The countermeasures of foreign trade yarn spinners amid the pandemic

As everyone knows， Chinas textile industry has always been led by the export of textile foreign trade. It is the main force to obtain foreign exchange and drive the coordinated development of textile-related industrial chains. It is the year when the “13th Five-Year Plan” closes. Suddenly out of control in the European and American pandemic， the economy began to shut down. It can be said that the domestic textile industry is the hardest hit by overseas pandemics. The cancellation of foreign trade orders in Europe and the United States flew like snow flakes， and there was a rare winter in the textile foreign trade industry. How to seek opportunities in crisis， adjust strategies， upgrade industries， spend the pre-dawn darkness， and step into a new world is the top priority of textile people.

The pressure is too much， beyond the stress

Pandemic interrupted normal delivery in foreign trade to impact fashion retails characterizing a strong seasonality. The well-known companies in the industry were also confronted with temporary difficulties in spite of their corporate strength and diversified operations. Now it seems that the pandemic will take a long time to end， companies first consider how to survive.

China produces 60% of the worlds finished apparel products， accounting for 70% of Chinas foreign trade surplus in its net export earnings. The closest integration with this industry chain is the international brand foundries. The owners of these factories these days are extremely anxious. The boss of a foreign trade enterprise in Keqiao， Shaoxing， said that the impact of the overseas pandemic was fatal. With the reduction of European factory orders， inventory backlogs， and half of the payment may not be received， many factories cannot maintain the cash flow for three months. Due to the worsening of the pandemic， the severe depression in the European and American markets is difficult to recover in the short term. In order to survive， some brand companies began to lay off employees. The boss is worried， the employees are even more worried， and they are forced to “take a holiday” because of the cost reduction. The income is obviously reduced， and the normal pace of life is disrupted.

The pandemic disrupted the business rhythm of textile enterprises

A 120，000-spindle cotton spinning factory in Jiujiang， Jiangxi is a manufacturer specializing in foreign trade. Even though the cotton textile industry has been in a downturn in recent years as a consequence of the Sino-US trade war， it has little effect on the cotton spinning factory. The profit per ton of yarn is higher than its peers by 1，000 - 2，000 yuan. There has been no loss for more than ten years. The products are exported to Europe and U.S. more， some to Africa. However， the pandemic impact inflicted the company basically with no orders， and the obstruction of domestic logistics， in particular， made the company suffer serious losses in the first quarter of this year.

Production has basically returned to normal so far. But before that， it was hit twice： as the cotton futures were hit by three meltdowns of U.S. stocks， the price of cotton futures fell from 14，300 yuan/ton to 9，930 yuan/ton， and the spot price fell by nearly 3，000 yuan/ ton. The average price of more than 1，500 tons of stocks is 14，150 yuan/ton. Due to the pandemic situation， more than 1，000 tons of Xinjiang cotton cannot be transported back， resulting in an average loss of about 3，000 yuan per ton of yarn. The second impact was that the goods could not be shipped out or the foreign orders were cancelled and logistics blocked. There were only sporadic small orders and the payment time was more than 3 times longer.

Speaking of the experience of cotton procurement， the general manager was very emotional， Xinjiang cotton payment has been paid before the Spring Festival， Xinjiang can not deliver the goods after the Spring Festival， the driver to transport goods needs to be isolated. The person in charge lamented： The one-size-fits-all management of the pandemic disrupted the production rhythm of the enterprise. The pandemic policies in different provinces were different， and the staff on duty delayed for nearly a month. For example， the cotton area in Xinjiang is sparsely populated， and even stricter restrictive measures are taken than in the any other place in the country. Logistics stagnation has a great impact on operations.

What we are doing now is the order before the Spring Festival， but it is estimated to be difficult in the second half of the year. Considering that the current production is a loss， plus the cancellation of several major customer orders， the output is temporarily reduced by half. Unless the global pandemic situation is controlled from April to June， it will be unsustainable. What worries me most is the extent to which the U.S. pandemic has developed. If the U.S. economy is as predicted by some economists， the severity of the recession will greatly exceed the 2008 financial crisis. In particular， at least one third of the cotton spinning companies may not survive this time.

The current situation of textile enterprises

Many textile companies such as cotton mills do not directly trade， but rely on group-owned textile companies that are well-known in the industry for the international market to do OEM processing. According to the WTO forecast， the economic recession and unemployment will be more serious than in the global financial crisis 12 years ago， and trade is expected to decline severely. The pandemic disrupted the rhythm of global production， life and market， consumption contracted sharply， and overcapacity intensified. The author interviewed several cotton mills， the situation is indeed grim.

A cotton spinning factory in Jianhu， Jiangsu， has the last batch of 500 tons of OEM processing orders provided by Sanyang after the Spring Festival. Because the equipment can only be used for conventional pure cotton varieties， the cotton price fluctuates sharply， and the yarn price falls continuously， facing the risk of loss. The original open-end spinning equipment was basically unable to produce due to the low market price of yarn. All openend spinning manufacturers in the surrounding areas of Jianhu stopped. There are laid-off maintenance workers and operators looking for work. Acrylic core-spun yarns and differentiated yarns， which were once more popular， in the past， have no orders yet.

There are the following problems in the cotton spinning mills around Jiujiang， Jiangxi： 1. The triangular debts are reappearing， and no payment can be received； 2. Jiangxi is close to Hubei， and Hubei personnel cannot return to work at the beginning of the resumption of work； 3. In addition to the normal opening of a factory in Jiujiang， seven or eight other factories with 20，000 – 30，000 spindle mills are temporarily on holiday （half a month to a month）， and the situation is re-determined； 4. The inventory backlog has approached the limit， and production has been limited to 50%， and customers cancel orders. Suppliers dare not take credit， factories dare not produce， and they have no cash to buy raw materials.

