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Facing The Common Challenge Of Global Textile Industry! Chinese And Foreign Textile Industry Experts Jointly Explore The Way Out Under The Epidemic Situation!

2020/7/31 10:24:00 2

On July 24, the video conference of the board of directors of the International Federation of textile manufacturers (hereinafter referred to as "IFN") was held at 17:00 Beijing time. Members of the board of directors and successive presidents of the International Textile Federation attended the meeting. The meeting was presided over by Cheng Qihe, President of the International Textile Federation and President of the Korea Fiber Industry Federation. It mainly discussed the industry situation, the annual meeting of the International Textile Federation (2020-2022) and the election of the board of directors.

Mr. Yang Zhaoping, former vice president and vice president of China Federation of textile industry, vice president of China Federation of textile industry, vice president of China Federation of textile industry, Mr. Yang Zhaoping, vice president of China Federation of textile industry, vice president of China Federation of textile industry, vice president of China Federation of textile industry.

At the meeting, Wang Tiankai exchanged views on the International Textile Federation 2020 conference and the participants. He said that the epidemic has caused a comprehensive impact on global production and demand, and maintaining the stability and security of the global industrial chain supply chain has become the common responsibility of the global textile industry. Under the current situation, the holding of the International Textile Federation 2020 conference as scheduled is conducive to the in-depth exchange and Discussion on the problems and difficulties faced by the industry, the development direction and outlet of the industry, the maintenance of the status and role of the international textile Union, and the solidarity of the global textile industry in the face of the crisis. At the same time, it is stressed that the key to the success of the conference - the topics and contents of the meeting - should be focused on on the basis of fully considering the feasibility of various conference forms at the technical and economic levels.

At the meeting, sun Ruizhe delivered a speech on the following topics.

On the industry situation, sun Ruizhe talked about the recent interview with the International Textile Federation (see below) on the impact of demand shocks on domestic export of Chinese enterprises; the three major challenges faced by Chinese enterprises since the outbreak of the crisis; how Chinese textile and garment enterprises cope with various difficulties after the resumption of work; and the medium and long-term impact of the new crown crisis on the global textile and garment industry The impact of the period is described in detail.

He further stressed that in the face of the crisis, the overall trend of the world textile and clothing industry for a long time will not change, and the historical trend of deepening global cooperation will not change. The medium-term and long-term impact of the new crown epidemic on the global textile and clothing industry is reflected in four aspects: first, the crisis will trigger the industry's new thinking on economic globalization; second, the crisis will promote the development of social responsibility of the industry to a new level; third, the crisis has pressed the fast forward key of the industry's digital economic development; fourth, the crisis will bring a new climax of the industry's scientific and technological innovation activities.

The theme of the online and offline meeting of sun Zhe is to give full consideration to the content of the meeting. To this end, sun Ruizhe proposed that the International Textile Federation should unite its members in the world, gather global think tank experts and industry leaders, focus on global issues such as geopolitics, terrorism, epidemic situation, climate change and social responsibility, digital economy, etc., which are having a profound impact and change on the industry. Through the annual conference, a global sharing platform, the International Textile Federation will send textile products to the world Join hands to open up a better future for industrial enterprises.

It is not only a proposal to rejoin the board of directors of the international textile industry in 2020, but also to inject more confidence into the world's textile industry Suhe development.

On the new normal of the global textile industry, the participants shared: due to environmental, political or economic reasons, the new crown epidemic has exposed the vulnerability of the global textile industry to unexpected supply and demand shocks. Both brands / retailers and manufacturers are aware of the need to consider the cost of such incidents and then adjust their purchasing and production strategies to reduce the risks and costs of such contingencies. This means that the future supply chain will no longer be centralized, but more regional. Therefore, compared with the situation before the crisis, the supply chain will no longer be inclined to optimal allocation, but will be more robust and more expensive. During the pandemic, the application of digital tools and solutions at the consumer and producer levels has improved. In addition, mass customization will play a greater role. Therefore, the future textile supply chain will be more demand driven, which will require more flexible interaction, closer and more transparent cooperation between brands / retailers and manufacturers. In addition, consumers are more aware of the economic and social consequences of global supply chain disruption, coupled with the challenges posed by climate change, and the increasing importance of sustainability in environmental and social issues.

The meeting agreed to hold another video conference of the board of directors of the International Textile Federation in September this year.

Sun Ruizhe, vice chairman of the International Textile Federation and President of the China Textile Federation, gives an interview with the International Textile Federation——

1st Question: In the first two quarters of 2020 the global textile industry has experienced an unprecedented global supply and demand shock. According to the ITMF Corona-Surveys the companies around the world are expecting turnover 2020 on average to be around -30% lower compared to 2019.

