retains the function of apparel design and foreign trade, a large number of apparel companies are still located in Shanghai sales center. As the Yangtze River Delta region, the textile and garment industry import and export leader, Shanghai also brings together a large number of clothing and textile listed companies such as Orient Venture (600278.SH), Shenda shares (600626.SH), leading shares (600630.SH).

"Shanghai is the bastion of foreign trade in the Yangtze River Delta region, in the case of textile and garment exports blocked, the first to bear the brunt of the Shanghai textile and garment foreign trade enterprises, which in turn spread to the entire industry chain." An Xi told the first financial reporter.

Xu Qi cooperation of foreign trade companies throughout Shanghai, Hong Kong, Qingdao, Dalian and other places, he believes that in the clothing foreign trade Shanghai is the first domestic. "The most complete information, the fastest circulation, big brands, buyers almost all have offices in Shanghai. Shanghai foreign trade is good or bad affects not only the domestic factories, but also affects the production of many foundries in Southeast Asia." Xu Qi claimed.

Orient International as a representative of the Shanghai garment foreign trade enterprises how to transform and change, will become an important aspect of the whole industry chain to drive change.

Anxi observed in recent years, many large domestic garment exporters are doing their own brands, Orient International, Shenzhou International are at the forefront of the industry on behalf of Lily, Yagor, Bosideng are successful cases of transformation.

"The first step is to realize the change of concept, from export dependence to the development of domestic consumption, the development of their own brands, catch up with or even replace the big foreign brands. For example, Orient International has already begun to shift from foreign sales to foreign + domestic sales in the first few years, and successfully cultivated brands such as Lily and Three Guns, which have almost completely switched to domestic sales this year." An Xi said.

The pains of transition

However, the transition isn't that easy, and nurturing a brand doesn't happen overnight.

On June 22, the General Office of the State Council issued the "Implementation Opinions on Supporting the Transfer of Export Products to Domestic Sales" (hereinafter referred to as the "Opinions"), encouraging enterprises to expand the international market while supporting the development of domestic market for marketable export products.

Shen Jianguang, chief economist of Jingdong Digital Science and Technology and director of the Institute, believes that from the perspective of the emergency situation of the short-term epidemic, every measure of the "Opinions" is good for the textile and apparel industry, and the reduction of tax exemption and negative tax burden is a blessing in disguise to the enterprises in difficulty, and customs facilitation, cross-border e-commerce and so on, will also have a certain positive impact on the export.

"But in the long run, the future of China's textile and apparel industry is still to move upmarket. In recent years, we have seen some good signs. Exports of textile machinery and chemical fibers with higher technological content and value-added have started to move upward, and garment processing, which really relies on manpower, has started to move to Southeast Asia, where trade frictions and epidemics may accelerate the industry's adjustment." Shen Jianguang said in an interview with CBN.

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higher cost of raw materials.

"A few years ago, I have seen some foreign trade enterprises in transition to do the brand, but which also faces great difficulties, the domestic fight a brand requires tens of millions of dollars, 100 of which can be 10, 20 out has been good." Xu Qi said.

Shen Jianguang also agreed that the transition will be accompanied by pain, "although the real transition is difficult, the internal market competition will intensify, there will certainly be enterprises do not adapt, or even eliminated, but there will also be enterprises may jump out and become a leader, which is the only way out at present".

In the case of weak exports, how to successfully transform? Zhang Yugui, dean of the School of International Finance and Trade at Shanghai International Studies University, believes that it is increasingly important to design and produce clothing that is close to the Chinese market, consumers and young people.

"Textile and apparel enterprises to achieve rapid transformation in market segmentation and personalized product supply, innovation in technology, process and service concepts, and not enough effort in the developmental needs of all age groups. For example, Shanghai's current market demand for customized suits are many and large, but the real ability to meet the high quality needs of very few companies, it is entirely possible to strengthen training, retain the teacher masters, and grow the 'national treasures' master craftsmen team." Zhang Yugui said.

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