What To Do After The Downturn Of Textile And Clothing Industry

[Domestic sales - China Business Information Center] In August, 50 key large-scale retail enterprises spin Products and clothing The retail sales of category A increased by 11.47% and 12.04% year on year, respectively, 2.78 and 5 percentage points higher than that of the previous month.

[Export - General Administration of Customs] China from January to August clothing Textile exports totaled USD 161.995 billion, down 0.70% year on year; The growth rate continued to decline by 0.49 percentage points from - 0.21% in January July, and the decline was further expanded.

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The slowdown of domestic and foreign demand growth began in the first half of 2011, which is rooted in the superposition of the domestic economic restructuring and the global economic operation entering the adjustment period.

Domestic demand has slowed down since the late second quarter of 2011. The monthly growth rate since 2012 has basically fluctuated at a narrow range of 10%:

The main reasons for the slowdown of textile and clothing consumption since last year are that consumption is closely related to the economy, enterprises are overly optimistic, stores are oversupplied, high priced products restrain demand, etc. These factors need time to change; From a micro perspective, many enterprises have experienced too long a "bull market", lack of crisis awareness, and only realized the market situation at the beginning of the year. Therefore, the adjustment of business strategies is lagging behind, which has increased the severity of the crisis to a certain extent. These are the main reasons for the sluggish consumption of domestic textiles and clothing.

From January to August 2012, the average year-on-year growth rate of clothing retail sales of 50 key large-scale retail enterprises in China was 10.8%, which was significantly lower than the average growth rate of 25.3% in 2011 and the growth rate of more than 20% in previous years. From January to July 2012, the monthly clothing retail sales and retail sales of 100 large retail enterprises in China grew at an average rate of 13.27% and 2.76% year on year respectively. These growth rates are partly due to the increase in discount promotions.

Overseas demand has been gradually impacted since the beginning of 2011 Textile clothing The year-on-year growth rate of monthly export volume shows a significant slowdown trend:

From January to August 2012, the cumulative export volume dropped 0.7% year on year, with clothing exports slightly better than textiles; From January to July, the cumulative export growth to the EU and the United States was - 10% and 11% respectively.

The US sub loan crisis and the European debt crisis have successively broken out, which has impacted the traditional largest export regions of China's textile and clothing (the United States and the European Union). Although the US economy has recovered, the rising trend of China's labor costs is irreversible, and the transfer of global textile and clothing production bases has begun, with a large number of orders flowing to Southeast Asia, India and other countries, The demand for Chinese products is still insufficient; The continuation of the European debt crisis is still hitting the consumption enthusiasm of the EU region.

We think there is little hope for the recovery of the industry this year: the golden age of textile and clothing exports has passed, and even if the European and American economies recover in the future, the growth rate will not pick up significantly; In terms of domestic sales, when the consumption of textiles and clothing slows down, the first half is the inventory stage, that is, the inventory of brands and channels rises significantly, but the industry chain often thinks that this is just a small band based on decades of bull market experience, and continues to maintain a certain amount of orders. As the market downturn extends, beyond the expectations of the industry chain, it enters the second half, that is, the store closing stage (now the movement Clothes & Accessories According to the China News and our terminal research, if the market downturn in the second half of the year is as we expected, the number of store closures may increase at the beginning of next year Textile and clothing retail The bottom of the plate may come.