Were export and domestic markets hit equally by the demand shock when looking at Chinese companies?

The first problem: in the first two quarters of 2020, the global textile industry has experienced unprecedented global supply and demand shocks. According to the International Textile Federation new crown epidemic impact survey, companies around the world expect their turnover to fall by about 30% in 2020 compared with that in 2019.

For Chinese enterprises, is the impact of demand shock on export and domestic market the same?

Sun Ruizhe: the new crown pneumonia epidemic continues to spread around the world, which has a major impact on the global economic operation and market demand. China's textile and garment enterprises are greatly affected by domestic and foreign demand.

As far as the export market is concerned, since the middle and late April, Chinese textile and garment enterprises have generally faced with the situation of overseas customers canceling orders, demanding postponement of delivery and paying for goods at a discount. As the current situation of epidemic prevention and control has not been significantly improved, and the market demand has not been effectively improved, it is increasingly difficult for Chinese textile enterprises to obtain new export orders, and the export scale has also been reduced. According to China Customs data, China's textile and clothing exports totaled US $96.16 billion from January to may, a year-on-year decrease of 1.2%. Among them, the clothing export volume was 38.21 billion US dollars, a year-on-year decrease of 22.8%, indicating the low demand in the international market; the textile export volume was 57.95 billion US dollars, with a year-on-year growth of 21.3%. The anti epidemic materials such as masks played an important role in promoting the export growth. According to the white paper "China action against the new crown pneumonia epidemic" issued by the Chinese government, from March 1 to May 31, China sent 200 countries around the world Domestic and regional exports of 70.6 billion masks, which strongly support the global "anti epidemic".

As far as the domestic market is concerned, the Chinese government has taken a series of positive and effective measures to deal with the impact of the new pneumonia epidemic, and orderly promote the resumption of work and production. At present, the situation of epidemic prevention and control is basically stable, the production order of the industry has been basically restored, and the domestic demand market has gradually recovered. However, it is still facing the pressure to restart commercial activities and stimulate consumption vitality. According to the data of China's National Bureau of statistics, since March, the year-on-year decline rate of China's total retail sales of consumer goods has gradually narrowed, with a year-on-year decrease of 13.5% from January to may, a decrease of 7 percentage points compared with January February. However, due to the fact that the retail sales of textile and clothing products are not fast consuming necessities, the recovery degree is not as good as that of food and daily necessities. From January to may, the retail sales of clothing, shoes, hats and needles and textiles of units above the national quota decreased by 23.5% year-on-year, while the retail sales of grain, oil and food increased by 13.4% and that of daily necessities increased by 2.5% over the same period. From January to may, the retail sales of online wear goods decreased by 6.8% year-on-year, 11.3% lower than that in January February.

2nd Question: What were the 3 biggest challenges companies in China were faced with since the start of crisis?

Second question: what are the three major challenges facing Chinese enterprises since the outbreak of the crisis?

Sun Ruizhe: first, the uncertainty of development prospects continues to remain unchanged. Although the epidemic situation in Germany, Britain, France, Italy, Spain and other European countries as well as South Korea, Japan and other Asian countries has been effectively controlled, the United States, Brazil, India and other countries have not seen signs of improvement. This brings continuous uncertainty to the international market recovery and supply chain remodeling.

Second, the international textile and clothing supply chain is broken and unbalanced, which makes it more difficult to rebuild. The epidemic situation has strengthened the basic characteristics of geo economy, and global value chain cooperation is under pressure. The original production and marketing channels are not smooth and the product price is lower, which increases the pressure of capital turnover and increases the risk of capital chain fracture.

Third, the domestic and international market demand is seriously insufficient, and recovery will take time. Many foreign trade enterprises adjust their strategies and make efforts in the domestic market, but they still lack of orders, which leads to the reduction of the utilization rate of production capacity, the accumulation of inventory, the heavy burden of costs and expenses, and the significant increase of business pressure.

3rd Question: China was the first country that was hit by the crisis. It was also the first country where the partial lockdown of the country was lifted and shops reopened. Other markets like Europe or North America were hit much later by the pandemic.

How did the Chinese textile and apparel industry weather the crisis since the end of the lockdown?

Third question: China is the first country to suffer from the impact of the epidemic, and also the first country to lift partial blockade and reopen shops. Other markets, such as Europe or North America, have been hit after the pandemic.

How to deal with the textile industry restrictions after the end of the blockade?

