The news of production cuts and shutdowns during the off-season has been around every year, but this year it came earlier and in greater quantities. As of June 19th, the overall operating rate of major domestic weaving production bases was only 54.16%, a decrease of 0.73% compared to last week. By subdividing the types of looms, the operating rate of air-jet looms is below 70%, that of circular knitting machines is below 40%, that of water-jet looms is above 70%, and that of warp knitting machines is below 60%.
As the temperature rises, the clothing consumption market enters the traditional off-season. The purchasing enthusiasm of downstream clothing enterprises has significantly declined. Although a few e-commerce orders are still being placed one after another, the overall sales pace of the greige fabric market has slowed down, and factory inventories continue to rise. Some factories are still mainly focused on taking orders and producing some regular fabrics for autumn and winter at present. There are still certain production reduction plans by the end of June.
Generally, after the "golden March and silver April", June, July and August are the traditional off-seasons for the textile market. It is not until the second half of September when the market conditions start to rise that the market returns to its peak season. Looking back at the operating rate curves of previous years, the weaving operating rate usually drops to the bottom between mid-July and mid-August. However, this year, as soon as June arrived, the performance of loom operating rates was already not optimistic, and this was the result of a slight increase in operating rates after the easing of tariffs between China and the United States in May. It can be foreseen that as time goes by and temperatures rise further, the operating rate will continue to decline.
The new regulations of the European Union have led to a sharp increase in testing fees, making it difficult for small and medium-sized factories to bear
The two new standards of the European Union, EN 71-18:2024 and EN 71-19:2024, have raised the safety testing standards for toys to a strict level. Garment accessory enterprises have been directly drawn into the center of the storm. Zippers, buttons, printed coatings, etc. all have to undergo stricter tests for the migration amounts of phenol and bisphenol A.
The owner of a company specializing in children's clothing fabrics in Shaoxing did the math: The cost of a single test has skyrocketed from 5,000 yuan to 12,000 yuan, directly eating up most of the profits from EU orders! Even more astonishingly, the new standard's requirements for temperature and the number of shakes have directly scrapped the original production process. A printing and dyeing factory in Wujiang gritted its teeth and spent 2 million yuan to update its equipment, while many small and medium-sized factories didn't even have the qualification to "pay the tuition fee", and could only watch helplessly as orders flew away.
New regulations in Brazil have put pressure on soaring dye costs and order defaults
Brazil's ABNT NBR 14725: The new regulation in 2023 can be regarded as a "nightmare" for the textile printing and dyeing industry. The major revision of chemical labels has directly led to a 30% surge in the import costs of dyes and auxiliaries! A medium-sized textile factory in Nantong fell into a big trap: a commonly used red dye needed to resubmit the SDS document due to the new regulations, and the certification period was as long as two months. This directly led to the delay in the delivery of foreign trade orders. Not only did it fail to make any money, but it also had to pay a 15% penalty.
Pakistan's new policy has led to zero profits and damaged its reputation
Pakistan's new 18% e-commerce tax policy has led cross-border fast fashion sellers to collectively "give up". A seller in Guangzhou who mainly deals in Muslim clothing cried out: After the platform deducted taxes, the profit plummeted directly from 12% to -6%! Even more magical is that the platform demands that suppliers reduce their prices by 15%, forcing factories to substitute cheap chemical fibers for inferior ones. In June, more than 20 small contract manufacturers in Dongguan went bankrupt one after another. The bosses smiled wryly, saying, "In the past, we sold at a low profit margin but in large quantities. Now, if we sell too much, we will surely die!"
Vietnam's covert policy battles and supply chain shifts have put it under attack from all sides
Vietnam's policy of requiring e-commerce platforms to withhold taxes and fees seems to target the domestic market, but in fact, it is "aimed at" China. 80% of the goods for e-commerce in Vietnam come from China. This policy directly raises the prices of Chinese goods and accelerates the shift of the supply chain to Southeast Asia. China's textile industry is in a difficult situation, having to deal with the domestic off-season as well as fend off international poaching.
Under the severe situation of both internal and external difficulties, internally, enterprises need to optimize their production structure, enhance inventory management capabilities, leverage digital means to open up sales channels, and explore new marketing paths during the off-season. Externally, the industry needs to accelerate the pace of technological research and development, establish a production system in line with international standards, and unite to deal with trade barriers. In the long run, only by breaking through technological bottlenecks through innovation-driven development and reshaping international competitiveness through brand building can we gain a firm foothold in the global textile industry chain reconstruction and turn this sudden "crisis" into an "opportunity" for the industry's rebirth.
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