According to the Alibaba Judicial Auction Network, a textile company in Zhejiang named Zhejiang Loncin Textile Co., Ltd. held an auction with a starting price of 35,030,000 yuan at the beginning of this month, but failed to sell after 24 hours of being put on the shelves…
According to public information, Zhejiang Loncin Textile Co., Ltd. was established in 2009 with a registered capital of 50 million yuan. An enterprise mainly producing mid-to-high-end clothing fabrics such as white greige fabrics and imitation denim fabrics. The company owns 64 advanced Japanese Toyota air-jet looms, 96 Italian Shumet air-jet looms, and 3 American Sullair air compressors. , it is also considered a well-established enterprise in the local area.
Although there is no announcement online why the company went bankrupt, the continued poor market conditions this year was indeed the “last straw” that crushed many companies. In the first half of the year, affected by the super “black swan” of the epidemic, the global economic environment was weak, and the survival conditions of textile companies were much more difficult than in previous years. There were also many bankruptcy auction cases on Taobao Judicial Online.
What did the textile market experience in the first half of the year?
Epidemic, still epidemic!
The outbreak of the new coronavirus pneumonia epidemic in 2020 has had a clear impact on global economic activities. The domestic epidemic broke out in early February and was effectively controlled in early March. After March, economic activities in the domestic market gradually began to recover, and the domestic sales market recovered for a time in May. The overseas epidemic began to break out in mid-March, and many countries adopted blockade measures. Foreign orders in the market “disappeared” overnight. In May, countries began to restart their economies. However, due to the recent recurrence of the epidemic, the pace of placing foreign trade orders has slowed down again.
From the perspective of the global epidemic situation, American regions such as the United States and Brazil The epidemic situation in other countries is still severe, the epidemic in Europe is gradually easing, and the epidemic in India can be described as a “ticking time bomb.” Overall, the foreign trade market in the first half of the year saw a sharp drop in demand for fabrics due to the impact of the epidemic.
The textile fabric market, which relies on “30% domestic demand and 70% foreign trade”, is also “moving forward with injuries” in this “war epidemic”. As the domestic market enters the seasonal sales off-season, the lack of foreign orders has an increasing impact on enterprises.
“In the past half month, we really have no orders. We have opened fewer machines every week. Now we only open a few machines.” A knitted fabric manufacturer Mr. Wang, the boss of the company, said. In fact, the knitted fabric company where Mr. Wang works has more than 20 circular knitting machines, and sales have been relatively stable in previous years.
In his eyes, orders will continue to be placed whether it is domestic customers or foreign customers, so there are few holidays throughout the year. But this year the situation is different. Since the start of construction in March, orders from customers in the United States, Japan and other places have “disappeared” in the past. However, before June, the company’s domestic sales orders were relatively stable, with more than 400 orders shipped in more than two months. tons of fabrics, but in late June, the market took a turn for the worse, and Mr. Wang shipped less and less every day. In July, only a few tons of goods were shipped a week, and the number of machines in operation in the factory also increased from more than 20 to 15. 10 units…reduced to the current 4 units.
“This year, none of our American customers have placed an order for one meter. Recently, I have also communicated with customers that their own orders have shrunk severely. One customer said that the order volume has shrunk by 90%. , my order has come to nothing, I really can’t hold on anymore, and I have to prepare for a holiday!”
In fact, Mr. Wang’s experience is also the experience of many textile bosses this year. At present, the market shutdown and production reduction operations have begun to gradually begin.
Is there still hope for the market in the second half of the year?
Many textile bosses said that after the market has entered the off-season recently, inventory and financial pressure have doubled. On the one hand, the inventory accumulated in weaving factories continues to rise, and it is difficult to realize it; on the other hand, due to the continued decline of raw materials , downstream price reductions are frequent, resulting in stocks woven at high prices being sold at low prices, resulting in thin profits, which intensifies the operating difficulties of enterprises, and also leads to the market gradually starting measures to reduce production and suspend production.
According to a recent survey by China Silk City Network, nearly 200 textile professionals participated in the survey. More than half of the voters believed that the market will continue to weaken and were optimistic about the market outlook. Only 15% are optimistic.
Although the epidemic is gradually under control in the second half of the year, the Vaccine research has also produced good news from time to time, but according to predictions from the International Monetary Fund, the global economic contraction in 2020 will be comparable to the Great Depression. The situation of overcapacity and financial constraints in the entire market is difficult to alleviate in the short term.
We are currently in an era of “more monks and less rice”. In the brutal competition, some companies have to face the risk of being eliminated. However, the recent mid-term results of listed companies in the industry have ForecastAmong them, we also saw some bright spots:
Rongsheng Petrochemical’s recent financial report shows that in the first half of 2020, its net profit increased by 196%-221% year-on-year;
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The net profit of Hengyi Petrochemical, another leading polyester company, also rose by 82% in the first quarter;
Peacebird Apparel reported in the first half of 2020 It shows that the company achieved operating income of 3.216 billion yuan, a year-on-year increase of 3.09%, and a net profit attributable to shareholders of the parent company of 120 million yuan.
It can be seen that although the market environment is harsh, companies can obtain maximum profits by integrating the entire industry chain and reducing intermediate link costs, or they can increase sales channels by deploying online and offline development , showing its strong ability to resist risks.
The editor wants to say that the entire industry chain is still in the destocking stage in the second half of 2020. Weaving manufacturers will face the problem of inventory digestion. Enterprises need to balance the relationship between their own funds and inventory. , waiting for the global epidemic to end and demand to be substantially restored before bargaining power can be returned to the hands. The industry is currently in a “cyclical trough” and companies have to go through hard times. However, the second half of the year can also be said to be a good time for layout. As long as companies find suitable products, demand will still explode.
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