Borrowing Strength: The Secret Of Rising Trend

"At this time of year, orders for the next two months have already been handed, but now there are no orders for two weeks."

On the scene of the twenty-sixth China East China Import and Export Fair (hereinafter referred to as "China Fair") last Saturday (March 5th), a parent triangle area

Lin Fei, the person in charge of export production enterprises, is introduced.

In order not to let the factory shut down for a long time, the small and medium sized enterprises, which had rarely done OEM, had to return to the old road a few years ago - re - OEM for large enterprises.

According to Lin Fei, in 2014, the proportion of OEM to other enterprises in the factory was less than 10%, and in 2015 it was close to 10%, but in 2016, it was estimated that 60% would be able to maintain the basic operation of the factory.

Like Lin Fei, there is not a small number of helplessness.

Focus on the closing ceremony of the China Fair

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For traditional commodities, export volume has dropped by 10% over the previous year.

With the increasing complexity of the global economic situation and the intensified conflict between the regional situation and the slowdown of domestic economic growth, China's foreign trade situation has accelerated.

For many small and medium enterprises in the textile industry, it is not enough to resist the deterioration of the foreign trade situation by improving the equipment, increasing the styles and widening the sales channels.

It is optimistic that the survival desire of Chinese private enterprises is very strong.

According to Lin Fei, "this year's situation is really going to die."

But if we want to carry it on, maybe there will be a turning point. "

Relatively speaking, the larger state-owned enterprises are more likely to be emboldened.

As a Japanese Ministry manager of Anhui garment import and export Limited by Share Ltd, Meng Zhuo shared their achievements with reporters: "in the case of 9.2% reduction in exports to Japan, the company went upstream, an increase of 42% over the same period."

The size of the business is about $300 million.

Although the overall export volume declined last year, the profit margin of enterprises increased by nearly 3% through the pformation and control of defective products.

Orders stolen by Southeast Asian factories

In 2015, the orders received by Lin Fei's export enterprises decreased significantly compared with the previous year. The total number of odd orders was less than US $40 million, a decrease of about US $5 million and a decrease of more than 11%.

Among them, the most important market - the order in South America was reduced by half.

A textile printing and dyeing company in Zhengzhou, Henan, mainly produces work clothes.

Henrie (alias), head of the company, told reporters that since 2014, the company has pformed from making fabric as the main product to making apparel products at the same time.

Since then, orders have dropped by more than a half, and now they only have orders of $3 million a year.

According to him, as the international oil prices continued to fall, the number of Hengli's exports to the Middle East decreased significantly.

According to customs data, in 2015, the total value of China's imports and exports was 24 trillion and 580 billion yuan, down 7% compared to the same period last year.

Among them, exports dropped by 1.8% and imports dropped by 13.2%.

Last year, China's textile and apparel exports amounted to 283 billion 780 million US dollars, down 4.9% compared to the same period last year.

According to Gao Hucheng, Minister of Commerce of China, in 2015, under the condition of slowing world economy and external demand, global overcapacity led to the contraction of international trade and commodity prices fell off cliff.

The price of crude oil and iron ore dropped by about 40% in 2015, which is an important reason for the decline of China's foreign trade in 2015.

In addition, geopolitical conflicts, extremism and the spread of terrorism also have a negative impact on the world economy and Global trade.

For export companies, a major reason for the sharp decline in foreign trade orders last year is that because of the high cost of domestic elements, Chinese enterprises have lost the price advantage compared with factories in Southeast Asia.

The orders originally held in the hands of Chinese enterprises continued to drain in recent years.

Lin Fei said he had quoted prices to the buyers in India a few days ago, and found that about 3% per kilogram of textile products were more expensive than India's local products.

Some of the products originally imported from China are in a state of backlog.

Meng Zhuo said that at least 20% of the company's overseas orders had been lost to Southeast Asia.

"Last year there was a major customer whose orders were cut by half and the amount was reduced by US $1 million, due to the company's policy adjustments to Southeast Asia."

Meng Zhuo believes that the US led p Pacific Partnership Agreement (TPP) will be formally signed before the Spring Festival, which will also increase this loss.

In fact, not only foreign enterprises built factories in Southeast Asia, but the factories built by Meng Zhuo last year in Kampuchea have also been put into production, and the whole plant now has about 700 people.

