Garment Industry Missed A Good Start In 2020

During the Spring Festival of 2020, a sudden new pneumonia spread throughout the country. It has disrupted the pace of life of the Chinese people and thus impacted the normal economic order.

Catering, retail, film and television, tourism and other industry practitioners have stopped under the outbreak.

Jia Guolong, the restaurant brand Xibei chairman, said that "20 thousand employees are unemployed, and loans can only be paid for 3 months".

The Guangdong food and Beverage Association's questionnaire survey report is more direct. If the difficulties of passenger flow and cash flow shortage are not alleviated in time, the restaurant industry will trigger a closed shop in 1-2 months.

The hotel accommodation industry is also at stake. Ji Qifa, founder of Hua Hua group, wrote that if the epidemic lasted for 6 months, the cost of all kinds of stores would be only 3 billion 600 million.

The film industry also ushered in the most coldest Spring Festival in history. The film was disconnected and the cinema was closed. Compared with past figures, the loss of the film market in 2020 was around 13 billion.

Hope that the housing prices return home market, the original plan has also failed. Central Plains real estate research center statistics show that from late January, the turnover of most developers fell by 95% compared with the previous Spring Festival.

Big enterprises are still so small businesses? To a broader industry scope, China's small and medium-sized enterprises account for 95% of the total number of enterprises in the country, and the number of employed persons accounts for 80% of the urban employment population.

Faced with the nationwide epidemic, the SMEs with low risk tolerance are most seriously affected. The problems of capital chain, market order, staff cost and so on, test the managers of enterprises.

In response to the economic impact of the epidemic, the government has also launched various supportive policies. Delaying social security payment, reducing rent and providing concessional credit support... From the central government to the local government, we should work hard to help enterprises tide over difficulties.

Chen Chunhua, a professor at Peking University's National Development Institute, believes that while preventing and controlling the epidemic, we must fight a war to prevent and control the failure of small and medium-sized enterprises. We should rely not only on the support of the government, but also on the efforts of the enterprises to save themselves.

"Winter clothes 90 percent off, spring clothes new low to 50 percent off."

Sales based on WeChat group have been increasing since February. In a clothing group in February 5th, Metersbonwe's distributors issued promotional posters and shopping links.

In the link, five hundred or six hundred of the original price is sold at 20~300 yuan after the discount.

Dealer Wang Jiang, while selling goods, said that all more than 100 of his stores were offline stores, and the epidemic was closed.

In the clothing enterprises of Henan, the women's trousers brand ESEY is known as the "electricity supplier master". Because of the epidemic, ESEY has also suspended the operation of more than 700 stores nationwide, with the highest loss of 30 million.

However, because electricity accounts for up to 60%, the online loss is far below the line, only 1/3 below the line. The electricity supplier has also become an important channel for ESEY to digest inventory.

Xu Weidong, who has many years of experience in clothing industry, is busy with the demand for docking protective clothing. Many garment enterprises accept the government's assignment and take the initiative to adjust the production line to help produce protective materials and materials.

A sudden disaster made the clothing industry's "winter" look particularly long this year.

Many brands were forced to suspend business. "Two quarter of spring and summer sales forecast loss of 30 million"

"Our marketing and sales will be greatly affected." Zhou Zhijun, director of marketing ESEY, said that because of the decline in sales during the Spring Festival, 40% of the original products were not picked up by the franchisees, plus we were manufacturing and marketing integration. The company had more than 2000 employees, and security was also a headache.

In addition to postpone the business hours from the eighth day to the sixteen of the lunar calendar, Zhou Zhijun said that after the commencement of the work, it will also be posted in batches to strictly monitor the health of employees.

While offline sales account for 40% of ESEY's clothing, Zhou Zhijun predicts that if the epidemic continues to the end of March, it may affect sales in the two seasons of spring and summer, with a preliminary estimated loss of 2000~3000 million, accounting for about 15% of sales under the annual line. At the same time, online sales are also affected, and the electricity supplier is currently down by about 10000000.

"The biggest problem brought by the epidemic is cash flow." Xu Weidong, chief academic officer of Shanghai East Zhou Fashion Institute, pointed out that no matter it is direct battalion mode or franchisee system, the biggest difficulty after stopping business is cash flow.

Since the end of January, many domestic and foreign brands began to suspend business as affected by the epidemic.

In February 4th, Nike announced that it will temporarily close about half of China's stores, and the remaining stores will shorten their business hours.

