“The past few months have not been easy for textile companies.” Mr. He runs a textile company in Dongguan. He told the 21st Century Business Herald reporter that during this period, although various places have The power restriction measures have been relaxed, but the impact of the dual energy consumption control policy and the price increase of raw materials on enterprises has not passed.
A few days ago, the China Textile and Apparel Industry Federation released data showing that the prosperity index of my country’s textile industry in the third quarter was 58.7, down 6.7 points from the second quarter. The reason why the textile industry’s prosperity declined in the third quarter was mainly due to factors such as the complex and severe international environment, the impact of the domestic epidemic and flood conditions, the continued rise in raw material prices, and tight energy and power.
21st Century Business Herald reporter learned that under the combined influence of various factors, many domestic textile and garment companies are facing the dual pressure of declining orders and declining profits.
The new orders index fell in the third quarter
In September this year, under the influence of energy shortage and energy consumption dual control policies, many domestic provinces issued power curtailment notices one after another, including textiles such as Guangdong, Jiangsu, and Zhejiang. As a big province, many textile companies have been affected to varying degrees.
In October, some major textile provinces continued to be affected by power restrictions. Enterprises’ operating rates were insufficient, terminal demand did not increase significantly compared with the previous month, and overall market sales remained sluggish.
“I originally thought that e-commerce carnivals such as Double 11 would stimulate corporate performance, but this year’s Double 11 orders were not as good as in previous years.” Mr. Xie, the head of a clothing company in Ganzhou, told a reporter from the 21st Century Business Herald.
For textile and apparel companies, a series of factors have disrupted the industry’s peak season production preparations. The ex-factory prices of some products have increased, and the delivery cycle has continued to lengthen. The pressure of shortages has begun to be transmitted through the supply chain. With the surge in raw materials, gray fabrics, fabrics, printing and dyeing, etc. are also affected by the trend, and there is a price increase in the upper reaches of the textile market.
Mr. Weng, the head of a textile company in Zhejiang, told a reporter from the 21st Century Business Herald that since the end of October, local power restriction measures have been relaxed and the company’s production capacity has gradually recovered. “However, although production capacity has increased now, orders have not increased significantly.”
In the opinion of industry insiders, policy adjustments have not driven a sharp increase in production in the short term, especially as the price of chemical fiber raw materials has been rising, and the profits of gray fabrics are relatively limited. Some orders have even been missed, and the production enthusiasm of some factories has hardly improved.
In October 2021, the China Textile and Apparel Industry Federation launched a survey on the current business status of textile enterprise managers. It is estimated that the prosperity index of my country’s textile industry in the third quarter was 58.7, down 6.7 points from the second quarter.
The China Textile and Apparel Industry Federation pointed out that according to estimates, the new order index of my country’s textile industry in the third quarter of 2021 was 61.5, a decrease of 8.6 points from the second quarter, but market demand is still in the growth range. The main reasons are that the domestic epidemic has occurred from multiple sources and points, which has affected residents’ travel and consumption to a certain extent; international market demand has been weak and transportation costs have increased; coupled with the high base in the same period last year, it has also affected the growth of new orders. In addition, since mid-May, peak power consumption has occurred in large areas in the south, and the power supply situation in some areas has been tight, causing companies to be afraid to accept orders.
Textile and garment companies operate at low profits
Data released by the China Textile and Apparel Industry Federation show that in the third quarter of 2021, the profitability of my country’s textile industry declined compared with the second quarter. According to the survey, 38.9% of textile companies said that their profits increased in the third quarter compared with the second quarter, and this proportion was 11.1 percentage points lower than the second quarter survey results; 29.2% of textile companies said that their profits decreased compared with the second quarter, and this proportion increased from the second quarter survey results. 13.4 percentage points.
21st Century Business Herald reporters interviewed companies and learned that with the skyrocketing prices of raw materials, cotton gauze, and fabrics, textile and clothing exports are in a dilemma. “The prices of cotton, cotton fiber, spandex, nylon, etc. have risen at the same time, which has put tremendous pressure on enterprises.” Mr. He said.
From the perspective of cotton prices, in October, affected by factors such as rising commodity market prices, domestic and foreign cotton prices rose sharply to a new high in the past 10 years, then fell back in the second half of the year. During the month, large-scale picking and purchasing began in various cotton areas, and the purchase price of seed cotton rose sharply, resulting in higher sales prices of new cotton.
Ganzhou Huasi Garment Co., Ltd. mainly produces and sells mid-to-high-end women’s clothing. During this period, the price of textile and clothing raw materials has increased across the board, making the company’s general manager Tian Guoping feel even more pressure. “Since last year, orders have declined significantly and have rebounded in the past few months. However, raw material prices have generally increased by 30%, and the rising costs have seriously squeezed our profits.”
The China Textile and Apparel Industry Federation said that currently, enterprise exports The main problems encountered are insufficient international orders and rising shipping costs. 48.1% of the sample companies listed insufficient international orders as the number one problem facing their exports, and 20.0% of the sample companies listed rising shipping costs as their top export problem. First question.
In addition, due to the impact of the epidemic, factors such as congestion at many foreign port terminals and container shortages have not only led to a significant increase in transportation costs, but also extended the transportation cycle. Once delivery cannot be made on time, there is a risk of order cancellation.
Industry insiders said that for many small and medium-sized enterprises, the bargaining power in terms of raw material procurement and product selling prices is not strong. While passively accepting the increase in raw material prices, they are unable to pass on the cost pressure. Most of the costs need to be absorbed by the enterprises themselves. , profits will inevitably be affected.��
Based on their own production and operation status and feelings about the market, some companies have made outlook for the industry in the fourth quarter of 2021. On the whole, companies are more cautious in judging the industry’s prosperity in the fourth quarter, and generally believe that the operating speed in the fourth quarter is generally the same as that in the third quarter. Specifically, it is expected that production will maintain stable operation in the fourth quarter; new orders may increase slightly, and market demand is expected to expand; raw material prices may fall back from high levels. </p