How to survive under the influence of the pandemic

Risks and opportunities coexist. Although the domestic economy has been improving for a long time， the mid-term risks of the world economy are expected to be on the downside. It will take time for the market to recover. Actively adjust the response， preserve strength， and fight against the long-term uncertain risks. Shareholders， investors， and partners of the large textile enterprise companies unite to support the company through the once-in-a-century difficulties. They are well prepared for orderly development.

Models of small and medium-sized cotton spinning companies

The pandemic has the same impact on all textile companies， but the end result is different. Dafuhao Textile returned to work on March 12. After the Spring Festival， the companys orders have been arranged until the end of April， with orders for Vietnam， South Korea， Japan， the United States， and a small amount in Europe.

Their success： First， they selected key domestic high-quality enterprises and carried out key quality researches based on customer technical requirements， most of the high-end products were mainly 50S - 80S， and the total production accounted for 70%； second， they produced differentiated conventional varieties while maintaining the balance of production capacity and customer demand， the total production accounted for 30%； third， they adhere to the differentiated and high valueadded business ideas.

Of course， if the global pandemic is not effectively controlled in June， the Dafuhao Textile will also face future inventory and capital pressure.

Pay attention to the risks of switching to the production of medical pandemic prevention products

Facing the sudden pandemic situation， many garment fabric foreign trade enterprises switched to pro- ducing masks and other pandemic prevention materials. At the same time， some masks produced by unscrupulous merchants were unqualified， leading to a large number of masks shipped to Europe and the United States recalled. For this reason， the Chinese Ministry of Commerce issued standards. From April 1， Chinas anti pandemic materials are only certified by the European Union and the United States， and cant be exported without Chinese registration！

Sober-minded people in the industry are well aware of the fact that the quality of some of our medical products does not meet the high-end standards is also a factor worth paying attention to. The European and American standards for medical products are currently a higher international technical threshold， and will be released as long as they are demonstrated. Otherwise， the “CE” or“FDA” certification you think may lead to the inability of customs clearance at the destination port， resulting in huge fees such as fines and logistics， transportation and storage.

Online live broadcast to expand domestic demand channels

The pandemic has changed consumer habits and consumer demand. For the textile industry， the strong domestic market needs good channels， and online live broadcast has become an important choice worth trying. Live broadcast is not only selling goods， but also can achieve multiple functions such as multi-channel access and efficient member management， helping to improve the brands refined operation capabilities. Facing the difficult situation， various apparel companies are actively seeking countermeasures. Most business owners said that the current primary goal is to survive first and wait for the recovery of consumption after the pandemic.

Pre-judgment of foreign trade layout in advance

In order to reduce export risks， while adjusting the export direction， we started to develop innovative products. The newly developed products of Shaoxing Gaogu Import and Export Co.， Ltd. are favored by overseas brand apparel manufacturers and can be mass-produced immediately.

Go through tough times with a positive attitude

The introduction of loose economic and monetary macroeconomic policies

Not long ago， the G20 video conference was held， and it will launch a USD 5 trillion stimulus economic plan to deal with the negative impact of the pandemic on global society， economy and finance， which will boost market sentiment. Interest rate reduction and quantitative easing at the level of monetary policy have become the core of many countries economic response measures. Emerging economies are no exception.

Simultaneous development of domestic and foreign markets， waiting for the recovery of the international market

From the perspective of stable operation of textile enterprises， upgrading of industrial structure and balanced economic development， due to the increasing spread of pandemic situation in textile export areas， temporarily losing the European and American markets， it is necessary to improve the layout of the textile industry chain in Southeast Asia， while opening up the domestic industrial chain and supply chain. The focus of foreign trade will be more on the maintenance and expansion of customer channels， to expand the domestic consumer market， and to wait for the recovery of the international market.

Strengthen confidence and overcome difficulties

In view of the many factors that affect the current restrictions on the resumption of production of textile enterprises， textile enterprises need to think in multiple dimensions， make full use of various sales channels， diversify the consumption field， tap the potential of internal and external markets， and orderly increase the capacity utilization rate. Textile enterprises must build confidence， believe in the central government， and firmly win the confidence of winning the battle of pandemic prevention and resumption of production. It can be expected that the market will be difficult to improve in the first half of this year， and preparations for long-term fighting should be made.

The COVID-19 pandemic is a disaster for mankind， but it is also an opportunity for the transformation and upgrading of the global industrial chain. China should seize the opportunity of some European and American industries to halt and economic recession， speed up the investment and ensure the healthy development of industrial chain clusters. When the foreign market recovers， we will further strengthen international cooperation， expand the scale and quality of industrial clusters， and drive the global industrial chain. The foundation of Chinas macroeconomic long-term improvement will not change. Domestic macroeconomic policies will focus more on stabilizing growth and preventing risks， and will place the improvement of the policy environment for small and medium-sized private enterprises in a more important position. In response to the impact of the pandemic， the state has begun to introduce various support policies to help enterprises gradually ease their operating pressure. CNTAC proposed to the relevant government departments as soon as possible to ease the pressure on the capital turnover of the enterprise， further reduce the burden on the enterprise， and continue to guarantee the resumption of production and other policy recommendations， and suggested that the policy plan for starting domestic consumption and stabilizing the competitiveness of export products after the pandemic was researched and deployed in advance. We will work together to overcome all difficulties and meet a new future.