The off-season is like a dark cloud hanging over the textile industry in Jiangsu and Zhejiang. From raw material weaving to printing and dyeing garments, even the tricycle rolling shops on the roadside are waiting for orders. But for enterprises with heavy asset operations such as weaving and dyeing plants, the pressure is obviously much greater. The factories, equipment, and personnel that we were proud of in the past have all become invisible burdens. There is no work to be done when the work is started, and what is left can only be used as inventory; the pressure of stopping production is even greater, and it is difficult to breathe under the pressure of rent, depreciation, wages, etc.
Even if there is no profit, we must hurry up and stock up
The longer the delay, the heavier the burden will be on the gray cloth factory, especially now that the price of raw materials is relatively high. It fell a lot in the early stage. Now customers will take advantage of the drop in raw material prices to counter-offer when purchasing goods. However, in fact, the prices of raw materials used in the fabrics woven by gray cloth factories in the early stage are still high. It is neither a matter of selling nor a matter of not selling. The gray cloth factory is in a dilemma. Depleting inventory quickly and ensuring profitability may be what every factory dreams of.
Grey cloth factories with trading companies began to rise to prominence. In the past, the trading department would get gray fabrics from its own factory, and the price would be cheaper than outsiders but not the cost price of the gray fabrics. After the gray fabrics were printed and dyed, they would be sold to customers. There would be profit margins for both the gray fabrics and the finished products in the entire process. But now the market is deserted, orders are limited, and inventory is high. In order to grab orders and eliminate inventory, gray fabric factories actively give up profits from finished fabrics and only earn part of the profits from gray fabrics.
For traders without factories, companies integrating industry and trade are completely competing with them based on cost prices, and defeat is inevitable. If things go on like this, not only will orders disappear, The customers are gone too. Gray fabric factories are also miserable. Inventory takes up a lot of working capital, and the business risks are too great. Now they can still make some profits from gray fabrics. Even if there is no profit, they still have to take orders and sell inventory. After all, there is no sign of the end of the off-season.
The relationship between suppliers and customers is a bit turbulent in the dull market. The painstaking production and long-awaited large goods make suppliers face the God-like situation. Also a bit impatient when it comes to customers. “The proofing is here, but the large goods are made elsewhere.” I believe every supplier has encountered it. As long as the various proofs are out and the large goods are not seen for a long time, it will always feel like the customer has given the order to someone else. It’s hard to say it with your mouth, but a barrier is formed between you and your customers in your heart.
Customers have no orders, and life is no better than you
The fact that customers are having a hard time can be seen from the changes in payment methods. In the past, foreign trade customers usually paid before the end of the second month after shipment in the first month. For good products, payment was made at the end of the month after shipment at the beginning of the month. Nowadays, it is basically two months to start, and three months of payment is normal, and even 180 days of payment are available. Some domestic customers will not send money unless they are urged to a certain extent, which shows the lack of liquidity in the hands of customers.
Customers are not the source of orders; they also have suppliers. If the suppliers do not place orders, they will be helpless. It is understood that competition for orders from customers is also very fierce. Normally, when customers receive orders, they purchase finished fabrics from the Jiangsu and Zhejiang regions and then send them to garment processing factories across the country. The customers often do not have any processing factories under their names, and all are processed on behalf of others. They do not need to occupy a large amount of capital. The company has strong risk resistance and high profits. Guaranteed.
But now the market has reversed and the market has gone down, and the number of orders has dropped sharply. The “ceiling” of order prices has been forced to drop again and again, but the price also has a “floor”. For customers who do not have a processing plant, the height of the “floor” is completely in the hands of others. After all, the processing plant also has to ensure profits. Some customers who have invested in the establishment of garment factories in the early stage have more room for maneuver. By reducing costs and reducing profits, they can obtain many orders at low prices. In the end, orders gradually flowed to those customers with factories, while orders from other customers became less and less. This reduction was gradually reflected in the upstream weaving, printing and dyeing.
In general, everyone is having a hard time. , but the factory, which has always been regarded as a burden during the off-season, found another way out. By “cutting off the tail to survive” and giving up part of the profits, the factory can quickly consume inventory while “plundering” the market and “harvesting” customers. The survival space after the off-season may be infinite.
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