Sun Ruizhe: in response to the realistic pressure after the restart, the innovation practice of China's textile and garment enterprises can be summarized into three aspects. The first is to resume production in an orderly manner, complete the production and delivery of orders in hand, and gradually arrange new production tasks. In this process, it is very important to invest human and material resources to do a good job in the prevention and control of the epidemic situation within the enterprise, so as to avoid the occurrence of mass infection. The common measures adopted by enterprises include: providing enough masks according to the number of people on duty, setting up temperature measuring points, temporary isolation and medical facilities, regularly disinfecting the workshop and public areas, adjusting the number of employees' dormitories, taking turns to dining in the canteen or catering to the working position.

Second, in the case of insufficient demand, strive to tap market demand and obtain new orders. Chinese textile enterprises have generally strengthened the construction of online channels, and made up for the deficiencies of offline channels through mode innovation such as live delivery with goods and cloud exhibition. Based on the high cost performance product supply chain, live e-commerce can effectively stimulate consumer demand by strengthening interactive experience and consumption scenarios. Clothing products are the largest category in the live delivery. Live e-commerce is becoming an industry outlet with good results. Some qualified textile enterprises have switched to production of masks, protective clothing and other epidemic prevention products to win space for coping with the impact of the epidemic. Many enterprises have extended to the field of health protection products, developed new fiber materials and products with antibacterial and health functions, and transformed into epidemic prevention products such as masks and protective clothing, and made good profits. Many foreign trade enterprises actively promote the adjustment of export to domestic sales.

Third, strengthen internal control and strive to reduce costs. Optimize the internal management process and resource allocation, strengthen inventory management, capital chain management, improve the quality and efficiency of operation, cost control, etc. At the same time, we should make good use of the burden reduction and relief policy issued by the Chinese government to reduce the tax and social security expenditure burden.

As a public service organization, China Textile Industry Federation actively acts as, guides and helps enterprises adapt to changes.

The first is to carry out the special monitoring on the resumption of work and production, timely understand the difficulties encountered by enterprises in the process of returning to work and production, strive to coordinate the upstream and downstream resources of the industrial chain, restore the coordinated operation of the upstream and downstream of the industrial chain, and promote the enterprises to return to work and production; and feed back the policy demands of enterprises to the relevant government departments. After the enterprise returns to work, it is necessary to strengthen the dynamic monitoring and analysis of the production and operation of the industry, and continue to pay attention to the possible difficulties.

The second is to help enterprises develop the market and enhance their competitiveness. Trade fairs, fashion week, technical exchange meetings, business training and other industry activities will be fully online, and with the help of the Internet platform, enterprises can meet the market demand and obtain the development resources they need.

4th Question: In the 4th ITMF Corona-Survey which was published in the middle of June, companies were asked when they expect to reach pre-crisis levels again. Most companies expect this to be in the first or second quarter of 2021.

Do you share this view?

Fourth question: in the Fourth International Textile Federation new crown epidemic impact survey released in mid June, companies were asked when they expected to return to pre crisis levels. Most companies expect this to be in the first or second quarter of 2021.

Do you agree?

Sun Ruizhe: the production and operation of enterprises are closely related to the global macro situation. At present, the new epidemic situation continues to spread, climate anomalies occur frequently, trade protectionism is on the rise, and geopolitical conflicts are deepening. These factors are superimposed on each other and are profoundly affecting the world economic and social trend. In the future, there will be greater uncertainty in the development of the global economy. From the current information, the world economy is expected to resume positive growth in the first half of next year, but whether it can return to the level before the outbreak of the epidemic remains to be seen.

The operation status of individual enterprises largely depends on their own strategy, operation ability and competitiveness. Some enterprises with core competitive advantages have grasped the recovery period after the improvement of the epidemic prevention and control situation, and even found new market space in the epidemic situation. They may be ahead of the macro-economic situation and start to pick up. Of course, there must be some enterprises which have suffered great impact in the epidemic and are relatively difficult to recover. However, if enterprises want to recover and develop faster, they must integrate into the general trend of economic globalization and strengthen practical cooperation.

5th Question: It was stunning to see that so many cancellations/delays were reported since the start of the crisis. According to the ITMF Corona-Surveys, orders have dropped by around -40%. Many buyers were referring to so-called “Force Majeure Clauses”. Others were working with so called “Open Accounts”. In both cases the risks were distributed unevenly to the disadvantage of the suppliers.

What are options to prevent such a tsunami of cancellations/delays in the future.

Fifth question: it's shocking that so many orders have been cancelled / delayed since the crisis broke out. According to the International Textile Federation new crown epidemic impact survey, orders fell by about 40%. Many buyers are using the so-called "force majeure clause" or "open account". In these two cases, the risk allocation is uneven, which is disadvantageous to suppliers.

What are the options to prevent future tsunami of order cancellations / delays.

