China'S Apparel Industry Suffers From High Inventory Pressure

In the high storage vortex, the risk of enterprise capital chain fracture increases.

In order to digest inventory, clothing enterprises or crazy discount sales, or use e-commerce platform to clean up inventory, and some also alleviate pressure through wholesale channels.

Experts point out that the promotion of profits can only be an emergency. In the long run, it is necessary to strengthen product innovation design, reduce homogenization and set up a detailed inventory control process, so that enterprises can get out of the predicament.

"If we sell the clothes that are currently in stock in the country, we are afraid that we will not be able to sell them in three years."

The evaluation of the industry, though exaggerated, depicts the current situation of China's clothing industry facing high inventory pressure.

Lining, who has been listed.

"Big guys" and some small and medium-sized enterprises have been trapped in the "going to stock" and discount "sell" the whirlpool.

Experts point out that promotion and profit making can only be an emergency. In the long run, we should strengthen product innovation design, reduce homogenization, and set up a fine inventory control process so that enterprises can "sell one for one" instead of "buy one for one".

Inventory high fever IPO road is difficult

Inventory is a common problem in garment enterprises, and it is also a "fatal injury" of garment enterprises.

"To see who can make money in this industry, it depends on whose inventory is cleaner."

Gao Jianfeng, managing director of Boge consulting, said that from now on, sports and casual clothing enterprises are most "hurt".

Especially for sportswear, due to the restrictions on design and material selection, the phenomenon of homogenization is serious, and many domestic brands are not clear, so the competitive advantage is being weakened. For these enterprises, going stock is more important and urgent than acquiring new orders.

Lining recently released the 2012 fourth quarter order conference data, including clothing products orders and orders amount fell more than 20% year-on-year.

The company admits that in order to avoid generating new inventory pressure on the retail side, it will actively communicate with the distributors, control the order arrangement, and plan to clean up the retail inventory in the next two years.

Due to the high inventory of whirlpool, the risk of enterprise capital chain breaking is even higher, which, to a certain extent, makes the market worried about its operation ability and even doubts.

In recent years, many garment enterprises in China are rushing to apply for IPO, but many of them are excluded. Stock rate has become a focus of attention in the market.

In May of this year, Hai Lan's IPO, a man's wardrobe, was called "folding wings".

According to its prospectus, inventories totaled 3 billion 870 million yuan at the end of 2011, accounting for 56.94% of the total assets, of which 1 billion 520 million yuan was in stock.

and

The clothing companies such as Lady house, Shu Lang dress and so on are not high, and the stock rate is also high, most of which exceed four or five of assets. IPO

Where does "inventory haze" come from?

In recent years, many domestic clothing enterprises seem to have concentrated their inventories at once. What is the "haze of inventory" coming from? "It's hard to survive the financial tsunami but to meet the European debt crisis."

Ma Gang, an independent critic of garment industry, pointed out that human resource costs, rising raw material prices and changes in the trade environment made the business environment of garment enterprises "sudden change" in recent two years.

The export orders of some garment enterprises have declined sharply this year. A large number of hoarding goods are forced to be sold domestically, coupled with the economic downturn and relatively weak consumption, resulting in a large backlog of stock.

Insiders pointed out that in the economic downturn, the turnover of product inventory slowed down, which not only occupied the operational capital, but also led to the failure of enterprises to update their products. Without new products, there would be no way to attract more customers, and their performance would go down seriously, thus exacerbating the difficulties of capital turnover, or even eventually leading to the end of the whole business.

In addition, most garment enterprises in China adopt the "order meeting" mode of supply, produce products six months to a year in advance, and rely mainly on downstream distributors rather than consumers to provide market information. The judgment of the consumption situation of enterprises is often too optimistic because of information asymmetry, and the output of products is far greater than the actual market digestibility.

Leisure, sportswear and so on belong to the mass fast moving consumer goods. Once the season is over, they will depreciate rapidly.

Moreover, the characteristics of clothing enterprises are to constantly introduce new products, and they can not clean up their inventory before putting them into production again.

The result of continuous replenishment production is that the stock is getting bigger and bigger.

Semir clothing, Hai Lan home, Lining and other brands are promoting discount activities to different levels to digest inventory, some brands even new products are on sale.

Crazy promotion is like drinking poison to quench thirst.

In order to digest inventory, clothing enterprises or crazy discount sales, or use e-commerce platform to clean up inventory, and some also alleviate pressure through wholesale channels.

But the industry also pointed out that behind the discount sales, the marginal effect is decreasing, and it is easy to damage the brand image.

"Even if there are fresh cases around, enterprises will continue to drink poison to quench their thirst."

Gao Jianfeng said that for many enterprises, under the pressure of high inventory, brand image has not become so important. How to digest inventory and obtain capital flow and survive is the most important issue.

Experts believe that in the past few years, the market is in a period of radical expansion, and clothing brand enterprises have been "running horses" to seize the site.

Today, the market has begun to "moderate", enterprises can no longer rely on "volume" and should take the initiative to change the mode of operation and management, in a more robust and finer way of process control.

CIC consultant light industry researcher said: "in the long run, clothing enterprises must reduce the homogenization competition of products, strengthen product design innovation, and establish an effective inventory control system."

Garment enterprises should change their fixed order patterns, adopt a more flexible supply chain, and adjust the orders that have not been delivered in time according to market conditions, so that the products can match the market demand more.

At the same time, we should learn from overseas excellent enterprises, design and promote sales rather than simple foundry and sales.