In March last year, due to the rectification of water-jet looms in traditional textile clusters in Jiangsu and Zhejiang regions, there was a situation of “hard to find cloth” in the market. Conventional products are in short supply, and the market is full of orders. However, weaving companies are trapped in the lack of production capacity. Traditional textile cluster water-jet loom indicators are very strictly controlled, and the cost of increasing production capacity is too high, so there are plans to put production in peripheral areas. plan.
Traditional cluster production capacity is limited, but is there really hope in going out?
When you have an idea, the first step is of course to examine the feasibility of the idea. In April and May last year, the author learned that many weaving bosses organized groups to inspect the production conditions in peripheral areas.
Of course, the local conditions are naturally worse than those in traditional textile clusters. The supporting facilities are not so complete, and there are not so many skilled workers. Some even have to rebuild their factories from scratch. Construction begins.
Of course, there are advantages. The indicators in peripheral areas are not so strict, and the rent of factory buildings is also much cheaper.
What was the main contradiction at that time? It is the continuous demand for conventional products in the market and the production capacity that has been greatly compressed due to the renovation of water-jet looms. To put it simply, the market wants cloth, and weaving companies have been producing at full capacity, but they still cannot meet the market demand.
Some enterprising weaving bosses began the road to external expansion.
During the research process, we also discovered some interesting things. Some companies with 100 water-jet looms in traditional textile clusters often put them into production in peripheral areas. 2. 300 units or even more.
After looking for some owners of weaving companies who have invested in peripheral areas to understand the situation, we can also roughly understand their mentality:
On the one hand, at that time The market is indeed very good, so we add as many machines as possible within our capabilities;
On the other hand, once the scale is determined, it will be much more difficult to expand production in the future. ;
Of course, some people think that since production has been expanded, they might as well invest more, and feel they are losing money if they invest less.
An afterthought – the consequences of excessive expansion of peripheral production capacity
1. Financial pressure. Even if you make a lot of money in the early stage because the conventional products are easy to sell, if you need to expand production capacity several times at once, and some even have to build factories from scratch, the investment required is generally very huge. Without so much cash flow, the only option is to obtain loans, which puts heavy financial pressure on them.
2. Overcapacity. Since so much new production capacity has been added, the problem of overcapacity can be estimated. Of course, this is also the reason why the market was overdrawn in the first half of last year. More importantly, the investment cycle for water-jet looms is generally about 2 years. Previous news has shown that the number of water-jet looms in peripheral areas will continue to increase in the next two years. It is foreseeable that the overcapacity situation will not last long. short.
3. Product quality. The same kind of gray fabric produced by the same company will also have quality differences due to different factory locations. Due to the influence of factors such as worker proficiency, machine running-in, and supporting facilities, the average production level in peripheral areas still lags behind that of traditional textile clusters.
4. Differentiated products. Due to production levels, peripheral areas currently produce mostly conventional products, and some differentiated products with higher technical content are not involved much. Therefore, the current impact on such products is not great. In the survey , companies that produce differentiated products also generally say that they are not so greatly affected. However, except for the second-hand looms that were transferred out at the beginning, the factories that are newly put into production in the later period are basically new machines. After the technical level improves, the impact on differentiated products is expected to follow.
5. Sell goods and start work. Such a huge financial pressure is met with a mountain of inventory, and the products produced cannot make money, so the goods can only be sold at a low price. If the goods cannot be sold, the production can only be reduced. However, if the start of production is reduced, it will increase the time for the factory’s technical level to be improved.
If you can survive, you are a dragon; if you cannot survive, you are a worm
Due to overcapacity and high inventory of gray fabrics, current weaving bosses are having a hard time, and weaving companies that began to expand externally last year will have even more difficult times due to greater financial pressure. . According to statistics, the plan to put water-jet looms into production has reached 2020. It can be said that before 2020, the production capacity in the market will be excess. But how can we survive such a day?
1. It’s time to cut prices and stop production. If you really get the fundsWhen the gold chain is very tense, you must be more decisive in dealing with these problems. In today’s competitive environment, survival is the first priority.
2. Focus on developing differentiated products. After this round of production expansion, there is already an excess of conventional production capacity in the market, and profit margins are horribly thin. If you want to make a profit, you can only develop differentiated products.
3. Pay attention to talents and use the old to lead the new. What is the most expensive thing in the 21st century? Talent! At present, most of the newly put into production in the peripheral market are new machines. As long as the overall quality of production personnel is improved, product quality can naturally be guaranteed, and all of this requires talents.
4. Suspend expansion, cash is king. Under the current circumstances, whether we can survive this period of time, the most important thing is to see whether the cash flow is sufficient, reduce some meaningless investments, and put the funds into daily operations and improving the technical level, so as to make good use of steel. On the edge of the knife.
For many weaving bosses, the external expansion of water-jet looms may be the only opportunity in recent years that can “make a fat man out of one bite”. Before investing, they may We could also foresee the current overcapacity situation, but we finally made up our minds to put it into production. As long as we can survive the current difficult situation, the situation will soon improve greatly.
If you can survive, you will be a dragon; if you cannot survive, you will be a worm. Perhaps this is also the natural courage of those Chinese entrepreneurs who started from scratch.
If I could do it all over again,
Will cloth bosses who have invested abroad before make the same choice? </p
