According to recent reports that Vietnam’s textile and garment industry has faced delivery delays and the risk of order losses, another textile powerhouse cannot hold on anymore!
Bangladesh: Exports have dropped significantly and the blockade will be gradually relaxed
According to the “Daily Star” report on August 11 , local export manufacturers in Bangladesh are facing increasingly prominent problems such as delivery delays and price increases. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), in order to avoid losses such as reduced shipments and inability to deliver on time due to re-intensification of the problem, have cooperated with Bangladesh textile mills The Association (BTMA) urgently held an online meeting.
The presidents of BGMEA and BKMEA proposed at the meeting that spinning mills should reduce yarn prices and maintain stable supply when export orders are growing rapidly. The chairman added that yarn prices have remained high since September 2020 and have become less competitive compared to other countries. A 20-count yarn that costs US$4.30 per kilogram in Bangladesh costs only US$3.24 in other countries, a price difference of 33%. Mohammad, senior vice president of BKMEA, said that the price difference between local 30-count yarn widely used in Bangladesh and imported 30-count yarn is 60-70 cents, and the price difference of some yarns even exceeds 1 US dollar per kilogram.
Large clothing retailer brands are also facing the same problem. Shahin Ahmed, owner of local fashion brand Anjans and president of the Bangladesh Fashion Designers Association, told Business Standard, “The prices of some fabrics have increased by 10 to 15 percent in the past few months. The cost will increase more. But I can’t increase the price of our products. Therefore, the profits will be reduced and some people will even have to calculate losses.”
In this supply chain, There are 5,000 companies in the country, including large and small fashion houses and designers. “These companies have an annual turnover of Tk 80-100 billion. However, their sales have dropped by more than half since the start of the coronavirus pandemic,” Shaheen said. “We estimate commodity prices by calculating the rising cost of raw materials. However, we are concerned as the recent lockdown in the country may hurt Eid al-Adha,” said Ashraful Alam, chief operating officer of Arong. Business.”
Entrepreneurs in Bangladesh’s textile industry said container charges, transportation costs, increased port charges, yarn quality and machinery also affect cotton prices. The gap between supply and demand is another factor. Demand for local yarn has also increased as imports from India, the main source of cotton and yarn, have fallen, they said. Md Alauddin Malik, president of the Bangladesh Inland Garment Manufacturers Association, said, “The owners of these garment factories cannot increase prices even though raw material prices have increased. Eid-ul-Adha sales are also uncertain due to the lockdown. “Our organization has around 6,000 members. These factories mainly produce clothing for the local market. “Since the outbreak of the new crown pneumonia epidemic last year, sales have dropped by about 70%,” he added.
In addition, due to the obvious economic downturn , the Bangladeshi government has gradually opened public places and transportation. At the same time, when the supply chain breaks and Southeast Asia is no longer a stable market, customers will transfer orders to other countries, which is a heavy blow to Southeast Asian countries. And early Previous reports stated that the COVID-19 pandemic has spread globally in 2020, and many Western importers have canceled contracts or delayed payments, resulting in the closure of many textile and clothing production plants in Bangladesh and a sharp decline in output. In addition to the impact of epidemic restrictions and the Eid holiday In July 2021, Bangladesh’s textile and apparel exports dropped by 11.02% year-on-year.
Reshoring of overseas orders? Domestic trading companies Be wary of big rumors and small rains
Recently, there is a very lively voice in the international community, which believes that with the surge in confirmed cases in India and Southeast Asia, manufacturing may return to China again. Some phenomena Reflected in trade, there is also the fact that the manufacturing industry is returning. A recent questionnaire survey by the Ministry of Commerce shows that about 40% of foreign trade companies’ newly signed export orders have increased year-on-year. It should be said that there are signs of improvement in foreign demand and the competitiveness of enterprises has increased. Overseas orders Reshoring has indeed brought unprecedented opportunities to small and medium-sized enterprises, but it has also brought considerable challenges.
Currently, from a domestic perspective, China’s foreign trade enterprises are facing four major difficulties , firstly, the efficiency of international shipping is low and the price is high; secondly, the fluctuation of RMB exchange rate has increased, and enterprises have appeared the phenomenon of “dare not accept orders, and exports are not profitable”; thirdly, the price of raw materials has risen, increasing the cost of enterprises; fourthly, in some areas Recruitment is difficult and labor is expensive.
At the same time, it is analyzed that the reason why last year’s orders were able to be smoothly returned is because European and American countries currently do not have exclusive policies for chemical fiber textile products with China except cotton fabrics. Policies are used to “protect” the reshoring of orders. Relevant sources from the company revealed that although domestic chemical fiber is currently in short supply, domestic factories do not increase prices when receiving reshoring orders. Moreover, peers do not believe that reshoring will continue and will not become a trend.
There are two reasons:
First, it is not expected that the epidemic will block large areas like last year, and it will only take time for some areas to unblock Problem.
Second, and more importantly, a large number of previous ChineseThe transfer of high-end textile orders from China to India and Southeast Asia is mainly due to the procurement transfer of international manufacturers driven by European and American governments. This wave of backflow is due to the epidemic causing factories to be unable to deliver on time. These European and American manufacturers have no choice but to transfer orders to China. Once the epidemic improves or for economic reasons, Southeast Asian textile production resumes, these orders will still flow to Southeast Asia.
In short, the current work of stabilizing foreign trade has not yet been completed, because the epidemic situation in many countries is rebounding sharply. If the rebound reaches a certain level, the entire external demand will shrink, and even some basic rigid needs will be affected. Therefore, the editor believes that with the return of orders, foreign trade companies should be cautious! </p
