Weihai Clothing Trade Fair Faces Three Major Problems
Influenced by many factors, such as the acceleration of RMB appreciation, the substantial increase in production costs and the spread of the subprime mortgage crisis in the United States, the garment enterprises in our city closed a total of $41 million at the 103rd Canton Fair closed in April 30th, down 4.4% from the same period last year.
This is also the first negative growth of garment enterprises in Guangzhou since the "SARS" in 2003.
Due to huge cost pressure, exhibitors generally raised the price of products. But the price increases of products, the decline in volume, the settlement of the euro or the US dollar, the continuation of the road to foreign trade or the opening up of the domestic market - the plaguing of these three problems makes the representation of the exhibitors feel particularly complicated.
Raise the price or not raise the price.
After the increase of production cost, the price increase of the product is still not rising, which is undoubtedly the most troublesome thing for the garment enterprises of the 103 Canton Fair.
At the Guangzhou Fair, an import and export limited company set up a booth of 9 square meters, bringing the latest development of dozens of sports and leisure clothing to the meeting. I hope to harvest a large number of orders, but the result is very disappointing. Although many people are more interested in their products, there are few people who can really sit down and talk, except for some fixed customers, not to mention the on-site signing.
When analyzing the reasons for the unsatisfactory turnover, Mr. Song, manager of the Trade Department of the company, said that the price was mainly rising.
Mr. Song said that all the products they participated in the exhibition were raised by 5%, equivalent to $3 per suit. In fact, the price increase of US $3 has not yet taken into account all factors, such as labor production costs, price rise of raw materials and rising prices.
"Customers are aware of the situation faced by garment enterprises, but it is difficult to accept the increase in clothing prices." Mr. Song said that of course, customers would not want to raise the price. If they raised the price by only 1 dollars, they might be able to accept it reluctantly.
In April 29th, Zhang manager, a trading company in Weihai, told reporters that they also raised the price of clothing by 5%. And according to costing, raising 10% is just a break even.
Why should we do so if we know that raising 5% does not make money or even lose money?
Zhang explained that all garment enterprises across the country came to the exhibition. If the price hike was too high, they worried about losing their business. "So we have to take a compromise." Zhang said that an increase of 5% would only make the business less profitable.
Settlement in euros or dollars
With the continued appreciation of the renminbi, it is becoming more and more worthless to settle accounts in US dollars. At the Canton Fair, exhibitors hope to use the euro that continues to rise in value to settle the market risk. In this regard, some customers can accept, some do not accept.
"Generally speaking, European customers are willing to use Euro settlement, and customers in the United States, Korea, Japan and other countries usually use the US dollar settlement." On the morning of April 30th, Miao Xianglin, chairman of the silver embroidery company limited, told reporters.
Miao Xianglin said: "in fact, a few years ago, we and European customers tried to settle in euros. At present, the proportion of settlement in euros is 30% to 40%. They participate in the several hundred products of the Canton Fair, and the 80% is developed from the European Union market, whether from the variety or design style.
"During negotiations with EU customers, we all asked them to adopt Euro settlement. Among them, 60% to 70% of customers can accept it. Miao Xianglin said that the reason why customers can accept the euro is not because of product prices, but because of product positioning and quality factors. For a few merchants who cannot accept settlement in euros, they recalculate the price of clothing according to the exchange rate difference between the RMB and the US dollar.
In the interview, reporters learned that, like the silver embroidery company, product development positioning the European market, the use of the euro settlement of the enterprises are not many, more enterprises are still forced to use US dollar settlement.
Shao manager, a clothing company in Rushan, said that they also considered adopting Euro settlement, but it was wishful thinking and it was hard for customers to accept it. Only trade in the European market is settled in euros.
"Settling in US dollars is a bit like futures. After two or three months, the price is uncertain. But if there is a business, even if it is settled in US dollars, we still have to do it. It's better than a long vacation. " Shao manager reluctantly said.
Product exports or domestic sales?
"Orders for running volume must not be done." This is a statement from Zhang Zhongjie, manager of Weihai textile and Tai Trading Co., Ltd. after attending the Canton Fair.
Zhang Zhongjie said, at the Canton Fair, exhibitors of clothing enterprises generally feel the pressure of survival is enormous. The consensus reached here is that improving product quality and developing high value-added products will be the direction for the development of garment enterprises in the future.
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