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The epidemic is still continuing, what can you foresee for export textile enterprises in 2021?

textile enterprise for export 1

The outbreak of Covid-19 has had a profound impact on world economic development in 2020.
In our country the first to contain the spread, and quickly implement comprehensive resume work and production shutdown of the background, through the joint efforts of the industrial chain upstream and downstream, the export of Chinese textile clothing enterprise to resist the impact of the international trade environment, not free the world, annual exports to achieve faster growth, become pull the important impetus to the growth of trade in goods.

China’s textile and clothing foreign trade enterprises have experienced a year of exercise in 2020, and their resistance to pressure has been significantly enhanced, setting up strong confidence for realizing the export target in 2021.

Looking forward to 2021, what challenges will China’s textile and clothing foreign trade enterprises face in export and what problems need to be paid attention to?

Expectations of yuan appreciation are worth watching

As China was the first to contain the epidemic, its economy recovered quickly and its currency appreciated.
Between June and December 2020, the renminbi began to appreciate, rising by more than 6,000 points against the dollar in seven months.
Looking ahead to 2021, analysts believe that international capital favors RMB assets, market forces should be in a state of strong RMB appreciation, and RMB appreciation is likely to continue in the first half of the year.

The depreciation of the dollar, the speed of the appreciation of the RMB affects the export of foreign trade textile and clothing enterprises.
“Export companies are signing orders in dollars, and if the renminbi continues to appreciate, some of these orders will have no profit to speak of, or even lose money.”
A person in charge of a medium-sized textile and clothing exporter from Jiangsu province said that combined with the pressure of rising raw materials and rising shipping costs, the operating pressure of enterprises has increased sharply.

A business official at a small foreign trade company in Zhejiang province that exports textiles such as face masks said the recent appreciation of the renminbi had cut profits by 7-8 per cent, with some of its products losing money.
The order received before can no longer raise the price, the loss caused by exchange rate fluctuations can only be borne by oneself.

A person in charge of a medium-sized enterprise specializing in children’s clothing export in Fujian said that in order to avoid the risk of exchange rate, the price of the enterprise’s export products has been raised by about 5%, and some customers can not accept the price increase, so the company has lost some orders.
“Some of our products have very thin margins, customers don’t want to take the risk of currency fluctuations, and companies can’t sell them at a loss.”
She said.

It is worth noting that some large foreign trade enterprises have adopted financial instruments such as currency lock-in and hedging to avoid risk, while small and medium-sized foreign trade enterprises lack the financial resources and professional skills to cope with frequent exchange rate fluctuations.
How to deal with the exchange rate fluctuations has become a challenge for small and medium-sized export textile and clothing foreign trade enterprises in 2021.
If the yuan continues to appreciate, it may also affect the good export performance since the second half of 2020.

In order to avoid the risk of exchange rate fluctuations, some professionals suggest that you can also choose RMB or appropriate foreign currency pricing and settlement, rather than relying too much on the US dollar settlement.
At present, some textile and clothing foreign trade enterprises have begun to try to use RMB settlement, in order to avoid the risk of dollar exchange rate fluctuations.
For buyers in Southeast Asia, China’s textile exporters have long been using the yuan for settlement.
In addition, there are many foreign trade real estate enterprises in Africa use RMB for settlement.
In recent years, the acceptance of the RMB and the scope of acceptance is getting bigger and bigger, it is worth the attention of export real estate enterprises.

The export potential in the post-epidemic era remains to be tapped

The year 2020 is a special year in which China’s textile and garment exports fluctuate greatly under the influence of the epidemic.
In 2020, the sudden outbreak of COVID – 19, let the world by surprise in the impact of SARS epidemic in many countries around the world, the market economy’s recovery was slow, our country should make full use of its advantages in system, timely stop the spread, export FangQi overcoming difficulties, immediately organize production and strongly epidemic prevention materials transport to all over the world.
Under the driving effect of global demand for epidemic prevention materials, textile exports including face masks in the first half of last year did play a greater role in promoting China’s overall textile and clothing export.
Subsequently, affected by the second wave, overseas production stagnation, China’s textile and apparel industry of the industrial chain of supply chain system is formed huge “magnetic suction” for some international orders flowing back, and quickly to undertake the important task of the to production orders in the world, starting from the third quarter of last year, many clothing foreign trade factory orders began to restore or saturated, appear even explosive situation.