Shen Danyang, spokesman of the Ministry of Commerce, said before that textile and clothing were the traditional dominant industries in China. Its exports mainly faced three difficulties, including the pfer of some industries and orders to low cost countries such as Southeast Asia and South Asia, which made the textile and garment industry of neighboring countries rapidly rising and occupied the space of some export markets in China.

Prior to that, Shen Weihua, deputy director of the Shanghai business commission and Deputy Secretary General of the China trade fair working committee, also pointed out to the media that Shanghai's foreign trade was facing the challenge of capacity pfer, that is, some labor-intensive industries began to shift from coastal areas to the central and western regions and Southeast Asia.

"(Shanghai) processing trade has decreased by an average of 7 billion ~80 billion a year on exports."

On the other hand, the enthusiasm of global buyers is decreasing, and the price expectations are low, which also leads to a decline in volume.

"The price expectations of India buyers are low. Because the global economic situation is not good, the rupees in India are also depreciating, so they are also very pressing on prices."

Lin Fei takes India as an example to describe the intense competition and the passivity of enterprises.

Of course, Indians themselves are more sensitive to prices and prefer low priced products.

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Favorable policies are being suppressed

Because of the expectation of global purchasers, the depreciation of RMB and export tax rebates, which were originally good export enterprises, eventually became the reasons for buyers to further reduce prices.

According to official data, the central parity of RMB against the US dollar depreciated by 5.8% in 2015, setting the largest annual depreciation rate since 2005.

However, the profits brought by the 5.8% are limited to the pockets of export enterprises.

In mid August 2015, the yuan plunged 3.5% in two days.

The head of a large scale foreign trade company in Zhejiang told reporters at that time: "foreigners have called, asking for a reduction in their products."

Yang Ming, a boss of an electronic component export company in Shenzhen, also said: "once the exchange rate is lowered, the big customers who care about the price may ask us to return the profits that are due to the exchange rate difference, otherwise we will cancel or postpone the order."

According to Meng Zhuo's statement, "although the general customers will abide by the signed contract, they will not break the contract or ask for a price reduction because of the depreciation of the RMB, but the customers will be more demanding because of their psychological imbalance."

Foreign trade insiders clearly know that the depreciation of the renminbi will not bring more profits to the enterprises themselves, but only increase the competitiveness of prices, thereby promoting the increase of export orders.

But Lin Lin's mind is that even the preferential policies of the state to export enterprises, the good export tax rebate, has become a reason for buyers to lower prices.

Lin Fei said that international buyers who deal with Chinese export enterprises all year round are very clear about the profits of enterprises, and know that export enterprises can enjoy the national export tax rebate policy, so they will "take away" part of the export tax rebate when prices are reduced.

As a small and medium-sized export enterprise, he also hoped that the state could directly cut taxes on export enterprises.

Bet on the India market for survival.

For all enterprises, "pformation" is the general trend.

In 2015, the structure of China's export commodities was further optimized, and the pformation from consumer goods to consumer goods and capital goods was being realized.

Among them, the proportion of private enterprises, general trade and mechanical and electrical products increased by 2%, 2.1% and 1.6% respectively, representing an increase of 10% in terms of the export of large scale sets of equipment representing a country's industrial development level.

Gao Hucheng pointed out that China's communications equipment has been exported to more than 140 countries in the world, and power equipment has entered the high-end market in Europe and other countries. The export of railway equipment covers six continents in the world.

Although Lin Fei's enterprises are not big and can not represent the development level of the national industry, they also strive to upgrade their equipment and make every effort to open up new markets.

In the past six months, Lin Fei went to India 3 times.

The last time I went there caught up with the riots of India caste groups.

In the course of the interview, Lin Fei also received a call from the exhibition company to invite him to India, and advised the newspaper group to go to India on the grounds of public order.

He responded to the phone, saying: "we will consider exhibiting but do not have to report to the group.

I just came back from India. "

According to Lin Fei, exports to India account for 15% of the total size of the company.

Because Indians do not care about packaging and quality, relatively low end products also compete fiercely with local enterprises in India. Therefore, the products exported to India are almost zero profit.

But intuition tells him that this is a market that can not be ignored. Especially in the case that some factories in India do not have the ability to produce, the India market is worth digging.

Their company is planning to set up a branch in India as soon as possible so as to open up a potential market.

Lin Fei's expectation is that the number of orders that will be exported to India will account for about 25% of the total volume in the future.

