In April, with the re-emergence of the COVID-19 epidemic and the uncertainty of the Xinjiang cotton ban, the textile industry is in urgent need of reshoring orders to save the market. However, is this “reshoring” also a hype? Are there really a large number of foreign orders returning to China?
1 Comparison of China-India textile and clothing trade data
China is more than sufficient to undertake return orders from India
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According to data from Longzhong Information: my country’s textile and clothing production and supply capacity is several times that of India. If orders return, the ability to undertake is not a problem, but the trade environment and price conditions still need to be considered.
1. India’s textile and clothing exports account for less than 5% of the world
According to World Trade Organization (WTO) data, China’s textile and clothing exports accounted for 34.04% of the world in 2019, accounting for 4.3%; my country’s textile exports accounted for 39.39% of the world, and India accounted for 5.6%; my country’s clothing exports accounted for 5.6% of the world’s total; The ratio is 30.71%, and India accounts for 3.5%.
2. India’s textile and clothing exports were -37% year-on-year and China’s textile and clothing exports were +7% year-on-year
In 2020, affected by the epidemic, India’s textile and clothing exports were US$21.67 billion, a decrease of 36.93% compared with the same period. my country’s textile and clothing exports achieved positive growth despite adversity. Its textile and clothing exports reached US$291.436 billion, a year-on-year increase of 7.19%.
3. India’s cotton export dependence is high, with 30-40% exported to China
India is the world’s largest cotton producer, and my country is the largest cotton consumer. About 30-40% of Indian cotton is exported to China, and it is highly dependent on foreign countries.
From 2017 to 2020, Indian cotton exports to China increased rapidly at an annual growth rate of more than 20%. In the first quarter of 2021, Indian cotton exported 129,995 tons to China. However, my country’s cotton self-sufficiency rate is high. Since last year, India has been unable to import cotton from China.
4. India’s yarn exports to China occupy the top three seats
India Spinning production capacity accounts for approximately 22% of global production capacity, and the combined spinning production capacity of China and India exceeds more than 65% of global production capacity. Our country not only has a large demand for cotton, but also has an equally large demand for yarn. From 2017 to 2020, Indian yarn exports have long occupied the top three places in China, but compared with my country’s yarn exports to India, there are very few.
2 Some companies have indeed received return orders from India
A large yarn company in Jiangsu is responsible for One person said: “Return orders are not all placed by Indian customers, but by European and American customers directly, or by Southeast Asian customers. We already received a small order yesterday. The production volume of this batch of orders is not large, but the delivery The delivery time is short, the factory is working overtime to produce, and will be delivered within 3 weeks.”
A relevant person from Blum Oriental said: “In fact, the company undertook a wave of reshoring orders in the second half of last year. Since the fourth quarter of last year, the company’s order situation has been very good. , operating at close to full production. Based on the order and production situation, it is prudent to estimate that the performance in the first half of this year will increase significantly compared with the same period in 2020, which has a relatively low base, and even be better than the same period in 2019 before the epidemic.”
3 Raw material prices have started to rise
Correspondingly, domestic cotton yarn prices have started to rise Price increase. A cotton yarn foreign trader in Guangdong: “In the past two days, the number of buyers inquiring about the price of weaving and fabrics has increased significantly. The quotations of OE yarn and C40S have generally increased in the market. Some spinning mills have increased their quotations by 500 yuan due to low raw material and product inventories. Yuan/ton.”
A light textile import and export company in Shaoxing said that in the past week, domestic, Indian and Vietnamese C40S cotton yarn shipments have been relatively good, and Pakistan’s 8S-16S Siro Spinning Yarn trading volume also bottomed out. As the quotations of Indian OE yarn, carded yarn and combed yarn fell slightly in both internal and external quotations, traders lacked the confidence to raise yarn prices.
With the strong growth of the textile and apparel industry, the prices of raw material commodities such as cotton have also seen a strong trend. The main cotton yarn 2109 contract price hit a historical high of 25,220 yuan/ton on March 2, 2021, an increase of 48.70% from 16,960 yuan/ton on March 24, 2020. Although the price fell back in March this year, it has recently started to rise in shock, with the closing price on April 26 being 23,275 yuan/ton. CITIC Securities’ research report on April 25 pointed out: “Affected by the good news, overall, cotton prices are expected to trend stronger.”
4 From May to June, the return of orders is expected to increase
According to the return of overseas orders last year, Demand for yarn, home textiles and other products is expected to partially return. It is expected that from May to June this year, domestic textile enterprises may usher in a wave of market conditions. Coupled with the stimulation of domestic demand during the 618 Festival, domestic textile enterprises may usher in a wave of market warming.
5 Order return = emergency order? Textile enterprises should beware of the “hype” trap!
However, based on the experience of last year’s return orders, this year’s return orders may also be “emergency orders”. Textile companies must be cautious and beware of falling into the “hype” trap!
An industry insider pointed out: “Upstream brands will not suffer any losses as long as they cancel the order, and they do not need to pay the balance. However, the downstream foundries need to bear the burden of raw materials, finished product backlog, inventory , employee wages and a series of expenses. In addition, return orders are transferred quickly, and buyers pay more attention to price and delivery speed. When India’s domestic production capacity recovers, it remains to be seen whether orders can remain in the country for a long time. In addition, with the As domestic labor costs rise, many companies have relocated their factories to Southeast Asia and other countries in recent years.”
And with the epidemic in India currently out of control, transferred orders may also flow to Southeast Asia and other countries.It is a textile powerhouse. After all, Southeast Asian countries have more cost advantages.
In addition, according to the China Cotton Storage Information Center, it remains to be seen how much support the production and sales situation of textile and garment enterprises will receive this round:
Firstly, most of the orders transferred from some Southeast Asian countries are “short, small and precise”, with the characteristics of short production delivery time;
Secondly, the orders are shipped through India, Enterprises in Bangladesh and other countries “change hands”, making the order contract price with very thin profits uncompetitive. Chinese foreign trade and textile and garment enterprises are likely to lose money and make a profit; in addition, even if European and American customers place orders directly with Chinese enterprises, they still need to increase the contract price. Price, otherwise it will be difficult for domestic trading companies and OEM companies to digest;
Third, some of the returned European, American and Japanese orders require that Xinjiang cotton products be prohibited, and domestic companies need to purchase imported cotton, cotton yarn, Gray fabrics, fabrics, etc. are arranged for production. If the orders lack sustainability, domestic textile and clothing companies will not be very enthusiastic about taking orders;
Fourthly, the recent strong appreciation of the RMB is not conducive to Textile and clothing export, receiving medium and long-term foreign orders. According to statistics, in just two weeks, the exchange rate of offshore RMB against the U.S. dollar rose from a low of 6.58 to 6.48, an increase of 1.54%, which put “huge pressure” on foreign trade companies and export-oriented enterprises.
6 Conclusion
“Crisis”, taken apart, “crisis” contains It is about “machine”, and “machine” also contains “danger”. When the epidemic in India collapses, some orders may be returned to relieve the urgent needs of domestic textile companies. However, when good news comes, textile companies should be more cautious, make reasonable judgments, and beware of falling into “traps”! . </p
