Exports fell sharply, textile and garment enterprises also incense?
Now the order has been reduced a lot. All the orders of July and August have been shipped, but the customer has not placed additional orders.The peak is in March and April when orders are highest.”On Aug. 13, Lu, a garment manufacturer in Shan tou, Guangdong province, told Time Finance that red-hot garment exports in the first half of the year seemed to have “stalled.”
According to the data of China Chamber of Commerce for Import and Export of Textiles, from January to June 2021, the cumulative export of textiles and apparel was us $1400.86 billion, with a year-on-year growth of 11.9%.According to the incomplete statistics of Times Finance, recently about 43 listed companies in the textile and garment industry released their performance or performance forecast for the first half of the year, and 38 of them had a pre-increase in performance, a rise in the same direction, or turned losses into profits.
Among them, Shen zhen Textile A (000045) expected half-year net profit attributable to shareholders of listed companies is 63 million to 90 million yuan, year-on-year growth of 8650% to 12400%;New Fengming (603225) is expected to return to the mother in the first half of 2021 net profit of 1.3 ~ 1.35 billion yuan, a year-on-year growth of 549% ~ 574%;Blum Oriental (601339) realized a net profit of 550 million RMB, up 304% year-on-year…
“The flow of global orders back to China, which started last year due to the epidemic, has continued this year.”On August 13, jiansheng Group (603558), an exporter of knitted sportswear, released its semi-annual results, showing a net profit of 108 million yuan in the first half of the year, up 96.4% year-on-year.On the reason for the performance increase, the semi-annual report mentioned to benefit from “order backflow”.
Now things are changing.
Clothing exports and textile exports both fell in July, according to data released by the General Administration of Customs.In RMB terms, textile and garment exports reached 181.39 billion yuan, down 18.24% year-on-year and up 1.82% quarter-on-quarter, down 4.21% compared with the same period in 2019.Among them, textile exports reached 75.06 billion yuan, down 33.73% year on year and 6.90% month on month, up 1.30% compared with the same period in 2019.Garment exports reached 106.33 billion yuan, down 2.08 percent, up 9.03 percent from the previous month and down 7.76 percent from the same period in 2019.
In fact, since the second quarter, the monthly export growth rate of textile and clothing has gradually decreased. In May, the export decreased by 16.8%. In June, the export continued to decline, but the decline rate was significantly narrower than that of May, only 3.7%.
“The decline in textiles and clothing is largely due to the recovery of export orders of the textile industry in some Southeast Asian and South Asian countries, especially India and Bangladesh.Some of the orders that had been ‘repatriated’ to China have gone back.”On August 13, Bai Ming, deputy director of the Market Research Institute of the Ministry of Commerce, pointed out in an interview with Time Finance.
“In the first half of this year, if the epidemic in other Southeast Asian countries eases, domestic orders will decrease and raw material prices will fall,” said Roh, a garment manufacturer.
1. The slowdown trend of “backflow” orders is obvious
Although the performance of listed textile and garment enterprises in the first half of the year is good news, but according to the RMB settlement, the total textile export in the first half of the year is not as good as 2020.According to the data of the General Administration of Customs, from January to July, the total export of textile and garment was 100.21 billion yuan, down 0.93% year on year.Of this, textile exports reached 519.89 billion yuan, down 17.94%, and apparel exports reached 570.32 billion yuan, up 22.17%.
In dollar terms, clothing exports fared slightly better, but textile exports also fell by double digits.From January to July, the cumulative export of textile and garment was us $168.351 billion, up 7.73%;Among them, textile exports reached us $2.052 billion, down 10.80%;Garment exports reached $88.098 billion, up 32.89%.
“China’s textile and garment export markets are concentrated in Europe, The United States and Japan. With the improvement of vaccine coverage rate and normalization of herd immunity in these countries, the import of textile epidemic prevention products has decreased significantly, and some developing countries have gradually resumed production, with the return and transfer of orders.In addition, due to China’s rapid resumption of work and production, last year’s relevant textile export base is large, so the year-on-year decline in exports of such products is inevitable.”Analysis of Times Finance and Economics by LAN Qingxin, researcher and doctoral supervisor of National Institute of Opening up, University of International Business and Economics.
