Orders Increase Profits, Counter Suits Enterprises Face Difficulties

Orders are growing and profits are getting thinner. This is the dilemma that many garment companies are facing recently.

Since the beginning of this year, cotton prices have been hitting a new record. Despite the recent easing, there has been little change. Some cotton companies believe that domestic cotton prices will continue to rise in August and September.

In the cost of garments, cotton yarn prices often account for 60%-70%. In fact, cotton yarn has increased by over 30% this year.

Labor costs are also rising.

Since the beginning of this year, more than 10 provinces and autonomous regions have raised the minimum wage standard, with an average increase of around 17%. In the second half of this year, there will be plans for more provinces to raise minimum wage standards.

At the same time, fuel power costs and pportation costs are also rising.

Take Guangzhou as an example, in the first half of the year, the purchasing price index of raw materials, fuel and power of industrial enterprises increased by 10.6%.

Regarding this, Sun Ruizhe, vice chairman of the China Textile Industry Association recently made a judgement: "the continuous rising of production factor prices in 2010 has become a prominent problem in the operation of the industry at this stage."

However, there are always two sides to a coin. The rise of cost brings pressure to many enterprises, but it also brings some new opportunities.

Opportunity first belongs to new raw materials.

Cotton and yarn continued to rise this year to promote the emerging raw materials market, some enterprises developed corn fiber, hemp fiber and other bio based fabrics, increased the bargaining space of clothing.

Moreover, these fabrics save more water and pesticides than cotton cloth in production process, which is in line with consumers' demand for low carbon and environmental protection.

With the increase of labor costs, automation equipment will get more opportunities.

Take the sweater industry as an example, most medium and small-sized sweater enterprises still use hand-held and semi-automatic flat knitting machines, and computerized flat knitting machines have great room for development.

In addition, 4S, the first high-tech clothing automation equipment store in China recently opened in Yiwu, Zhejiang, and is also an example of the trend of industrial intelligence.

Compared with the consumer's acceptance of the "hard cost" increase, the "soft cost" raises more space.

"Soft factors" will play a more important role in clothing brand sales such as culture, emotion, service and so on. It is necessary for enterprises to further develop their creativity and deepen their work.

The pformation and innovation of commercial channels is imperative.

China's department store industry has been using the mode of joint operation, factory entry and collection of various "entry fees" for a long time, resulting in a high price.

With the rising cost of clothing, the department store industry has come to an urgent need to change, and vigorously developing its own brand is the future trend.

At the same time, Oteri J, online shopping and other sales channels are stepping up the expansion of the site.

As far as possible to reduce the cost of the channel and give profits to consumers, the new business model with this direction will have greater prospects for development.

The opportunity of domestic enterprises is coming.

The price of raw materials goes all the way, which is a great pressure to the foundry enterprises, because they all take orders first, agree on the price and delivery date, and wait for delivery after production.

If the raw material is higher than expected after receiving the bill, it will not make money or even lose money.

Therefore, this year, many enterprises are more willing to make domestic sales orders, because the delivery cycle is short, easy to grasp the cost.

The opportunities for garment industry in the mainland are also increasing.

In order to minimize costs, many clothing brands have clearly indicated that they are more likely to look for factories that have received orders and R & D departments in the developed regions and manufacturing sectors in the mainland.

Clothing training industry should also be able to get a slice of the cake.

Many garment enterprises are not short of orders, but because they are short of work and single dares.

This "lack of work" mainly refers to the lack of skilled skilled workers, and domestic training for skilled workers is far from enough, many of which rely on factory training.

Standardized and professional training of garment technicians will be welcomed by many enterprises.