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Europe's textile and garment production and sales may be reduced by 50% +, and the "Thunderbolt" of the industrial chain may only be a matter of time

This spring, the textile industry can be said to be "in the cold winter", and the upstream and downstream industrial chains are all damaged.

Zhejiang has a complete textile industry chain. In the upstream chemical fiber field, Tongxiang, Shaoxing and Xiaoshan are well-known production bases of new chemical fiber materials in China, with polyester fiber output over 16 million tons, accounting for one-half of the national total; in the midstream printing and dyeing field, the blue printing fashion town in Keqiao, Shaoxing, has gathered 108 printing and dyeing enterprises, with printing and dyeing volume close to one-third of the national total; in the downstream clothing and apparel field, 18 garment industries have been formed in the province Clustering.

"Even with a large downstream customer base, our recent sales have declined significantly." In Jiapu Town, Changxing County, where home textile enterprises gather, Zhejiang Keyi Textile Co., Ltd. is one of the few local upstream chemical fiber enterprises, and about 80% of the local textile enterprises are in the downstream.

Only a few kilometers away from "science and technology textile", the orders of downstream enterprises "Chengxin textile" have been reduced by nearly half. "Our products are directly or indirectly exported overseas, and the fluctuation of the international market has a great impact on us.

"Now, what worries me most is not the cancellation of orders, but the collapse of foreign distributors and partners in this epidemic." Referring to the risks in the overseas market, Zhang Jian, deputy general manager of Xinchang textile, said that during this period of time, foreign customers have been asking for a delay in payment, with the amount of more than 2 million yuan, and more than 6 million yuan of goods "floating on the sea" may also face the problem of "difficulty in payment collection". Not only that, Zhang said, at present, the company has only five or six hundred thousand orders in hand, only enough to maintain the production of the enterprise for more than 20 days, and almost no new overseas orders have been added since April.

Foreign trade: Europe's textile and garment production and sales may fall by 50% +, or affect more than 10% of textile and garment exports this year

According to Eurostat data, although the sales and exports of textile and garment industry in 2019 performed well, due to the economic recession in the EU and the brexit of the UK, the manufacturing industry needs to face uncertain tariff pressure, and the textile and garment industry in Europe has gone through a difficult 2019.

The European Association of garment and textile industries (Euratex) said the data for the textile and ready to wear industry were in line with the overall situation. Employment fell by more than 2% and turnover grew negatively for the first time since 2012-2013. Compared with 2018, textiles fell by 2% and clothing fell by 1.3%.

Preliminary results of the questionnaire show that more than half of the companies expect sales and production to decline by more than 50%. In addition, 90% of the companies are facing severe financial constraints, 80% of the companies will be temporarily laid off, and 25% of the companies are considering closing down.

Euratex said that the novel coronavirus brought about a sense of crisis, and felt pressure on the operation of the domestic market. EU countries control the border sharply, which leads to supply delay and order cancellation, thus aggravating the impact on the economy.

According to the General Administration of customs, in the first quarter of this year, the total value of bilateral import and export trade between China and the European Union reached US $75.19 billion, down 19.8% compared with the same period last year (the same below), which was 5.1 percentage points lower than the overall decline of China's foreign trade in the same period. Among them, China's export to the EU was 49.86 billion US dollars, down 22.1%; China's import from the EU was 25.33 billion US dollars, down 15.1%.

In the overall EU export data, the export of clothing and clothing accessories was 5.47 billion US dollars, down 8.8%; textile yarn, fabric and products were 1.8 billion US dollars, down 14.8%. In the first quarter, although China was also affected by the epidemic, it was basically back to work in March, and overseas orders returned to normal delivery. Therefore, compared with the overall data, the textile and clothing industry is still very good. However, despite the spread of foreign epidemic in the later stage, the decline of export data is affected by customs rejection, order cancellation, and delayed payment collection.

Throughout the year, according to customs data, in 2019, the EU imported 122.016 billion euros of textiles and clothing from outside the EU, up 3.91% year on year. Among them, EU imports 39.744 billion euros of textiles and clothing from China, a year-on-year increase of 2.0%, accounting for 32.6% of EU market share, and the import share is 0.6% lower than that in 2018.

In March, the sales of clothing, shoes and hats, and knitwear Enterprises above Designated Size fell 34.8% to 68.9 billion yuan, 390 basis points worse than 30.9% in January February. The industry and catering industry were the only industries that did not improve in March. From January to March, overall sales fell 32.2%.

The above expectation is also based on the gradual return of business activities to normal, and the current expectation for the recurrence of the covid-19 pandemic in this autumn and winter is still the consensus of most scientists and medical experts.

Under the above multiple attacks, the situation of global traditional textile and clothing retailers is more difficult. It may only be a matter of time before the store is closed. How long will the market impact last and how much will the impact be? I'm afraid it can only be known after the storm. For the textile market, it is not only the supply and demand of these two mountains. Capital, inventory and production capacity are all problems that need headache.