Overall outbreak of inventory crisis in the apparel industry

At present, the apparel market stocks are facing a crisis. Under the impetus of the European debt crisis and the slowdown of domestic economic growth, the large number of small and medium-sized enterprises in the Pearl River Delta have been in trouble, and how should they transform? NetEase.com has conducted multiple surveys in the Pearl River Delta region and selected a number of representative industries in an attempt to present to users the difficult situation faced by a large number of SMEs.

Guangdong's garment production still maintains its status as the country's largest producer of clothing, but it has seen negative growth. This year, the entire industry has experienced an inventory crisis. The relevant research report pointed out that in the international market downturn, rising operating costs and other factors, the average operating rate of garment enterprises in Guangdong is about 75%, and nearly 20% of the companies operating rate is less than 50%.

Orders plummeted corporate profit margins were only about 3%

"Now the clothing is too difficult to do, orders continue to decline, the cost is getting higher and higher," Kobayashi believes that this is the most difficult period she has been engaged in in clothing wholesale for three years.

Three years ago, Kobayashi and her boyfriend rented a stall of only 5,6 square meters at Guangzhou Shisanxing to engage in clothing wholesale business.

Guangzhou Thirteen Banks is a professional firm that established foreign trade in Guangzhou in the Qing Dynasty. It is now a famous clothing wholesale center in Guangzhou. Those who have visited the thirteenth row used “hiccups” to describe the scenes of the place. People arranging accent came and went hurriedly. The packaged wholesale large bags transported the goods and the small self-occupied household took several pieces of goods.

But now, many stall owners are worried about their future.

At three in the afternoon, Kobayashi has returned from the stall of the thirteenth row to his home near Guangzhou Baiyun Cultural Square. She told Netease Finance that it would close at 2:00 pm and the business was not as good as it used to be. Kobayashi is engaged in the wholesale of T-shirts and designs his own business. In the two years prior to entering the business, the business was decent and this year it has become increasingly difficult.

Kobayashi told Netease Finance that in the past, during peak season, nearly 20 new T-shirts will be launched in a month. One explosion model (hot-selling style) can sell one or two thousand pieces, but now the explosion model can sell thousands of pieces. A good market. The decline in domestic sales orders and the dismal sales of foreign trade. In the past, an average of one or two single Thai orders were received each month, and each shipment received 300-400 pieces. However, the current Thai list does not exceed 100, and it is not always possible to receive orders every month. .

The decline in orders for Kobayashi's stalls is not a single case. NetEase Finance understands that the business of a dozen of stalls is light. Mr. Li, head of a garment processing factory in Guangzhou, told NetEase that the situation in the first half of the year was particularly bad and the situation in the second half was slightly better, but it was still not ideal. Mr. Jiang, who heads the clothing factory in Foshan, said that since the beginning of this year, the list has gradually fallen a lot, and the entire clothing market has been declining.

According to data released by the China Garment Association recently, the number of garment exports in China has been negative for 13 consecutive months. From January to September, the increase in the sales revenue of 14328 large-scale enterprises in China dropped from 13% at the beginning of the year to about 10%, which was lower than the average level in the past two years. The profit rate also decreased from 6% at the beginning of the year to 5.09%.

According to estimates by the China Garment Association, the average profit margin of small and medium-sized enterprises processing export low-end products is only about 3%. The reduction in profits makes the transfer of apparel orders to emerging economies more apparent.

A slump in sales

The slump in sales also caused the inventory crisis to spread throughout the industry. Not long ago, nearly eight stalls on the thirteen rows suddenly closed at the same time. These shops belong to the same boss, due to excessive inventory pressure, poor capital turnover, had to shut down.

NetEase Finance has learned that the owners of the 13-line and first-gear warehouse have made a batch of leather garments in the first half of this year. They hope to make a big profit this winter, but due to poor sales, there is a backlog of 40,000 leather garments in the warehouse. The cost of each piece of leather clothing is around 100 yuan, and the owner’s stock of light leather clothing has frozen 4 million yuan. The processing fee of the processing plant is still not settled. The boss reluctantly stated that the money is gone, and he hopes to use the leather garment inventory to pay the processing fee.