As for the slowdown in the return orders in July and August, Bai said that India suffered from a serious epidemic in the first half of the year, and many orders were transferred to China in April and May.Some industries in India and Bangladesh also recovered in the second half of the year, leading to a reversal of orders in July and August.
LAN added that in addition to the return of orders, rising costs and a slow economic recovery have also dampened demand.
As for the decline in textile exports reflected in the Customs bureau’s data, Mr. Lu, who works on the front line of production, has a more intuitive feeling.”I felt that in the first half of this year, when the epidemic abroad eased a little, foreign trade orders fell,” Lu said.
When Time Financial asked Mr. Lu and the small business owners around him if they were worried about a lack of orders, Mr. Lu said, “The price of raw materials is the highest in two years.It doesn’t matter if I can’t get orders, or I will lose money. After all, the clothing industry is a low-margin industry.”
As for listed companies, there is also a decrease in orders.Era financial journalist on August 13th, as investors call polyester, polyester spinning and draw texturing, import and export trade as one of the modern large-scale joint-stock enterprise new fengming (603225), investor relations department staff, according to recent situation does have a drop in exports in July, “outbreak relations are sure there will be some impact.”
When asked by Time Financial whether the rising sea freight prices are the cause, a staff member of New Fengming said, “There are also rising sea freight prices. There may be some obstacles to the export of goods, but we mainly sell more domestic products, and the proportion of export is relatively small.”
As of Aug. 13, new Fengming edged up 1.45 percent to 20.30 yuan.
Second, there are still many uncertain risks
The search for replacement orders as the pandemic strikes is doomed to be short-lived.
Bai Ming pointed out, “In recent years, China has been transferring orders to other countries, but last year was a special situation. Many Chinese factories were the first to resume production. When many countries were still in the grip of the epidemic, their textile exports were affected.Now that capacity is back in those countries, customers are running back.”
Large domestic textile and garment enterprises are also “well aware” of the temporary return of orders. Jiansheng Group points out in the third section of the semi-annual report “Management Discussion and Analysis” that “it is still the general trend to transfer low-end production capacity to Southeast Asian countries with lower factor costs and less disturbance of tariff disputes”.
As the global epidemic prevention and control has gradually become normal, the trade demand for epidemic-related goods has weakened, and many manufacturing countries have restarted production. Li Xinggan, director-general of the Department of Foreign Trade of the Ministry of Commerce, said on July 22 that this is more of a challenge than an opportunity for China’s foreign trade.
“On the one hand, China’s exports will face increased market competition;On the other hand, countries also need a large number of raw materials and production equipment to resume production, and the demand for China’s capital goods and intermediate goods has significantly increased.”
For many countries to restart the production manufacturing, possible impact Li Xinggan said, “at present, we are change, the situation of foreign trade in the second half will focus on enterprise faces serious difficulties and problems, in conjunction with relevant departments and local research on more specific policy measures, effectively reduce the comprehensive cost of the foreign trade enterprise.”
Textile industry is closely related to macroeconomic environment and national policies.At present, the global epidemic alert brought by the Delta mutant strain has not been lifted, and a mutant strain named “Ramda (λ)” has begun to emerge, causing the development of the domestic textile industry to face many uncertain risks.
LAN suggested that in the second half of this year, exporters should further tap their potential, reduce costs from the perspective of increasing efficiency, diversify export markets, and actively tap overseas demand by more means of cross-border e-commerce.At the same time, we should appropriately adjust production capacity and not blindly expand production or increase inventory.
It is worth mentioning that as of the end of July, freight increases and port congestion have not been fully alleviated, becoming the biggest uncertainties affecting exports in the second half of the year, according to the China Chamber of Commerce for Import and Export of Textiles.The upstream raw material price increase caused by global inflation did not transmit to the downstream sales price of finished goods synchronous rise, in the first half of the woven clothing total export price slightly decreased 0.8 percent year on year.
In addition, the gap between CPI and PPI has been running at a high level for nearly half a year in a row. Under the double impact of rising raw materials and weak consumption end, downstream garment enterprises, especially small and medium-sized enterprises, ay be in a situation of continuous profit compression.
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Post time: 03-09-21