The 3 field experience gave Lin Fei a preliminary understanding of India.

As a big country that will soon surpass China, the India market is undoubtedly a huge cake.

But India, which calls itself "the largest democracy in the world", has also made Lin Fei very nervous.

"It may have been discussed with the government, but if the local people are not satisfied, they may have changed their minds after the demonstration."

Apart from a lack of understanding of India's policies, Lin Fei is not too sure about the implementation of local policies and administrative efficiency.

However, even if the order from India can not earn money, it can work together with the foundry business to ensure the normal operation of the factory machinery, and occupy the market at the same time to "live and wait for opportunities".

Trying to pform is costly.

As a small business, Lin Fei frankly says that they have invested less in new technology, and there is no real innovation. More is the introduction of technology in South Korea and other places, imitation and learning.

In addition to India, Lin Fei's company also tried to take orders from Korea last year.

However, in the actual production, there were technical problems in the printing and dyeing links, not only losing customers, but also putting in a compensation of about 100000 yuan.

This made Lin Fei realize that in a time of bad market, we should be more careful in taking orders, and only take the project that we have confidence in.

In the process of pformation and opening up overseas markets, Lin Fei also intends to lay out domestic sales channels in the long run.

"In the future, domestic sales account for 20%, and profits can account for 30% to 40% of total profits. I will be satisfied."

Lin Fei said.

Sun Li (a pseudonym) is the head of a state-owned foreign trade enterprise in East China, and the clothing products exported in the industry belong to the middle and upper level.

For her, India is not very attractive. Instead, the United States will become the focus of the group's future ploughing.

"The company will set up a branch in the United States to do a good job in the US market.

Such a big market is not good enough to waste. "

In Sun Li's view, these countries and regions in Europe and the United States are still relatively rich, so it is best to earn these people's money first, without considering the development of the India market without considering local development.

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Borrowing strength: the secret of rising trend

Last year, when the country's exports to Japan dropped by 9.2%, Meng Zhuo's team achieved a 42.25% growth trend.

He attributed it to five aspects: accurate market analysis, the use of Kampuchea factories, the introduction of famous brands, the enhancement of added value, and the bold prediction of exchange rates.

In fact, at the beginning of 2015, orders from the Japanese market and the customers were shrinking. "The expectations offered by the customers at that time were quite different from the normal price."

In the case of price bearish, Meng Zhuo's department investigated the production base and the major order sources from Europe and the United States, and finally got the market accuracy.

"In this case, we are boldly taking many orders that are not possible at the beginning of the year."

Meng Zhuo told our reporter.

In response to the risk of exchange rate, Meng Zhuo's team's flexible reaction can be seen from a sudden fall in the renminbi last year.

In mid August last year, the central parity of the RMB exchange rate dropped sharply for 3 consecutive days, triggering a ripple effect in the global market.

In response to the sharp fluctuations in exchange rates, Meng Zhuo immediately convened an emergency meeting and promptly stopped all of the company's fixed exchange rate operations.

Previously, in order to reduce the impact of exchange rate fluctuations, Meng Zhuo's company would adopt an early lock in rate method to reduce the risk of two-way fluctuations.

In 2014, about 70% of Meng Zhuo's foreign exchange took a fixed exchange rate. Taking into account the change in the trend of the yuan, it fell to 50% at the beginning of 2015.

After last summer's exchange rate fluctuations, the company immediately stopped the lock up of tens of millions of dollars.

In order to improve the company's profits and product competitiveness, Meng Zhuo's group specially built laboratories.

And the development of high-end products with customers, the use of high-end materials and the use of famous brand to increase the added value is also an attempt made by Meng Zhuo team last year.

"The main products we export to Japan are winter clothing, of which the down jacket is a large item.

However, the Japanese market is flooded with many Chinese down garments, with large inventories and declining prices.

Under the guidance of customers, the enterprises developed the Poland velvet and French velvet, although the price of the down has doubled, but the fluffy degree has increased correspondingly, and the certified Poland and French tags have been popular in the Japanese market.

The sale is very good and the selling price has gone up. "

Meng Zhuo told reporters that in 2015, the amount of Poland velvet and French cashmere purchased by the company and its customers amounted to 3 million 489 thousand yuan, creating an export volume of about 3 million dollars.

At the same time, enterprises also used high value-added materials such as Japan and the United Kingdom.