Nike expects its operation in China to be "materially affected" and the March earnings report will cover the relevant data.

The American classic Cowboy brand Levi 's Levi's parent company said that the company recently closed half of its stores in China, accounting for 3% of the group's revenue. This will have a negative impact on the short-term growth target of the group.

In addition, UNIQLO, Gap, H&M, YOUNGOR and so on also issued a notice of closure.

The industry has made an account for the clothing industry: brand clothing is the peak season for sales in spring, and sales usually reach -2 at the end of January at the end of January.

During the epidemic period, the line can not produce and sell normally, which will directly lead to the annual income impact of 8%-10%. If there are 150 employees in a company, the monthly salary, rent, tax, water and electricity will be accumulated for 1 months, and the loss will reach 100-200 yuan.

"SARS is too impressive. Fortunately, we made preparations ahead of time."

In December 25, 2019, ten days before the outbreak of the outbreak, ESEY apparel just completed the summer goods order meeting.

"In January 10th, Hubei's customers reflected the local situation, and the company immediately stepped up its vigilance." Zhou Zhijun sighed, "the SARS in 2003 is very impressive. Fortunately, we made preparations ahead of time."

Xu Weidong, who has worked as director of planning for Metersbonwe, has been sensitive to his experience for many years. Besides cash flow, inventory is the second mountain that clothing companies will face.

"Since 2019 is the warm winter itself, the inventory of the entire Chinese garment industry is quite large." Xu Weidong admitted that three to May is the peak of spring and summer sales. It is also a time node for the clothing industry to make an order for autumn and winter. If these two time points are affected, the challenge to enterprises will be greater.

Inventory control in advance has become the key to ESEY's loss reduction.

"SARS, all enterprises have no experience to deal with, no foresight, no other way for enterprises to endure." Zhou Zhijun was fortunate to have made psychological preparations ahead of schedule.

Zhou Zhijun introduced that, when ordering the meeting, when making the plan, ESEY could reduce the order consciously, but at the same time, it would guide the customer to order less, and only one style would be sold into one set, and then sold out to replenish the goods. In peacetime, customers have to reserve about 3 sets of one style.

"In the past year, it will be down to 40%, only 5% this year." Zhou Zhijun regrets that if those goods are once produced and the customers do not mention them, the impact on us this time is not 230 million.

Garment enterprises urgently need to produce emergency clothing and other emergency supplies.

"Textile and clothing are traditional industries, most of which are labor-intensive, and the shortage of labor force affects industrial production. The reduction of people's mobility will inevitably bring about a weakening of consumption. Wu Bingming, President of the Zhejiang sweater Association, admitted that the impact of the epidemic has intensified since Zhejiang launched a major public health emergency in January 23rd.

He once had the internet background, and he always hoped to promote the transformation and upgrading of the fashion and fashion industry to digitalization, networking and intellectualization, to maintain the integrity of the industrial chain, and to promote technological progress, reduce costs and increase efficiency, and enhance the ability to resist risks.

"Macro view, 2019 clothing is not optimistic, coupled with the year of the epidemic is even worse." Ma Gang, an independent critic of retail industry, has given the measures that the apparel industry is in urgent need of. Considering the channel structure of the enterprise, can it support the online sales + community pre warehouse + Guide Shopping micro sales? Considering the backlog of products, how to arrange the supply chain to reduce the loss of enterprises? Looking forward to considering functional and innovative products, we can develop 1~3 SKU products from the aspect of wearable protection in order to respond to emergencies under special circumstances, and establish a fast reverse supply chain to deal with the supply and demand of commodities under extreme conditions.

Ma Gang proposes whether protective clothing can be used as a permanent design for large service production enterprises and has flexible fabric preparation. "If clothing companies can take this problem into consideration, the protective clothing will not be so lacking."

In fact, since the outbreak of the epidemic, garment enterprises have begun to respond to the government's call for emergency supplies such as protective clothing, in addition to donations.

Red beans announced in the evening of February 3rd, will be in the "Jiangsu emergency medical supplies protective clothing, respirators emergency production and use of the approval documents" after the production of disposable protective clothing for medical purposes. The products will be subject to the unified allocation of the government and not to be sold externally. According to the estimation of red bean stock, the disposable medical protective clothing produced after mass production is about 60 thousand units / month, and the sales revenue involved is about 12 million yuan / month.

However, the stock of red beans suggests that compared with the company's operating income of 2 billion 483 million yuan in 2018, which is relatively small, and does not take profits as the main purpose, it will not have a greater impact on the business performance of the year.

