On April 18, the National Bureau of Statistics released the performance of the national economy in the first quarter of 2022. According to preliminary calculations, China’s GDP in the first quarter of 2022 was 27,017.8 billion yuan, a year-on-year increase of 4.8% at constant prices, which was higher than that in the fourth quarter of 2021. Quarterly growth was 1.3%. The overall data indicators are lower than market expectations, which is a reflection of the actual operation of China’s economy.
China is now in a fierce battle with the epidemic. The tightened epidemic prevention and control measures in various places have had a certain impact on the economy. The national level has also introduced various specific measures to speed up the resumption of work and production and smoothen logistics links. For textile companies, how much impact has the recent epidemic had on their production and operations?
Recently, the Jiangsu Provincial Garment Association conducted 199 online questionnaires on the impact of the recent epidemic on corporate production and operations, including: 52 key textile companies, 143 clothing and apparel companies, and 4 textile and clothing equipment companies. The survey shows that 25.13% of enterprises’ production and operations have “dropped by more than 50%”, 18.09% have “dropped by 30-50%”, 32.66% have “dropped by 20-30%”, and 22.61% have “dropped by less than 20%”. %, with “no significant impact” accounting for 1.51%. The impact of this epidemic on the production and operation of enterprises is so great that it deserves attention and attention.
under the epidemic
It turns out that he is the main difficulty facing the company
The survey shows that among all options, the top three are: “High production and operation costs” (73.37%), “Reduced market orders” (66.83%), and “Unable to produce and operate normally” (65.33%). The proportion of choices More than half. Others are: “It is difficult to collect accounts receivable”, “Enterprises need to pay liquidated damages because they are unable to perform transaction contracts on time”, “Financing is more difficult”, etc. Specifically:
(1) The cost of production and operation is high and the burden on enterprises is heavy
Mainly reflected in: the epidemic has caused transportation and logistics to be blocked. Raw and auxiliary materials, equipment and materials cannot come in, and products cannot go out. Freight rates have increased by as much as 20%-30% or more. The price of raw and auxiliary materials has also increased significantly; labor costs have increased year by year. Rigid expenditures such as social security are rising; the cost of rent is high; many stores are not operating satisfactorily and may even close; the cost of epidemic prevention for enterprises is increasing.
(2) Market orders decrease
Foreign markets: Due to obstruction of logistics and transportation, sample clothes and samples delivered to customers cannot be delivered in time, and customers cannot confirm them in time, which directly affects the placement of large orders. Noodles and auxiliary materials could not come in, causing orders to be interrupted. Goods cannot be delivered, and products are backlogged in warehouses. Customers are very worried about order delivery, and subsequent orders have also been affected. Therefore, a large number of foreign customers have stopped placing orders and are waiting to see. Many orders will be transferred to Southeast Asia and other regions. Domestic market: Due to the epidemic lockdown, orders cannot be fulfilled on time, foreign customers cannot visit the company normally, business personnel cannot carry out normal sales activities, and customer losses are serious. In terms of retail, due to irregular lockdowns, shopping malls and stores are unable to operate normally, traffic in various business districts has plummeted, customers are afraid to invest easily, and store decoration has been hampered. Affected by the epidemic, customers go shopping less often, wages have dropped, consumer demand has declined, and the domestic sales market has been sluggish. Online sales cannot be shipped on time due to logistics reasons, etc., resulting in a large number of return orders.
(3) Unable to produce and operate normally
During the outbreak, due to the lockdown and control, employees were unable to come to work normally, logistics was not smooth, and there were problems with the transportation of raw and auxiliary materials, finished products, etc., and the production and operation of enterprises were basically at a standstill or semi-standstill.
84.92% of surveyed companies
There are already great risks in withdrawing funds
The outbreak of the epidemic has three main impacts on the operating funds of enterprises, mainly in terms of working capital, financing and debt: 84.92% of enterprises said that operating income has decreased and working capital is tight. Due to abnormal production and operation, most companies have delayed order delivery, reduced order volume, and hindered online and offline sales. There is a great risk of capital withdrawal; 20.6% of companies are unable to repay loans and other debts in time, and financial pressure has increased; 12.56% of companies Short-term financing capabilities have declined; 10.05% of enterprises have reduced financing needs; 6.53% of enterprises face the risk of being withdrawn or having their loans cut off.
Pressure continues to increase in the second quarter
The negative effects on textile companies are gradually emerging
From the current point of view, the pressure faced by textile companies in the second quarter of this year is still increasing compared with the first quarter. Energy prices have soared recently and food prices have risen sharply. However, the bargaining power of textiles, clothing, etc. is relatively weak, making it difficult to increase prices. Coupled with factors such as the ongoing conflict between Russia and Ukraine and the tightening of the U.S. government’s ban on imported Xinjiang-related products, this has created a negative impact on textile companies.The bad news gradually emerged. The recent outbreaks and spread of the epidemic at multiple points have made the prevention and control situation extremely severe in the second and third quarters of 2022. The impact of “dynamic clearing” on textile enterprises cannot be underestimated.
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