So, in 2021, can this export momentum be maintained and continued?

First, international market procurement will return to the normal track as the epidemic improves.

Due to the strong and stable supply capacity of China during the outbreak of the epidemic, the major global export markets temporarily stopped the pace of purchasing abroad and returned the focus to China, and the international market share of China’s textiles and clothing recovered to some extent.
However, with the gradual easing of the epidemic, the European Union, the United States, Japan and other markets will turn their attention to ASEAN, South Asia, and countries and regions with geographical advantages, and China’s market share of products may fall.
Export textile enterprises need to focus on the change of purchasing trend, layout in advance, and do a good job in response.

Second, epidemic prevention materials are still an important force driving export growth.
At present, the world is still in the shadow of the epidemic and the situation is still uncertain.

Although the export of China’s epidemic prevention materials has fallen from the peak, it will still maintain the characteristics of large-scale and high growth, and will still be the main force driving the export growth.In many major markets, Chinese masks account for more than two-thirds of all masks imported to the country, with nearly three-quarters in the United States and Italy and 80% in Japan, according to WTO data.

Third, in the post-epidemic era, cross-border e-commerce platforms for textile and clothing will be further developed.

Influenced by the epidemic, online procurement and trading will become the main way for export textile enterprises to develop orders in 2020, and online exhibitions will attract more attention.
Some experts predict that foreign trade orders will be more fragmented, small orders will become the mainstream, pure trade type foreign trade enterprises living space will be narrower and narrower.
China’s foreign trade real estate enterprises, especially B2B foreign trade enterprises, should adjust the product line, repositioning the customer base.

“From the outside to the inside” to high quality benefits

At present, it has become the theme of China’s economic and social development to accelerate the formation of a new pattern of high-quality development featuring domestic circulation as the main body and mutually reinforcing domestic and international cycles.
Not long ago, nearly 70 foreign trade enterprises in Hunan participated in the “export products for domestic sales” exhibition and sales connection activity.
The purpose of this event is to give play to the guiding role of the government and the role of enterprises as the main body. With the help of the pilot market platform for new forms of foreign trade, we will help foreign trade enterprises cope with operational risks during the epidemic period, build a platform for domestic sales, accurately connect with domestic consumer demand, and support marketable export products to explore the domestic market.

In fact, as early as the Sino-US trade friction began, some textile and garment foreign trade enterprises consciously shifted their focus from foreign trade to domestic trade.
The person in charge of a fabric production enterprise in Zhejiang said that in previous years, their order composition is 80% foreign trade and 20% domestic trade, but last year, on the one hand, affected by the epidemic, on the other hand, is consciously to open up new customers, so gradually shifted the focus to domestic trade, domestic trade has accounted for more than 70% of the total trade.

It should be noted that the global economic environment is still deeply affected by the epidemic, and the textile and garment industry is faced with a slow recovery of the terminal consumer market. In particular, the poor overseas economy has led to the rising unemployment rate and the number of bankrupt enterprises in some countries.
Once the epidemic recurs, it is easy for foreign trade activities to press the “pause” button again.
Therefore, China’s textile and garment export enterprises should not put all their eggs in one basket. While developing overseas orders, they should also pay attention to the development of the mainland market, actively seek benefits from high quality and share operational risks.
The shift to high-quality development is the key to realizing a new pattern of “double cycle” development.

A large – scale textile clothing export enterprise from Jiangsu has done more in this respect.
In terms of external circulation, this enterprise, relying on the advantages of the complete industrial chain, has risen to the challenge, accelerated transformation and upgrading, and continued to enhance its competitiveness in the restructuring of the global industrial chain. Among them, the supply chain platform economic model has become a new highlight of the growth in the field of foreign trade.
It to the core of the transformation and upgrading of economic model for supply chain platform, two head extends to the industry chain, to enhance supply chain efficiency, actively organized using their own advantages, and other national and regional comparative advantage and market space, to promote supply chain extending and upgrading, shape the high starting point of intervention, the high-end link to extend new pattern of international division of labor.

In terms of internal circulation, this company gives full play to the advantages of domestic scale market, makes in-depth study of market trends, enlarges and strengthens the domestic market with advanced technology and high-end functional products, and explores new growth points.

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Business Director at Shanghai Fumao Clothing Co.,LTD

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