The textile industry needs transformation to break through

Labor-intensive industries such as textiles were once the main force of China’s foreign trade exports. Today, the era of high growth in textile product exports is over.

Behind the weak performance of the order market is the unprecedented challenge faced by the textile and apparel industry: the traditional export market is affected by the slowdown in economic development; the raw material price fluctuations have caused tremendous pressure on business operations; the rising labor costs have brought high costs; Reduced operating rates, increased product inventories, and stagnant market channels.

The industry is in a predicament, especially in the low-end production capacity is facing more and more prominent orders reduction and capacity migration challenges. Specifically, the dual impact of the shrinking international market and the competition of similar products in other countries is still the main reason. How can we break through the predicament under the prevailing circumstances of loss of profit and thinning profits?

First, efforts should be made to increase the added value of products. With the gradual loss of comparative advantage, textile and garment companies can no longer fight the market with “low price and high volume”, but should actively change to enhance the cultural connotation of products, strengthen brand building, and increase the core competitiveness of products. For example, in the three quarterly reports, the eye-catching local men's brand has, after many years of brand nurturing, the brand men's wear represented by seven wolves and the Annunciation has gained a firm foothold in the domestic market, a clear market position, and in terms of commodity structure, design and quality, etc. The gradual strengthening of these brands has significantly increased the visibility and risk-resistance of these men's brands. It is not surprising that today's overall performance of the industry is declining. In addition, some home textile companies increase their added value by adopting new materials and developing new products, which not only effectively responded to the decline in orders, but also achieved overall profit growth on the basis of increasing product prices.

Second, we must effectively control costs. The first is to effectively control raw material costs at the source. In recent years, the price of raw cotton has been ups and downs, which has a great impact on textile companies. How can I not get stuck with raw materials? Some companies began to use their brains to "upward" the solution. Shandong Ruyi Group intends to acquire an 80% stake in the Australian cotton production base. Other companies set up cotton production bases in China to fundamentally solve the cotton problem. The second is to shift outwards and break down high-cost pressures. With labor, land, and capital costs continuing to rise, the initiative to increase the efficiency of resource allocation and transfer some production lines to neighboring countries and the central and western regions of China has also become a transformation strategy for domestic textile and clothing companies.

Third, we must rationalize the layout and do a good job of "preheating before the game" in the domestic market. The domestic market with huge potential has always been the hope of the textile and garment industry. Especially in the current situation of continuous decline in exports, “turning inwards” requires companies to work harder. According to an industry source, the overall trend of demand growth will not change in the domestic market or the international market. Although the economic cycle will affect product consumption, the overall demand will pick up gradually as the economy improves. Domestic textile and apparel companies should keep confident. At the same time, it is even more necessary for companies to study the needs of consumers at different levels in the country, and to develop and produce products that are marketable.