Sun Ruizhe: at present, China Textile Federation mainly adopts two measures to help enterprises cope with large number of cancellations of orders

The first is to give targeted measures and suggestions. It includes suggestions for export enterprises to standardize the contract text, collect deposit according to the contract, and use export credit insurance for export contracts; it is suggested that the local governments and industry associations with conditions should organize public welfare legal aid activities, and give professional legal aid to export enterprises suffering from refund and delivery delay; and it is suggested that qualified enterprises should be sold to the domestic market in an orderly manner.

The second is to launch the supply chain initiative. For example, in April 2020, During the implementation of the "Star" initiative, all the potential textile manufacturers in Asia should consider the impact of the global textile industry on the procurement behavior of all the potential textile manufacturers We should abide by the letter, understand each other, negotiate and cooperate to tide over the difficulties together.

6th Question: How were textile and apparel companies directly and indirectly supported by the government?

Sixth question: how can textile and garment enterprises get direct and indirect support from the government?

Sun Ruizhe: the Chinese government has issued a series of measures for all enterprises registered in China, including wholly foreign-owned enterprises and joint ventures, to help enterprises cope with the impact of the epidemic. These measures mainly include phased exemption of part of social insurance, allowing enterprises with financial difficulties to apply for deferred tax and social security, and periodically reducing the price of industrial energy. The support measures issued by the Chinese government are aimed at all industries at the same time, and there is no policy measure to support textile and garment enterprises alone.

7th Question: What are the medium-term and what are the long-term consequences of this crisis for the global textile and apparel industry?

Seventh question: what is the medium and long-term impact of the crisis on the global textile and garment industry?

Sun Ruizhe: no matter whether the situation of epidemic prevention and control will be substantially improved in 2020 or 2021, people's demand for textile and clothing products will gradually return to normal level with the improvement of the situation, which is the most fundamental influencing factor for the development of global textile and clothing industry. In the face of the crisis, the overall trend of the world textile and clothing industry for a long time will not change, and the historical trend of global deepening cooperation will not change.

The long-term impact of the new epidemic on the textile industry is reflected in four aspects.

1. This new economic crisis will trigger the thinking of the new industry.

The important consensus brought by the epidemic is that mankind is a community of shared destiny. Global problems cannot be solved without global cooperation. The realization of human well-being depends on the development of globalization. Although the global value chain cooperation is under great pressure in the epidemic situation, the basic structure and practical basis of the world textile and clothing industry chain and supply chain cooperation have not changed. Facing the common crisis, most countries are more willing to strengthen industrial cooperation. Promoting trade globalization and liberalization has become a common aspiration. In this context, the global textile and clothing industry will continue to establish new cooperative relations, the industry chain, supply chain cooperation will be closer.

2. This crisis will push the development of social responsibility of the industry to a new level.

As an important supply department of people's livelihood products and epidemic prevention materials, the characteristics of good value and responsibility development of textile and clothing industry are strengthened in the epidemic situation. The depth of the integration of the whole enterprise's responsibility system and the whole industry's social value chain starts from the integration of the whole industry's production and service chain. In the future, it will focus on the development of low-quality industry and supply chain, pay more attention to the development of global environment-friendly industry, pay attention to the development of low-quality industry and supply chain in the future Open operation promotes the fairness and justice of the whole society and the all-round development of workers.

3. This crisis pressed the fast forward key of the industry digital economy development.

Digitalization, networking and intellectualization are the general trends of global economic and technological transformation. The outbreak of the epidemic has widened the social distance, formed market isolation, and caused a huge impact on the physical channels. The real pressure is forcing the global textile and garment enterprises to accelerate the integration of online and offline, and promote the digital transformation of resource organization mode and market connection mode. On the one hand, enterprises are speeding up the integration of physical systems and information systems in the production field, developing intelligent manufacturing with the support of intelligent equipment and industrial Internet, and promoting the lean and flexible upgrading of the supply chain. On the other hand, enterprises are actively promoting channel integration and mode innovation, improving the breadth and depth of e-commerce applications, and developing new formats and modes such as live marketing, community marketing, cloud exhibition, etc.

4. This crisis will bring a new climax of technological innovation activities in the industry.

Scientific and technological innovation is reshaping the development mode and industrial boundary of global textile and garment industry, which determines the international division of labor and competitive advantage. The spread of the global epidemic has made the strategic value and status of science and technology fully demonstrated. Science and technology has become a key factor affecting global industrial governance and enterprise decision-making, and is the highland of industry development and competition in the future. In the medium term, if enterprises want to hedge the impact of the epidemic and create market demand, they need to strengthen product innovation and production innovation with scientific and technological innovation to form a supply of "high efficiency, high quality, high responsibility and low cost"; in the long run, in order to ensure industrial safety and independent control, more attention will be paid to basic research and original innovation of the industry, especially fiber materials and textile intelligence Innovation in related fields of strategic industries such as equipment technology.