Behind The Transfer Of Indian Textile Orders To China: Stay 2-3 Years At Most For "Emergency" Enterprises

Is it possible to change textile orders from "backflow" to "long stay"?

In the domestic textile industry, is blowing a "warm current".

In recent months, many large export-oriented textile enterprises in India have been unable to guarantee the normal delivery due to the epidemic situation, and many orders originally produced in India have been transferred to China for production, including towel and bed sheet.

Is this really the case? 21st century economic reporter recently interviewed domestic textile enterprises, and some enterprises said that they suddenly received orders originally from India.

For example, Luo Liangcha, the boss of Jiede Leather Co., Ltd., told the 21st century economic report that the company received a batch of orders transferred from India in August. Because of the serious epidemic situation in India, customers dare not produce there, so they chose to give the orders to his factory in Shandong Province for production.

This makes domestic textile exports continue to shine this year. On October 13, the new office of the State Council of the people's Republic of China held a press conference on the import and export situation in the first three quarters of 2020. Li Kuiwen, spokesman of the General Administration of customs and director of the Department of statistics and analysis, said that the export of textiles, including masks, reached 828.78 billion yuan in the first three quarters of this year, an increase of 37.5%.

But at present, these orders are mostly "emergency orders". These orders are hard to stay because of the labor cost. In the future, is it possible to change textile orders from "backflow" to "long-term retention"?

Returned orders

In recent months, China's domestic textile orders have been from the textile and clothing industry in the first half of the "cold winter" over, ushered in a new round of hot period.

Data show that the textile and clothing industry "turnover" is mainly in the second half of this year. According to the data, from January to August, China's textile and clothing exports reached 187.41 billion US dollars, a year-on-year increase of 5.6%, 1.3 percentage points faster than that of January July. In August, China's textile exports amounted to 14.72 billion US dollars, a year-on-year increase of 47%; and clothing exports amounted to US $16.21 billion, a year-on-year increase of 3.2%, achieving the first monthly positive growth in the year.

On the other hand, a lot of foreign trade orders have been transferred from India to other countries.

India is the world's largest cotton producer, the world's largest jute producer, the world's second largest silk producer, and its yarn production capacity accounts for 22% of the world. Textile income has always been one of the main pillars of India's economy and one of the largest sources of foreign exchange income in India. The textile industry accounts for about 15% of India's total export revenue. However, the textile industry has been shut down due to new crown pneumonia. As of October 13, more than 7 million people have been diagnosed with new crown pneumonia in India, ranking the second in the world.

In the 21st century, it is not the polyester futures that need to improve gradually in the 21st century. From the second half of the year, according to some feedback from downstream factories, overseas orders continued to increase.

He pointed out that as the largest cotton producing country in the world, the textile revenue has always been one of the main pillars of India's economy. However, as the domestic epidemic situation in India is still relatively serious and the cumulative confirmed cases are in the second place in the world, it is difficult for domestic textile enterprises to complete normal delivery. According to the data, India's textile exports have not recovered to the previous level despite the rebound since the bottom of May. And during the epidemic period, the demand for home textiles is relatively strong, which is one of the reasons for the excellent performance of domestic home textile orders in recent months.

The textile researcher of the agricultural products team of China Securities construction investment futures told the 21st century economic report that the transferred orders were mainly concentrated in the home textile sector. There are two reasons for this phenomenon: "first of all, China has strong control over the epidemic situation, and compared with other countries, it has the ability to undertake orders for resumption of work and production; Secondly, the domestic cotton price is relatively low, with the price advantage of low cost. "

In addition to home textile orders, some other foreign orders of textile industry are also transferred to domestic production. Luo Liangcha's company mainly produces handbags, bags, belts and other products. Around August, a customer suddenly sent a lot of orders originally in India to the company, mainly for purses and handbags.

So, part of the foreign textile and garment industry orders returned to China, how about the impact on domestic textile enterprises?

