Market Dynamics: Shrinking Consumption Is The Cause Of Losses Of Textile Enterprises

The shrinking market demand is one of the important reasons for the loss of textile enterprises. Industry insiders believe that the uncertainty of the global economic situation has inhibited consumers' willingness and ability to consume, and the demand for clothing and other products has also decreased.

Relevant data shows that the growth of the global clothing market has slowed down in recent years, and the growth rate is significantly lower than in previous years. This shrinking market demand has directly affected the order quantity of enterprises, which has seriously affected the production plan and sales plan of enterprises. Enterprises have to face the problem of mismatch of temporary production needs, and also bear the financial pressure caused by inventory backlog.

At the same time, the fluctuation of raw material prices has also brought huge cost pressure to enterprises. The unstable price of raw materials such as cotton and chemical fiber makes enterprises face many risks in the process of procurement and production. When the price of raw materials rises, the production cost of enterprises increases and the profit space is compressed; When the price of raw materials falls, the inventory value of the enterprise decreases, and the provision for price decline needs to be made, which will have a direct impact on the profit of the enterprise. In this case, it is extremely difficult for enterprises to achieve balance in cost control.

In the face of shrinking consumer demand, textile and clothing enterprises need to drive market recovery with innovation, develop high value-added products such as functional fabrics, environmentally friendly materials and professional clothing in different scenarios by accurately positioning the segments, realize small batch personalized customization, reduce inventory risk, and connect users with digital means such as live broadcast e-commerce and virtual fitting, And enhance brand stickiness through offline experience, from "low price competition" to "value competition".

For the pressure of rising costs, use futures instruments at the raw material end to smooth the risk of raw material price fluctuations and deepen the application of futures instruments: establish a dynamic hedging model, lock the basis risk in combination with the future and present, adjust the hedging ratio in combination with the spot market volatility, and achieve interval management of procurement costs; Innovate option portfolio, introduce Asian options to smooth price fluctuations, use collar options to build a "risk buffer zone", and realize non-linear risk hedging through OTC option customization scheme, forming a multi-level price protection mechanism.

Textile and garment enterprises can actively use derivatives to control the cost of raw material procurement, prevent the risk of inventory depreciation, improve the productivity utilization of production lines, shorten production cycle and reduce inventory backlog through lean production and other methods.

A textile enterprise has successively purchased 200 tons of cotton for daily production and operation after the Spring Festival, but the previously expected "three gold, four silver" market has not appeared. It is difficult to get goods in the spot market, the inventory pressure is gradually increasing, and the textile enterprise judges that the probability of price decline in the future market is large. In order to alleviate the inventory pressure and avoid the risk of inventory depreciation, the textile enterprise established short futures positions to prevent the risk of future price decline, and at the same time, it provided the possibility of increasing profits for the existing inventory by selling dummy call options. In the end, the profit of the futures end of the scheme is 1375 yuan/ton, the profit of the options end is 314 yuan/ton, and the total profit of the derivatives end is 1689 yuan/ton. After making up for the loss of inventory falling price, there was still 559 yuan/ton of excess earnings, totaling 111800 yuan.

The production end needs to accelerate the intelligent and green transformation, improve efficiency through industrial Internet transformation (such as AI production scheduling, automation equipment), transfer low-cost production capacity to Southeast Asia or China's central and western regions, and retain high-end manufacturing capacity in the east; Promote recycled fiber, anhydrous dyeing and other recycling technologies to reduce energy consumption, use carbon neutral certification to obtain policy dividends, strengthen supply chain collaboration, and achieve upgrading from "extensive production" to "lean and intelligent manufacturing".

At present, the industry has entered the stage of high-quality development, which requires enterprises to improve their own capabilities at many levels, give full play to their advantages in the industrial chain through the refined use of relevant tools, form a stable business model, and expand their operations.