According to the existing business scope of Hong Kong stock, the company can engage in manufacturing, processing and marketing of general labour protective articles and special labor protective articles. It is understood that the mature production technology of red beans has created favorable conditions for the rapid production of general protective clothing.

The red bean leader told Sohu finance that after the company launched the protective clothing project, the local 200 skilled workers were summoned to produce the protective clothing. At the rate of "second change", the western-style clothing production line was adjusted to the national urgent protective clothing production line. Because the workers had not done any protective clothing before, they needed related training and guidance. The initial mass production was 1000 pieces per day. With the improvement and process of the production process, the daily mass production can reach 7000. After the mass production, the general protective clothing production capacity is expected to be 200 thousand pieces / month.

At noon on February 5th, the 1000th general protective clothing produced by the red bean production was successfully sent to the Wuxi public security and city management on duty.

According to the red bean insider, it is possible to get relevant approval for producing disposable medical protective clothing next week. After the approval, tens of thousands of medical protective clothing will be sent to the forefront of fighting the epidemic.

In addition, Hong Kong stock has also stepped up production of medical masks during the SARS period, and the daily production of mask has reached more than 20. Referring to the reason why no mask was produced this time, red bean said that the company is still in preparation, and the coronavirus is different from that during the SARS period. The requirements for mask level and production environment are relatively high, and medical protective clothing and respirators need to be approved before they can be produced.

In January 27, 2020, YOUNGOR announced that it would develop new respirators for virus prevention, and will be put into production immediately after successful research and development.

In addition, China Qipai and Shandong Ruyi clothing brands have also been added to the production of protective clothing urgently.

"As far as I know, the clothing industry is still actively engaged in this piece. The strength of the people has risen, and we are confident that we will overcome the epidemic. " Xu Weidong is currently busy helping the government to meet the demand for protective clothing production.

However, according to his reflection, clothing enterprises at this time production protective clothing is not for the sake of revenue consideration. "For the powerful enterprises, it is not a big problem to carry on these months, so they are actively taking social responsibilities."

"Expect retail sales data to recover in 5-6 months".

2019 is the winter of the clothing industry.

According to the data released by the consumer goods industry division, in 2019 1-10, 13760 enterprises in the apparel industry (above 20 million yuan and above) had a total operating income of 13077 billion yuan, down 0.2% from the same period last year, and the total profit was 68 billion 500 million yuan, down 3.4% from the same period last year.

La Natsu Bell, a chain brand, has changed greatly since its listing 2 years ago. Last year it lost 2 billion 100 million or 4469 last year. The sports brand, the highest bird in 2019, lost 900 million yuan in advance, and faced two years' risk of delisting.

In addition, Taiping bird, Mei Bang dress, Ruyi group and so on are all facing the risk of net profit decline.

"The economy is at a standstill. I believe no industry will be affected." Xu Weidong believes that the challenge is even more frequent cash flow requires very large fast turnover industry, followed by a longer period of clothing industry.

Recalling the SARS in 2003, Xu Weidong sighed, "there are not so many friends circle information in SARS period. In fact, many enterprises were at the critical point of life and death. Many friends had talked about it, and if they were one or two months later, they would not be able to sustain it."

Pacific Securities, Orient Securities and Everbright Securities recently mentioned the impact of SARS on the clothing industry in June 2003. When the SARS epidemic came to an end, the growth rate of retail sales of clothing society began to pick up rapidly. In the 6-12 months of 2003, the year-on-year growth rate maintained double-digit growth. Assuming that this epidemic is from 3 months to the end of the peak, it is assumed that the impact of the new crown pneumonia is basically over in April. We expect to see a revival of the retail end data in May -6.

"The epidemic accelerated consumption to online channels, and online sales are relatively small." Huaxi Securities, Pacific Securities pointed out that different from the start of the electricity supplier in 2003, the clothing company's current electricity penetration ratio has reached 20-30%. In the long run, the apparel industry has gradually entered the stock market. The competitive advantages of high-quality leading brands are highlighted, and the risk of small and medium-sized brand operation is relatively large. The epidemic will lead to its accelerated withdrawal from the market.

"2020 was also a major market shuffle situation. Catching up with the epidemic situation will add some shuffling logic." Xu Weidong believed that after the war, there must be better and more viable enterprises to grow up. Now many powerful enterprises are small and micro businesses in those years. (Wang Jiang is a pseudonym)