Zhu zhantian said that in the first half of this year, the domestic textile industry was basically in a stagnant state, especially in the foreign trade orders. The inventory of the textile industry has been accumulating. For downstream factories, both capital and inventory costs have brought great pressure on enterprises. With the restart of the European and American economy, superimposed orders are transferred to China, which is a big deal for downstream enterprises Good. According to their research on some downstream enterprises, they found that the demand for home textiles in large supermarkets in Europe and the United States is very large, because there was no replenishment during the epidemic period, which led to the depletion of the inventory of these household goods in the supermarket, so the strength of replenishment is very strong.

"After the cold winter in the first half of the year, the domestic market will usher in the best period of this year when domestic and foreign demand improves at the same time." He said.

However, Luo Liangcha said that at present, orders are returning and some special technical workers will be added to the factory to increase part of its production capacity. However, the saturation degree of orders is not very high on the whole.

Where will industrial upgrading go?

Although the export performance of the textile industry is excellent, for some return orders, the textile and clothing industry generally judges that it is "emergency order".

"I think it's more of an emergency. The fast transfer speed indicates that the currency nature of such orders is stronger, and the buyers pay more attention to the factors such as price and processing speed. Once India's domestic production capacity is restored and the domestic production cost advantage is reduced, whether the orders can stay in China for a long time still needs to be further observed. " China construction investment futures agricultural products team textile industry researcher said.

Zhu zhantian also said that the textile industry is a labor-intensive industry and is highly sensitive to labor costs. In recent years, with the increase of domestic labor costs, many brands have relocated their factories to Vietnam, Laos and other Southeast Asian countries.

Moreover, even if we accept these orders, it is not without risks. Zhu zhantian believes that it is still necessary to be vigilant against the recurrence of the epidemic. If there is a second outbreak of the overseas epidemic, perhaps these orders made by China will be delayed or cancelled again, or even no one will receive the goods after delivery. In addition, we also need to pay attention to India's own epidemic situation. If we can effectively control the situation, these orders will return to India.

Luo Liangcha is not optimistic about whether these orders can be retained for a long time. He estimates that it will be good for these orders to stay in China for 2-3 years. "It is not so easy to transfer these textile orders back, especially the leather goods industry is not highly skilled, so it is relatively simple to transfer them to foreign countries. The wages of Chinese workers will certainly be higher and higher. This is a trend. Southeast Asian countries still have labor advantages. I think these orders will be short-term orders. "

So, what do we need to do to maintain the international competitiveness of China's textile and garment industry? Industrial chain upgrading has become the main direction.

Zhu zhantian believes that China, as the country with the most complete textile industry chain in the world, has always been the leader in the competition. However, at present, our advantages are mainly reflected in the low-end products, rather than high-value-added products. Therefore, in the high-end field of textile, we still need to improve our own technology and technology to make up for the gap with developed countries.

According to the above-mentioned textile industry researcher of the agricultural products team of CSCI futures, although China's textile industry has industrial supporting advantages, under the background of environmental pressure and rising production and processing costs, some parts of the domestic textile industry will still maintain the trend of outward transfer. However, labor intensity is not the only spokesperson for the textile industry. In addition to cotton yarn, grey cloth and other commodities, downstream fabrics and clothing are more personalized. Design and style determine the product premium and sales speed.

To make up for the lack of new technology and optimize the development of labor force.

Luo Liangcha believes that the intelligent production of Ali rhinoceros is a direction, and it will definitely develop in this direction in the future. It does not reduce the production capacity of China's textile and garment industry, but increases the productivity efficiency. The efficiency increase needs very few people. This is a kind of manufacturing upgrading.

He believes that China's textile and garment industry upgrading is highly likely, both in terms of population development and technological development.

"After taking the present 00, his preferred job is definitely not to work as a front-line worker in the assembly line, but to do technical operations at most, such as programming and design." Luo Liangcha said that with the development of 5g, it will release a lot of labor force in remote areas with little cost. The same is true for the textile industry. China will not lose the textile and garment industry chain, but upgrade the industrial chain. This condition will soon mature in China.