According to a research report of the textile and apparel industry of China Gold Securities, since 2012, the textile and clothing retail industry has experienced a full inventory crisis, indicating that the industry has entered a transition period. The essential reason is that the market space is limited, and high-speed growth is unsustainable, but companies The business model still remains in the inertia of scale expansion. The conflict between the two causes the sales of new stores in the company to be lower than expected, and the accumulated inventory of many new stores exceeds the scope that the slowing consumer demand can bear. And then upgrade to a crisis that interferes with the normal operation of the company.

The problem of inventory is a headache for people in the clothing industry. Kobayashi told Netease that in February of this year, the stalls had also accumulated some inventory, and the number was about 15,000. If the average cost of each T-shirt is about 20 yuan, there will be 300,000 yuan in inventory at Kobayashi. She reluctantly said that she can only see if she can digest it next year.

Lin Jiang, director of the Department of Finance and Taxation at Lingnan College of Sun Yat-sen University, told NetEase that the inventory problem created a great pressure on garment companies.

In addition to the heavy inventory pressure, rising labor costs have also become a problem facing the apparel industry. As the garment industry has shifted to the central and western regions, many migrant workers have achieved employment in their hometowns and the number of migrant workers has gradually decreased, which has caused difficulties in recruiting garments in the Guangdong garment industry.

Some small business executives told NetEase Finance that it is very difficult to recruit people now and they have to “pick” workers to work. It is understood that during the peak season, Guangzhou's garment workers can earn more than 10,000 yuan a month, ranging from six to seven thousand yuan.

The wages of workers in the Kobayashi factory have been increased by thousands over the past two years. In addition, the rent for stalls has also increased year after year. This has caused her production costs to soar. “Now the cost of each T-shirt has increased by 10%-15% compared to last year, mainly due to the increase in labor costs.” Kobayashi said.

Shortage of employment, part of the operating rate of enterprises is less than 50%

In order to gain insights into the status of industry operations and the survival status of various types of small and medium-sized garment enterprises, the Guangdong Garment and Apparel Industry Association conducted a phased survey of Zhongshan, Dongguan, Huizhou and Foshan in the first half of this year.

The results show that from January to May of this year, Guangdong's garment production still maintained its status as the country's largest producer of clothing, but it has seen negative growth. In the first half of 2012, the garment economy in Guangdong continued to show negative growth. In terms of foreign trade, from January to May this year, Guangdong exported 11.35 billion U.S. dollars in clothing and clothing accessories, a year-on-year decrease of 1.9%, which is lower than the national increase. In Zhejiang, Jiangsu, Fujian, Shandong and other major garment provinces, Guangdong is the only province with a negative total export growth.

It is understood that the global economic situation is grim, the demand in Europe and the United States has declined, and some orders have been transferred to countries with lower labor costs such as Vietnam and Cambodia.

In the survey, most industrial clusters have responded to this year's shutdown or semi-discontinued production of many companies. Compared with the same period of last year, nearly two-thirds of the companies reported a significant drop in production. The main reason for the decline in output was the reduction of orders and shortages of labor. The operating rate is about 75%, and nearly 20% of the companies have operating rates of less than 50%.

According to the report of the Guangdong Garment and Apparel Industry Association, compared with the same period of last year, the sales revenue and profits of nearly 70% of enterprises in Guangdong decreased significantly. The average increase in labor costs for garment enterprises is around 20%. In the survey, garment companies considered that the most significant factors in the first half of the year were recruitment difficulties, rising labor costs, rising raw material costs, and insufficient orders.

Lin Jiang told NetEase that the clothing industry not only faces a significant increase in labor costs, but also has high costs such as taxes, business expenses, and logistics, resulting in high industry costs and reduced profits.

“Currently, the garment industry in Guangdong is in a dilemma. The garment industry is a labor-intensive industry with low technical content. At present, there is no preferential policy on tax deductions for the apparel industry,” Lin Jiang said. The problems of the industry lie ahead, but problems such as tax burden, commercial expenses, and imperfect market systems cannot be solved at present, and government agencies do not want to support them.

For the current problems faced by the garment industry in Guangdong, the relevant person in charge of the Shenzhen Garment Industry Association told NetEase that Guangdong's garment industry is affected by both internal and external economic conditions, resulting in industry issues, as well as national phenomena. He believes that in the process of economic restructuring, this is a process that will inevitably go through. In addition, in the process of transition, there will be some companies that will collapse if they break the sand and win the fittest.