All of these efforts resulted in a sharp increase of 42.25% in exports last year to 11.27% of Japan's total exports.

In addition, in 2015, Meng Zhuo's factory in Kampuchea also put into full scale production, the entire plant 14 production lines, a total of 710 people.

Because "Japan imports knitted garments from China with a 10.9% tariff and imports from Kampuchea, it can be exempt from customs duties". In addition, the wage level of local workers in Kampuchea is only half or even 1/3 of the domestic level (the minimum wage in Kampuchea is 140 dollars, while the local workers in Anhui are about 450 dollars). The production cost of the Kampuchea factory can be reduced by at least 20% than that of the domestic factories.

It is worth mentioning that in addition to the company's own factory set up factories in Kampuchea, Meng Zhuo team is also based on the factory as a platform, combined with other local factories to expand production capacity and reduce costs.

At the same time, because many Japanese and European and American customers will go to Kampuchea to place orders, they can also borrow more customers from Kampuchea factories, making some factories that are unable to complete orders from local factories.

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Meeting foreign trade and winter with diversification strategy

In an interview with the media, Gao Hu described China's foreign trade performance in 2015 as "an excellent student's answer".

Because "foreign trade is a trade between countries, and the evaluation of the operation of foreign trade must be considered under the international background".

Looking at it, Global trade in 2015 was "rapidly declining". According to the current 73 major economies in the world (90% of total world trade) announced by WTO in 2015, Global trade exports decreased by 11.1% in 2015 and imports by 12.56%.

Therefore, China's foreign trade achievements last year were "worth noting".

According to WTO statistics, total exports of major economies in the world dropped by 11% in 2015, 8.1 percentage points higher than the decline in China's exports.

It is estimated that the international market share of China's exports will exceed 13% in the whole year, 1 percentage points higher than that in 2014, the largest increase in history, and will continue to maintain the status of the world's first goods trading power and export power.

After the closure of the China trade fair, which is known as the first exhibition of China's foreign trade, after the closure of Shanghai, the signal given by the barometer of 2016 is that the export prospects continue to tighten, and foreign trade continues in the winter.

According to statistics from the organizers of the China trade fair, about 3000 Chinese foreign trade enterprises achieved an export turnover of US $2 billion 310 million during the five day session, down 9.97% from the previous session.

Xinhua News Agency reported that this year attracted about 21 thousand and 500 overseas buyers, from 114 countries and regions, and the total number of merchants increased slightly by 1.2% compared with the previous year, but turnover has dropped by nearly 10%.

Shen Weihua said that although the buyers and sellers of Europe and the United States attracted 2.83% growth over the past year, the export turnover showed a decline of 16.12%, indicating that the outlook of the European and American markets as the main export target of China is not optimistic. China's foreign trade enterprises need to expand the emerging markets such as "one belt and one road" and create diversified export markets for Chinese goods.

According to the data of the General Administration of customs, China's exports continued to decline year-on-year in January 2016, down 11.2%, imports fell by 18.8% and trade surplus amounted to 63 billion 290 million US dollars.

As a traditional dominant industry, China's textile and clothing export growth or zero growth or even negative growth may become a norm.

As for the overall foreign trade situation in 2016, Gao Hu Cheng made such a statement: "overall, the foreign trade situation this year is extremely grim and complex, unstable and uncertain factors are increasing, and downward pressure is very great."

Even in the past year, Meng Zhuo, who has made remarkable achievements, is not optimistic in his view in 2016.

Many Japanese customers have plans to move the list to Southeast Asia, while Japanese customers reflect that the large stock of 2015 cotton clothing is bound to affect orders in 2016.

Therefore, it is an important task for Meng Zhuo this year to expand trade opportunities, increase the number of visits and actively develop new customers to offset the loss of orders from old customers.

Lin Fei, a small business man, worries much. He prays that he can carry it this year.

Actively developing new markets such as India, and developing the domestic market in the long run to increase domestic sales, or even to pform into imports, is Lin Fei's assumption of a full future in the "osseous reality".

"Japanese companies are taking advantage of their good reputation to come directly to China to seize the market, which is produced in Southeast Asia and China and sold in China."

Meng Zhuo said that they are equally optimistic about the Chinese market as Japanese companies. Regardless of whether China's economy is declining, they hope to continue to expand the share of China's domestic sales and seriously develop the domestic market.