Textile industrial news

Global textile industry: Rethinking and changing

Since mid March, offline textile sales in most parts of the world, especially in Europe and the United States and other important markets have been suspended, the global textile supply chain has been extremely damaged, and the extreme uncertainty of textile enterprises for future development has increased. In this environment, the third survey on the impact of the new crown epidemic was carried out by the International Textile Federation in late April. A total of 600 enterprises from Africa, America, Asia and Europe (including Turkey) participated in the survey. Recently, the International Textile Federation released the third investigation report on the impact of the global new crown epidemic on the international textile industry.

Order status: the number of cancelled and / or delayed orders rose to 41%

Since the first FIAF survey on the impact of the new crown epidemic in March, the number of cancelled and delayed orders globally has risen from 8% to 41%. The third survey confirmed the expectations of the first and second surveys that the crisis was global and had continued to deteriorate over the past four weeks. Companies in all regions have reported a large number of cancellations and delays. Only a very small number of enterprises adapt to the changing situation rapidly by producing personal protective equipment (PPE).

2020 turnover is expected to decline by an average of 33% compared with 2019, and global enterprises are expected to decline by an average of 33% in 2020.

Compared with the second survey, enterprises are more pessimistic about the outlook. European companies expect turnover to fall "only" by 22% in 2020, which is significantly better than the 33% reported in the second survey. Businesses in East Asia are expected to see a 26% drop in turnover, close to the second survey report (24%). On the other hand, the expected turnover of enterprises in Southeast Asia and South Asia has deteriorated significantly. These areas are relatively late impacted by the epidemic, so the impact of the epidemic is also delayed. Compared with 2019, the turnover of Southeast Asia and South Asia is expected to drop to 38% and 31% respectively in 2020. Africa, South America and North America expect little change in turnover.

Challenges and difficulties: uncertainty in the future brings heavy pressure to enterprises

At present, the biggest challenge and difficulty faced by the global textile industry is how long the epidemic situation will last and when the trade flow will return to normal.

Among them, to ensure sufficient trade liquidity is the most concerned issue of most enterprises. On the one hand, due to the cancellation and postponement of orders by many customers, manufacturers are unable to get cash flow. On the other hand, the recovery of enterprises in different countries is not synchronous, which affects the normal operation of the global supply chain.

In the medium and long term, the uncertainty of the future is a big problem. Many companies want to know what the post epidemic era will look like. What will the recovery look like? Will consumer spending recover as quickly as before? Will consumer behavior change because of the crisis? Because it is impossible to predict how long the crisis will last, the uncertainty of the future brings heavy pressure to the enterprises. Many orders have been cancelled or delayed, and few new orders. Will there be a second wave of covid19 infection in autumn and winter this year, leading to a second blockade?

At the same time, due to the increase of uncertainty, it is difficult for enterprises to plan production, and it is increasingly difficult to retain jobs and talents. They are worried that they will not be prepared to retain loyal customers when demand recovers. However, the current insufficient sales are further leading to overstocking of inventory in many enterprises, which may bring negative pressure on future pricing.

Looking for opportunities in crisis: Rethinking the current industrial organization

According to the survey, at present, many enterprises are considering diversification, focusing on medical textiles. In fact, the huge demand for personal protective equipment (PPE) provides a new market for some enterprises.

In addition, due to the dependence on foreign raw material supply and market demand, enterprises in some countries are considering to centralize production, simplify their organization and production process; reconsider the dependence on global supply chain, and promote enterprises to recognize the importance of local / regional supply chain, which will change the current pattern of textile supply chain.

The biggest expectation: win win cooperation and overcome difficulties together

In order to fight against the epidemic, many countries around the world have provided support policies for their enterprises, such as delaying tax payment, delaying social security payment, obtaining low interest rate loans and delaying repayment, etc. In some countries where electricity is provided by the government, enterprises can postpone the payment of electricity fees, etc.

In Europe, a very important tool for governments to support enterprises is the short-term work plan. The basic principle is that businesses lacking demand can reduce working hours, and a certain proportion of employees' wages can be paid by unemployment insurance. In this way, enterprises can retain employees and only pay for the reduced working hours. At the same time, compared with the original income, the employee's income level has not declined significantly (due to the supplement of unemployment insurance).

With the gradual control of the international epidemic situation, many enterprises in many countries hope to learn from the experience of China's resumption of work, expect to resume work on May 11 or the end of May, and the situation of unilateral cancellation of orders by retailers and brands will be gradually improved, which will promote the structural adjustment of international textile suppliers, win-win cooperation, and overcome difficulties together!