Hot Return Textile Orders In India: Mainly "Short And Small Bulk", Low Profit And High Delivery Risk

At present, India's new crown epidemic continues to be severe. According to the latest data released by the Ministry of health of India, as of 8:00 local time on May 13 (10:30 Beijing time), in the past 24 hours, there were 362727 new confirmed cases of new coronal pneumonia in India, and the number of new confirmed cases in a single day has remained above 300000 for 22 consecutive days, with a total of 23703665 cases confirmed; There were 4120 new deaths and 258317 deaths; 19734823 cases were cured; There are 3710525 confirmed cases.

India's new crown epidemic is rampant, not only dragging down the country's economic recovery, but also affecting the global supply chain of many industries, one of which is the textile industry. Recently, a large number of Indian textile orders to the Chinese market. However, the reporter investigation found that although it is true that many domestic enterprises have received some transfer orders, these orders are not as "beautiful" as imagined.

Xu Dong, the person in charge of a large textile enterprise in Shandong Province, told the China Times: "the return orders are not all placed by Indian customers, but by European and American customers directly, and some are transferred by Southeast Asian customers. Last month, we also received a small order. The production volume of this batch of orders is not large, but the delivery time is only three weeks, so the profit is not high. "

As for the return of orders from India, some textile export traders in coastal areas do not feel strongly about it. "These so-called backflow orders are mainly low-end processing products, and most of them are" small scattered short "orders. Therefore, we generally do not accept them. The profit is not high and the risk is high. Once the epidemic situation improves, these orders will be transferred back, If it's not good, I'll accompany my wife and break the army. " Zhejiang Ningbo Shuntong export trade Co., Ltd. General Manager Mr. Chen told our reporter.

One way transfer to China due to epidemic situation

Since April, the number of new crown confirmed cases in India has reached a record high. According to the World Health Organization, India had the largest number of new confirmed cases in a single day on April 23 and 24 in the world. On April 5, India had more than 100000 confirmed cases for the first time, more than 200000 on the 15th, and more than 300000 a few days later. So far, India's newly confirmed cases in a single day have been maintained at more than 300000 for 22 consecutive days.

As we all know, India is the largest cotton producer in the world, and the textile and garment industry is one of the largest sources of foreign exchange income in India. The textile industry accounts for about 15% of India's total export revenue. As a labor-intensive industry, textile and garment industry was seriously affected by the epidemic. According to the data provided by wozier consulting company, the absence rate of garment industry workers is as high as 50% in Delhi and Bangalore; Last year, the consumption and export of Indian clothing industry decreased by 30% and 24% respectively.

As a result, many international buyers have heard the wind and turned their orders to China. Tang Shuangshuang, an analyst with Huaxi Securities, pointed out to reporters that India's yarn production capacity accounts for more than 20% of the world's total. If Chinese enterprises can successfully win more lost orders from India, the domestic textile industry may also benefit from the Indian epidemic in the short term.

Market data showed that in mid April, cotton futures prices recovered 15000 points, and then rose steadily. In the last week of April, hesitating below 16000. However, after the May 1 holiday, bulls made efforts again, and finally on May 7, cotton futures successfully reached 16000 points and reached a two-month high.

After May 1, the price of cotton yarn also rose. The main contract of Zhengzhou cotton rose from 15530 yuan / ton to 16250 yuan / ton, and the cost of cotton yarn rose accordingly. In addition, India, Pakistan and other Southeast Asian countries "closed city" and unstable freight channels, not only led to the return of short-term orders, but also the long-term orders in Europe, the United States and Japan gradually spilled over. Domestic textile and clothing enterprises were worried about the decline, and the mood of receiving orders increased.

As a matter of fact, as early as October last year, India was on the verge of a second wave of epidemic, and many textile orders were turned to China. A textile factory in Hebei Province said that since September 2020, the company's overseas orders on the Internet platform increased rapidly, mainly from the Indian market. Orders for towels reached 2 million in one month, equivalent to twice the same period last year; A private enterprise in Jinhua, Zhejiang Province has received a large export order of hundreds of thousands of tablecloths from Zara, an international brand. This order was originally undertaken by printing enterprises.

Domestic color spinning dragon Oriental in the recovery of overseas orders and capacity expansion of double positive, the first quarter showed strong growth. According to the company's performance forecast for the first quarter of 2021, the net profit attributable to the parent company increased by 135 million yuan to 164 million yuan, with a year-on-year increase of 190% to 230%.

According to insiders of Blum Oriental, the company received a wave of return orders in the second half of last year. Since the fourth quarter of last year, the company's orders have been very good, close to full production. According to the production order scheduling, it is prudent to estimate that the performance in the first half of this year will be significantly higher than that in the same period of 2020 with a relatively low base, and even better than that in the same period in 2019 before the epidemic.

The accelerated transfer of orders also directly promotes China's textile and clothing exports. Data show that in the first quarter of this year, China's textile and clothing exports reached 65.1 billion US dollars (about 421.4 billion yuan), up 44% year-on-year. Among them, textile exports reached 31.81 billion US dollars (about 206 billion yuan), an increase of 40.3% year-on-year; Clothing exports reached 33.3 billion US dollars (about 215.5 billion yuan), up 47.7% year-on-year.

Backflow orders are mainly "short bulk small"

With regard to the news that a large number of Indian textile orders are rapidly transferring to the Chinese market, in the view of professionals, it is absolutely normal for multinational enterprises to adjust their order production globally and for international purchasers to select suppliers according to their production capacity.

Xu Dong told our reporter that despite the recent backflow of overseas orders, most of the contract prices of these orders are uncompetitive, and they are low-end processing products with low profits.

An industry personage also analyzed to the reporter: "as long as the upstream brand side cancels the order, it can return the whole body without paying the final payment. Such orders transfer quickly, and the buyer pays more attention to the price and delivery speed. When India's domestic production capacity recovers, whether the orders can stay in the country for a long time still needs to be further observed. The textile industry is a labor-intensive industry, which is highly sensitive to labor costs. In recent years, with the increase of labor costs in China, many brands have moved their factories to Vietnam and other Southeast Asian countries. "

What's more, this year's rise in raw material prices has squeezed the profits of enterprises. Therefore, even if the orders of many enterprises have increased, they are likely to lose money and earn money in the end.

The above Ningbo export trader Mr. Chen told our reporter, "last year, the profits of enterprises were still about 10%, this year may be less than 5% Therefore, at present, he is very cautious in receiving orders, and would rather not do it than lose money.

It is worth noting that due to the epidemic, some ports and logistics in Southeast Asia have been suspended. For example, the Indian container port kandera announced that it would close the terminal operation on April 24, and other ports in India and Thailand may be forced to stop by the epidemic. Therefore, in Xu Dong's opinion, Chinese enterprises should be very cautious in receiving orders from India, Myanmar and other countries. Due to the epidemic situation, port suspension, logistics suspension and other reasons, the buyer is likely to be unable to receive the goods on time, resulting in delay, breach of contract and even abandonment of orders.

Under the impact of the epidemic situation, the supply of India, the second largest textile manufacturer and exporter, has "flamed out", accelerating the opening of a new cycle of global textile and garment industry. China is the country with the most complete textile industry chain in the world, but its current advantages are mainly reflected in the stability and security of the supply chain, and the upgrading of the industrial chain in recent years has also enhanced the competitiveness of the textile industry.

In addition, according to the prediction of China Keqiao Textile index, although the export in the second quarter of this year will continue to grow, the growth will return to the normal level, and China's textile and clothing and other bulk commodity exports will continue to achieve recovery growth.

(source: China Times)

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