Cotton price volatility exacerbates garment industry reshuffle

January 26, 2019

Recently, the ups and downs of cotton prices have once again caused the textile and garment industry to reshuffle, and those textile and apparel companies that have already undergone technological upgrades and product mix adjustments have also been affected by soaring cotton prices. If these factors are spread over products, cotton prices The increase in costs caused by the skyrocketing profits has diluted profits.

With the increase of various uncertainties, the reshuffling of Chinese garment enterprises will begin again, and survival of the fittest will be a foregone conclusion. While cotton prices are rising, while clothing is also increasing the price of products, the price changes cannot keep up with the increase in costs. Under such circumstances, various clothing companies have to consider changing their own business ideas. More clothing is starting to adjust its own product structure and operating special products.

In the process of re-shuffling, how to achieve zero inventory, once again become a problem that must be faced by apparel companies. With the gradual increase in the turnover of apparel companies, inventory will also increase. The larger the stock, the greater the foam. It is destined that when the apparel industry encounters major market fluctuations each time, it is necessary to reshuffle the brand and eliminate some of the backward companies with poor sales performance.

“What is profit, and profit is the turnover. Turning profit into cash is the absolute principle of enterprise development. If a garment company can produce 80 pieces of clothes and sell 75 pieces, it will be a success.” Shen Yongsheng, Professor of Economics, Chinese Academy of Social Sciences It is believed that many companies have eliminated a group of dealers because of slow sales. In fact, this is a great waste of social resources.

In the fashion industry, there is a saying that if a commodity is not sold for 30 days, then this commodity is destined to become a dead cargo, which is called “brick” in the industry, and ultimately leads to no guarantee of product profits. Only if the enterprise can make sales and inventory information transparent, can it determine the quantity of replenishment and distribution according to regional sales and inventory information.

A Beijing-based export manager spoke of the fact that the price of export orders will increase by at least 34%, but this increase does not know whether the buyer can accept it. Therefore, this year's pricing list has not yet been determined. However, the company has already made preparations to adjust its export position and adjust its export market to markets with high demand for “Winter” clothes such as Russia and Canada. At the same time, it will improve the quality of clothes and take the high-end routes of the “cold” market.

At present, there is an overheated investment in China's garment industry, and the scale expansion to a certain extent may lead to overproduction and low-level redundant construction. The price advantage of cheap labor is also gradually weakening, and this is precisely after the global economic crisis. One of the internal worries of the clothing industry. Wang Yu, secretary-general of the China Textile Import & Export Chamber of Commerce, pointed out that the most competitive factor in domestic textiles is cost, and overheated investment in the industry will inevitably generate production capacity, which in turn will lead to strong demand for raw materials, leading to higher prices. Wang Yu pointed out that China's current textile and apparel profit margin is only 2% to 5%. In addition to soaring raw materials such as cotton prices, energy shortages, low levels of corporate management and operations, increased costs of pollution control, and lack of technical content of products are offsetting the low cost of China’s labor force. Therefore, experts called for the “post-economic crisis era” in which the Chinese textile industry should extend its industrial chain and accelerate the implementation of its brand strategy.

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